Democrats want to focus on increasing the access to health care insurance, while Republicans want to focus on cutting insurance premium and care delivery costs.
Politics aside, these are the stated policy differences that clearly emerged at Thursday's so-called health care summit chaired by President Obama, and attended by leaders of both houses of Congress.
Here's a bit more than 25 words of commentary.
There are two policy mantras embedded in the Republican plans--aside from the political mantra, "Let's scrap the bill and start with a clean sheet of paper": allow the purchase of insurance across state lines, and institute robust tort reform.
If enacted, what would be the result of these policies?
Insurance premiums would be reduced, but so too would the quality and extent of coverage. Did you ever notice how most of your credit cards are issued from companies located in South Dakota or North Dakota? This is because these states have actively tried to attract credit card companies with little regulation. For example, many states limit interest on credit cards to 18 percent. Lax usury laws in both Delaware and North Dakota allow much steeper rates. Similarly, there is a much lower rate of corporate taxation in both states. So if you are a financial institution that wants low taxes and high interest rates, you choices are clear.
Under the Republican health care plan, there would be no minimum standard of coverage, so insurance companies could set up shop and sell cheap policies from states with a very low or no required level at all of minimum coverage. There would likely be a large number of catastrophic coverage plans--plans that would cover serious illness but no well-care or preventive care and routine screening. So if you get cancer, your chemotherapy, radiation, or surgery might be covered, but not the blood screening, colonoscopies, or mammograms that might lead to the early detection of a serious illness, and, possibly, better outcome.
To cover well care, routine checkups, and the like, the Republicans advocate the use of medical savings accounts--a tax sheltered account into which medical consumers could contribute their disposable income.
The problem is that many people who could afford the premium for a catastrophic policy would have little left over for a medical savings account. As President Obama pointed out, it's not a problem for a Senator making $175,000 a year to contribute to a medical savings account, but it is a problem for a person making only $40,000.
If health insurance companies were to set up shop in the health care equivalents of Delaware and South Dakota we could witness a "race to the bottom" in the cost of premiums, but also in the extent and quality of care.
The second mantra of the Republican plans is malpractice reform. The costs of defensive medicine include high premiums for malpractice insurance, costs of damages, and expensive diagnostic tests to protect against missing a diagnosis that might lead to a lawsuit.
Republican plans would cap both punitive and nonecomic damages in malpractice suits. One proposal would limit these damages to $250,000 while still allowing compensation for actual medical costs.
The nonpartisan Congressional Budget Office (CBO) does score these tort reforms as leading to a decline in health insurance premiums by as much as ten percent. It would also lead in many cases to a decline in physicians' premiums for malpractice insurance.
A wider look at the economics of malpractice reveals a more complex picture. One study, from 2005, by Amitabh Chandra at New Hampshire University, noted a weak association between malpractice costs and insurance premiums, and concluded that the recent spike in premium costs results from a poor return on insurance company investments. In other words, they are trying to make up for losses in the stock market. Chandra noted that, since 2000, damage payments have risen only at the same rate as overall medical costs, and concludes: "It's not payments that are causing this. The simple explanation that comes to mind is the underwriting cycle. If they're making less money from the investment side of things, it's going to cause insurance companies to raise rates."
Other studies have looked at the overall costs of malpractice relative to the total health care economy, and have found that Republican estimates of malpractice costs constituting as much as 15 percent of overall medical costs are quite exaggerated. The actuarial firm, Towers Perrin, said that in 2007, the last year for which figures are available, medical malpractice cost--liability insurance premiums and damages--were $30.4 billion. The total annual bill for health care is $2 trillion, which means that malpractice costs, at most, equal 1.5 percent.
In an interview with the New York Times (August 3, 2009), "Would tort reform lower costs?" Tom Baker, professor of law and health services at the University of Pennsylvania, said that the number of claimants remains small, "We have approximately the same number of claims today as in the late 1980s. Think about that. The cost of health care has doubled since then. The number of medical encounters between doctors and patients has gone up -- and research shows a more or less constant rate of errors per hospitalizations. That means we have a declining rate of lawsuits relative to numbers of injuries." Only 4 to 7 percent of the injured actually file a claim.
I'll admit that stories of doctors leaving practice because of exorbitant malpractice premiums is a good talking point, but it remains as anecdotal and Democratic stories of individuals who die from lack of health care insurance. Anecdotes make for good politics, but bad public policy.
Do the Republican plans do anything about coverage? Currently, there are close to 50 million people--including undocumented residents--without insurance. The CBO estimates that by 2019 Republican policies would cover 3 million additional people. Factoring in population growth, this would leave about 52 million uninsured. More people would in fact be uninsured leaving the percentage of the uninsured, non-elderly at the same 17 percent as it is today.
Finally, with regard to the deficit, the CBO estimates that Republican plans would shave $68 billion from the deficit by 2019.
To summarize, in another 25 words: Republican plans would cut the premium costs for those who can afford them, while maintaining the status quo in the percentage of those with coverage.
Next: The Democratic proposals
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Click here to read the first chapter of my book, Nasty, Brutish, and Long: Adventures in Old Age and the World of Eldercare (Avery/Penguin, 2009). It provides a unique, insider's perspective on aging in America. It is an account of my work as a psychologist in nursing homes, the story of caregiving to my frail, elderly parents--all to the accompaniment of ruminations on my own mortality. Thomas Lynch, author of The Undertaking calls it "A book for policy makers, caregivers, the halt and lame, the upright and unemcumbered: anyone who ever intends to get old."
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