By Christopher Guadagnino, Ph.D

Published October 2000

• React to this article in the Discussion Forum.

The respective health care proposals of Vice President Al Gore and Texas Gov. George W. Bush are probably closer than those between any two presidential candidates in recent memory.

Even with large budget surpluses, Gore is proposing to spend less to reduce the ranks of the uninsured than have past Democratic candidates and his proposals are more market-based than those of his predecessors.

Although Bush’s proposals would cost less than Gore’s, the difference is less in many areas than it has been between opponents in previous election campaigns. Bush is also attempting to craft policies that match Gore’s expansions in areas including access to health care for the uninsured, a federal HMO patient bill of rights, Medicare and prescription drug coverage and medical research.

Significantly, both campaigns have converged on one policy—giving uninsured workers tax credits to help them purchase health insurance coverage—a convergence that gives the policy a good chance of moving forward regardless of which candidate wins in November.

Nevertheless, similarities between the Gore and Bush health care proposals do give way, to some extent, to differences in program locus and expenditures: Gore’s focus is on spending more to expand existing government programs, while Bush favors spending less and relying more on market-based reforms.

Medicare proposals are where the differences are most stark. Gore would spend $100 billion more than Bush on Medicare over ten years and Bush favors offering more private sector alternatives to traditional Medicare along the lines of the Federal Employees Health Benefits Program.

Key Physician Issues

At press time, neither candidate had taken a position on the Quality Health Care Coalition Act (H.R. 1304), sponsored by Rep. Tom Campbell (R-CA) and Rep. John Conyers (D-MI), which was passed by the U.S. House in late June and would enable independent health professionals to collectively bargain with health plans. As governor of Texas, Bush supported and signed a state bill that allows independent physicians to jointly negotiate fees with health plans under state attorney general supervision.

Whereas the Federal Trade Commission and the Department of Justice under the Clinton-Gore Administration have expressed strong opposition to the Campbell bill to ensure that consumers are not hurt by antitrust activities of physicians, the White House has been unusually quiet about the bill, observes Kate Sullivan, director of health care policy for the U.S. Chamber of Commerce. Sullivan notes that the White House typically issues a Statement of Administration Position (SAP) every time a bill comes for a vote, which it has not done for the Campbell bill. Sullivan interprets the silence to be an abdication of executive branch responsibility, although the absence of official opposition to the bill could lead to alternate interpretations.

On the issue of tort reform, Bush would be amenable to signing medical malpractice reform at the federal level, according to a policy adviser to Governor Bush. Bush made tort reform one of his key campaign issues when running for governor in Texas and passed a series of laws to limit liability for defendants, including capping and limiting circumstances for punitive damages, sanctioning frivolous lawsuits, toughening qualifications for expert witnesses and raising the threshold for joint and several liability, notes Kim Ross, vice president for public policy of the Texas Medical Association.

Although Gore has not been an advocate of tort reform, the current judicial system must offer patients a fair avenue to redress grievances, notes Richard Boxer, M.D., a Milwaukee urologist and senior health policy advisor of the Gore-Lieberman campaign.

Neither candidate has taken a position on any specific federal medical malpractice reform proposal, whereas that the physician freedoms that a strong HMO patient bill of rights would offer are more important, counters Raj Shah, a Gore health advisor who is pursuing degrees at the University of Pennsylvania Medical School and the Wharton School.

Until recently, Gore had the upper hand on the issue of funding for medical research, proposing to double NIH funding over the next five years, from $14.6 billion this year to $29.2 billion in 2005. In late September, Bush pledged to double NIH funding. Bush would also make a permanent tax credit for private research and development into disease cures and prevention. Gore also supports making the tax credit permanent, says Shah.

The Clinton-Gore Administration has championed efforts to reduce Medicare fraud through federal audits and prosecutions, while Gore supports the Administration’s proposal to allow criminal investigators and civil prosecutors to work together on Medicare fraud cases and to prohibit providers from avoiding paying Medicare fraud fines by declaring bankruptcy. Gore also advocates rewards of up to $1,000 for seniors who report fraud.

HMO Patient Bill of Rights

While both Gore and Bush support a federal patient bill of rights, their plans differ on who is covered and how easily patients can sue HMOs.

Gore supports the bipartisan Norwood-Dingell bill, which is also supported by the AMA, that would:

• Set standards for all private health insurance, covering 160 million Americans.

• Ensure timely patient access to medical specialists.

• Allow physicians to prescribe medically necessary drugs regardless of HMO restrictions

• Allow patients to sue HMOs in state court if a health plan failed to cover a service on the ground that a service was not medically necessary or that a treatment was experimental, but require lawsuits to be filed in federal court if patients wanted to challenge an administrative decision to deny benefits.

