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Coverage vs Cost-Cutting: A look Inside the Obama and McCain Healthcare Plans

Coverage vs Cost-Cutting: A look Inside the Obama and McCain Healthcare Plans

CHICAGO—This year’s roiling political contest took center stage at ASCO 2008 in a special session that reviewed the healthcare insurance reform proposals of Sen. John McCain and Sen. Barack Obama, the presumptive presidential nominees.

Two experts discussed the candidates’ proposals: Jonathan Gruber, PhD, professor of economics at Massachusetts Institute of Technology, a health economist who consulted with several of the Democratic presidential candidates, and Gail Wilensky, PhD, with Project Hope, an advisor to McCain.

Obama: Goal of universal coverage

 

Dr. Gruber considers universal coverage the central construct of healthcare reform: "The three key features of any universal healthcare coverage initiative are pooling risks to make it attractive to payers, affordability, and a mandate."

Dr. Gruber was a key architect in Massachusetts's healthcare reform, which includes privatized subsidized coverage for the low-income population, pooled coverage for those above the poverty line, and an individual mandate, enforced through tax penalties.

 “We have two presidential candidates with fundamentally different visions about how to reform our system,” Dr. Gruber said. “It could be the most significant domestic policy difference we’ve seen in an election in 30 years.”

“We have two candidates with fundamentally
different visions about how to reform our system.”

—Dr. Jonathan Gruber  

 

 The Obama plan is similar to the Massachusetts initiative, Dr. Gruber said, but with one critical difference: no mandate. “Obama’s plan has low-income subsidies and a reformed market so you can’t charge different prices based on a person’s health status. However, instead of a mandate, there’s auto-enrollment that defaults people into insurance if they’re offered a plan but don’t take it. But that only covers about a quarter of the uninsured,” Dr. Gruber said.

Obama’s plan has the government and the healthy pay for the sick: The former will offer big subsidies while the latter will see a significant bump in insurance rates, Dr. Gruber predicted.

But for Obama to achieve universal coverage depends on the mix of the population within the various pools of uninsured. “Plans like Obama’s will get us about two-thirds of the way—a major contribution, but far from universal coverage,” Dr. Gruber said.

Implementing the Democrat’s plan will cost between $60 and $100 billion a year, by Dr. Gruber’s estimate. Also, “there’s a legitimate question whether Obama’s plan can work without a mandate,” he said.

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