National health care may be on the horizon

By DON McINTOSH, Associate Editor

Next year could be the year Congress passes some kind of major national health care reform.

By now very few Americans, even among the insured, think the U.S. health care system is fine the way it is. On the contrary, it’s widely seen as costly, inefficient, and hard to understand. About 47 million Americans have no health insurance, and for those who have insurance, costs are rising. Family coverage premiums are up 78 percent since 2001 — over four times the increase in wages or inflation. Last year, average employer-paid family health premiums topped $1,000 a month for the first time.

America’s health care system is unique: No other developed country gives private insurance companies a dominant role, or lets so many citizens suffer from a lack of care. Either, like Canada, they have national insurance (kind of like Medicare, but covering all citizens, not just seniors), or, like Great Britain, they have a national health service (kind of like America’s VA hospitals for armed service veterans, where doctors are government employees).

America has a hodge-podge health care system, with different levels of public subsidy for different groups. Servicemen and women, and veterans, get health care directly from government doctors. Seniors 65 and older get government health insurance known as Medicare. Some very poor people get state-administered health coverage through Medicaid. Some children from families not poor enough to be on Medicaid get coverage through a program called the State Children’s Health Insurance Program, or SCHIP. When employers provide health insurance, they pay for it in pre-tax dollars, which works out to be a substantial public tax subsidy. Individuals outside the above groups are mostly on their own; they can purchase private health insurance, or go without.

This year, each major party candidate for president has a set of health care reform proposals.

U.S. Sen. Hillary Clinton (D-New York) proposes to require uninsured individuals to get and pay for health insurance. A tax credit would help them pay for it, scaled so as to limit health premiums to a certain percentage of income. Individuals could choose a new Medicare-like plan for all ages, or they could get the same choice of private insurers as members of Congress. Those who are now insured could keep what they have, if they want to. Large employers would be required to provide health coverage, or pay for it. Small employers would get a tax credit if they choose to provide health coverage.

U.S. Sen. Barack Obama (D-Illinois) proposes a new public insurance program which would be available voluntarily to all uninsured individuals — and to small businesses that want to cover their employees. A public subsidy would be available to help pay the premiums, using a sliding scale based on income. All employers would be required to provide coverage, or contribute toward their employees’ coverage, or support the public plan by paying a payroll tax. Individuals who want to purchase private insurance could continue to do so through a National Health Insurance Exchange, which would set minimum standards for insurance, limit profit and administrative costs, make insurers justify rate increases, and evaluate competing plans, making the differences easy to understand for consumers. Obama also proposes to expand Medicaid and SCHIP so that they cover more people, and require that all children be insured, allowing children to stay on their parents’ plans until age 25.

Meanwhile, on the Republican side, U.S. Senator John McCain (R- Arizona) proposes to eliminate the current tax incentive for employers to provide health coverage. Instead he wants to create a tax credit of $2,500 a year for individuals and $5,000 for families to purchase health insurance on their own. [At current rates, those amounts would cover less than half the premium.] McCain proposes to privatize the VA health system by letting veterans get government-paid care outside the VA. And he would privatize Medicaid by letting states give Medicaid clients the option to substitute private insurance.

McCain also promotes greater use of high-deductible Health Savings Accounts (HSAs). HSAs were part of the signature health care achievement of the Bush Administration, the Medicare Modernization Act of 2003, which is best known as the law that added a prescription drug benefit to Medicare. HSAs are tax-free special accounts that otherwise uninsured individuals set up and use to pay for high-deductible (at least $1,100 a year) insurance policies.

Both Democrats would also repeal a rule that prevents Medicare from bargaining better drug prices for those enrolled in the new drug benefit. And all three major party candidates say they would allow Americans to import drugs from other developed countries where the price is limited by government.

Of course, candidate proposals are just policy papers. To become law, they first have to become bills. Clinton, Obama, and McCain are senators, and could introduce their proposals as bills, but haven’t done so.

Two health reform bills already in Congress have substantial backing, however.

U.S. Sen. Ron Wyden (D-Oregon) has a bill known as the Healthy Americans Act. It would eliminate employer-paid insurance and instead require most individuals to buy insurance, and most employers to pay part of the cost. Households earning up to four times the poverty level would get a tax deduction or government grant to help pay the premiums. Those on Medicare or who get their health care from the VA would be exempt from the requirement to buy insurance.

The bill has 14 co-sponsors in the Senate. A House version, sponsored by Southwest Washington Democrat Brian Baird, has three-co-sponsors, including Portland-area Democrat Earl Blumenauer.

Congressman John Conyers (D-Michigan) is the sponsor of a bill known as the Medicare for All Act. It would extend Medicare to cover everyone, not just seniors, and thereby make private health insurance largely redundant. About one-fifth of the House of Representatives — 88 members — have signed on as co-sponsors of the bill; there is no Senate version of the bill. [In Oregon and Washington, only Seattle-area Democrat Jim McDermott has signed on.] The bill has also been endorsed by 11 national unions and 27 state labor federations, including the Oregon AFL-CIO and the Washington State Labor Council.