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Gore Has The Right Remedy For Health Care


Economic Viewpoint

Gore Has the Right Remedy for Health Care

For the Clinton Administration, which arrived in Washington with a promise of universal health care, it is a bitter irony that the number of uninsured Americans has continued to increase despite a booming economy. For Vice-President Gore (who I periodically advise on economic issues), there is a related irony: Former Senator Bill Bradley (D-N.J.) has made an expensive plan to reduce the number of uninsured Americans the centerpiece of his Presidential bid. The Senator has the luxury of proposing such a plan only because of huge projected budgetary surpluses over the next 15 years--surpluses that are the result of the Administration's decision to put fiscal responsibility at the top of its policy agenda.

As they listen to the debate between Gore and Bradley, voters should understand that in contrast to their Republican opponents, both Democratic candidates are committed to the same goals: reducing the number of uninsured Americans, preserving Medicare and extending its benefits to prescription drugs, and safeguarding patients' rights. Both Bradley and Gore agree that these goals are best achieved by building on our current system of private insurance and medical providers, employer-sponsored health insurance, and Medicare. Neither candidate is proposing new federal mandates.STEEP PRICE. But there are important differences. Bradley's plan relies on generous federal subsidies to low-income individuals and families to purchase health insurance through employer-sponsored insurance programs or through the Federal Employees Health Benefit Plan (FEHBP), a voluntary insurance program now offered solely to such workers. Neither the idea of tax subsidies to purchase health insurance nor the idea of opening FEHBP to uninsured Americans is new. But to make health-care coverage available to the majority of Americans, as Senator Bradley hopes to do, these options come with a steep price tag, which he acknowledges.

Relying on the Office of Management & Budget and the Congressional Budget Office, Professor Kenneth E. Thorpe of Emory University estimates that the federal subsidies, along with a tax deduction for health insurance also included in the Bradley plan, would cost about $52 billion per year. That would extend health-insurance coverage to 15 million additional Americans, less than 40% of the number of currently uninsured. More than half of this additional federal spending would simply replace private spending by employers and individuals for private health insurance.

And even these generous federal subsidies would be inadequate to cover the premium costs of 85% of the managed-care plans in FEHBP, let alone Medicaid coverage that Senator Bradley's plan would dismantle except for coverage for the aged, blind, and disabled. For the remaining Medicaid population, mainly poor children, Senator Bradley's plan would replace the Medicaid entitlement to relatively generous benefits with a new capped entitlement to federal support to purchase private health insurance.OUTSIDERS. The Vice-President's proposal, in contrast, preserves the Medicaid entitlement, while targeting additional resources to people with no health insurance, including children and parents in low-income families and Americans aged 55 to 64. These individuals are covered by extending the State Children's Health Insurance Program and Medicare. Thorpe estimates that the Vice-President's plan would insure an additional 12 million Americans at a cost to the federal government of only about $12 billion per year. Gore's plan would cover about 80% of the total number of individuals covered by the Bradley plan but at less than 25% of the cost.

There are also important differences between the two Democratic candidates on the issue of Medicare. Although both support prescription drug coverage in Medicare, the drug benefits in the Bradley plan are somewhat more generous and would cost twice as much as those in the Gore plan. But the Bradley plan contains no additional resources to cover the yawning gap between Medicare's projected revenues and expenditures, while the Vice-President's plan commits $374 billion to secure Medicare's solvency over the next 20 years.

During the past seven years, Vice-President Gore has been a standard-bearer in restoring the mantle of fiscal responsibility to the Democratic Party. He has helped parry efforts to slash Medicare's funding and to gut the Medicaid entitlement to finance unwarranted tax cuts. He has also worked to extend health-insurance coverage to all low-income children without crowding out private dollars already spent on insurance. Both Bradley and Gore have proposed serious health-care reforms, but Gore's plan reflects a wiser balance among competing objectives.By Laura D'andrea Tyson


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