• Shield employers from being held liable unless they directly participated in a decision to deny benefits that led to patient injury or death and shield employers from punitive damages unless they showed a willful or wanton disregard for the rights or safety of patients.

• Allow states’ HMO patient protection laws to remain in effect if a state could show that its laws were at least substantially equivalent to the new federal standards.

The Bush campaign would not directly address whether Bush supports the Norwood-Dingell bill. According to Mindy Tucker, press secretary for the Bush-Cheney campaign, Bush supports an HMO patient bill of rights at the federal level that will not supersede states’ versions.

The version that Bush supports would only apply to 48 million Americans in employer-sponsored and ERISA-regulated health plans, counters Shah, leaving out the majority of America’s 160 million Americans who would be covered under Norwood-Dingell.

Tucker says that Bush supports a federal HMO bill that allows patients to sue HMOs after they have gone through an appropriate adjudication process, a limitation that is absent from the Norwood-Dingell bill.

As governor of Texas, Bush vetoed a patient bill of rights in 1995, but signed a package of patient protection reforms in 1997 and let lapse into law without his signature a first-in-the-nation statute allowing HMOs to be sued for negligent decisions, says Ross. Concerned at the time that such a measure had no precedent or benchmark, Bush admits that the HMO liability measure works and would sign it now, according to the Bush campaign. Out of approximately 1,000 HMO patient appeals that have gone through Texas’ external HMO review process, roughly half have been adjudicated in favor of patients and only three lawsuits against HMOs have come to fruition, says Ross.

Expanding Access to Health Care

To address the problem of 44 million Americans without health insurance, both Gore and Bush propose a combination of tax credits, Children’s Health Insurance Program (CHIP) reform and measures to make employee health insurance more affordable to employers.

Both agree on a tax credit proposal, but differ in the way they would have it calculated. Gore’s other access proposals feature expansion of existing government programs, while Bush’s access proposals focus more directly on market-based reforms.

Gore proposes an annual refundable tax credit equal to 25 percent of individual and family health insurance premium costs for employees who are not offered an employer insurance plan.

Bush proposes an annual refundable tax credit to uninsured workers worth up to $1,000 per individual and $2,000 per family to cover up to 90 percent of the health insurance premiums for individuals earning $15,000 and families earning $30,000 or less, with the credit decreasing to a minimum of 30 percent of premium costs for individuals earning $25,000 and families earning $50,000.

Although the federal CHIP program has existed since 1997, offering coverage for Medicaid-ineligible children in families earning up to 200 percent of the federal poverty level, 11 million American children remain uninsured.

Gore would expand CHIP to 250 percent of poverty, up from the current 200 percent, allow uninsured children above 250 percent of poverty to buy into CHIP or Medicaid and expand CHIP to parents of children already enrolling in CHIP or Medicaid.

Bush would relax federal regulations to allow states more freedom to innovate and expand coverage through CHIP.

To provide access to health care to as many uninsured Americans as possible, Gore believes that the best start is to provide affordable coverage for all children by 2005, says Boxer. Gore’s CHIP proposals should be able to bring in seven million uninsured adults and attract more children to the program, of whom one million are between 200 percent and 250 percent of poverty, Boxer adds.

Gore’s access package is more efficient in addressing the uninsured problem than is Bush’s package, argues Boxer, who says that Gore’s plan will newly insure 12 million people at a federal cost of $157 billion over ten years, while Bush’s proposals will newly insure three million people at a cost of $135 billion.

Gore’s package covers health care costs up to $41,000 per family—the 250 percent poverty level, while families faced with average annual health plan costs of $2,400 per individual and $5,400 per family would still be $3,400 short under Bush’s $2,000 tax credit proposal, Boxer says.

Gail Wilensky, Ph.D., senior advisor to the Bush campaign, counters that Bush’s refundable tax credits will give support that is currently unavailable to the vast majority of uninsured, and says that a perusal of private market offerings reveals that a typical annual cost of Blue Cross Blue Shield or Kaiser-type health insurance policies for a woman in her thirties is between $1,440 and $1,680.

Bush’s approach to CHIP reform, rather than expand eligibility categories and thresholds directly, removes obstacles from states that wish to implement reforms that are better targeted to increasing health care access of specific local populations, argues Wilensky.

Wilensky, who was the head of HCFA in President George Bush’s administration, says that HCFA has not used its broad waiver authority that exists in Medicaid, and argues that putting more flexibility in state CHIP programs would encourage states to implement coverage options not currently possible, such as purchasing insurance through employer-sponsored health plans. States could elect to use CHIP allocations for families who can’t afford coverage under an employer’s plan, and would be free from other existing regulations, such as having caps placed on outreach expenditures, according to the Bush campaign.

Both candidates propose help for small businesses to purchase employee health insurance. Gore offers a 25 percent tax credit for premium costs to small businesses that join a purchasing coalition for employee health insurance, and would encourage coalitions to form by offering seed money to states and allowing foundations to make charitable contributions for their start-up. Bush proposes to change federal law to allow trade associations such as the Chamber of Commerce to offer nationwide health plan purchasing pools for small businesses, rather than having pools restricted to single states as they are currently.

The tax credit approach is the better way to hold down costs to small businesses and to sustain the experienced group purchasing environment already present in state purchasing pools, argues Shah.

Pooling at the state level has not been able to achieve stable financial vehicles for group purchasing, whereas the national purchasing groups advocated by Bush would have the capital and solvency to allow small businesses in high-cost states to enter a purchasing pool with low-cost states and enjoy a national economy of scale in their health insurance purchasing, according to the Bush campaign.

Coming at the access issue from another angle, Bush proposes to change laws and regulations governing Medical Savings Accounts to make them permanent, lift the cap on the number of accounts allowed to exist, allow employers to offer them as a coverage option, permit both employee and employer contributions, lower the minimum deductible to $1,000 for an individual and $2,000 for family coverage and permit contributions up to the deductible. Bush also proposes to allow employees to roll over up to $500 of their flexible savings accounts—pre-tax wages set aside for health expenditures—from year to year rather than requiring unspent funds to be forfeit at year’s end.

Boxer cites a Congressional Budget Office analysis that dismisses MSAs as offering significant benefits to only 33,000 people.

Medicare and Prescription Drug Coverage

The candidates’ Medicare proposals further illustrate fundamentally different visions of reform: Gore favoring the use of existing government programs and Bush favoring a hybrid approach in an attempt to induce greater involvement of the private health insurance market.

Gore pledges to devote $300 billion of the federal budget surplus to extend the life of the Medicare Trust Fund, supports the Clinton Administration’s proposal to allow those aged 55-64 to buy into the Medicare program and opposes increasing the eligibility age for Medicare. Gore also proposes adding prescription drug coverage to the existing Medicare program, which would carry no deductible for seniors below 150 percent of poverty, would pay half the cost of prescriptions up to a $1,000 benefit in 2002, rising to $2,500 in 2008, and would pay all drug costs after a beneficiary had spent $4,000 out-of-pocket on drugs in a year.

The total projected cost of Gore’s Medicare reform package is $253 billion over ten years.

Bush proposes to reform Medicare by convening a bipartisan Medicare task force to build on the work done last year by an earlier commission led by Sen. John B. Breaux (D-LA), and to ask Congress to agree to an expedited final vote by the end of 2001. Congress would consider recommendations from the task force as well as from Bush, who advocates requiring traditional fee-for-service Medicare to contain a prescription drug benefit and to compete with private health plans similar to the way in which the Federal Employees Health Benefits Program (FEHBP) provides health benefits to nine million federal employees, retirees and family members. Under FEHBP, the government pays 72 percent of enrollees’ average premium for 245 government-approved health plans, seven of which are fee-for-service and the remainder are HMOs and point-of-service plans.

As an interim measure, Bush proposes to spend $48 billion over four years to allow states to administer prescription drug benefits covering 100 percent of costs for seniors who earn 135 percent of poverty, down to 25 percent for seniors who earn 175 percent of poverty or more, and pay for all health care that exceeds $6,000 in annual out-of-pocket costs.

Bush also opposes increasing the eligibility age for Medicare.

The total projected cost of Bush’s Medicare reform package is $158 billion over ten years.

Medicare HMOs, which would play a central role in Bush’s plan, have not worked well, throwing out nearly one million seniors after departing from the market, Boxer charges. Other critics of Bush’s proposal argue that private plans will attract healthier seniors, overburdening traditional Medicare with the frailest and sickest who are left behind.

Wilensky counters that the intent of the Bush proposal is to offer a variety of private health insurance plans: physician-sponsored groups, traditional managed care, indemnity plans, as well as traditional Medicare, each with basic and high-end coverage options. Clearer, more consistent and fairer rules for those plans could offer a substantial improvement over Medicare+Choice, the unraveling of which is hardly surprising, Wilensky says, given its maze of differential rules, reporting requirements and burdens.

Wilensky, who chairs the Medicare Payment Advisory Commission, advocates risk adjustment, both for traditional Medicare+Choice and for a federal employees health care model. The current Medicare+Choice payment model, she says, "is limited to principal inpatient diagnosis, which is particularly galling for risk plans that pride themselves on keeping people out of the hospital and trying to use disease management and other strategies that re-arrange how you spend." She also advocates a stop-loss or reinsurance mechanism that will ameliorate some of the plans’ patient selection problems.