How the candidates would alter health care
As the presidential campaigns shift into high gear, front-runners in both parties are talking health-care reform. And the political bed-hopping is well under way. One example: The three leading Democrats have modeled their proposals on the new Massachusetts health-care plan, which has employer and individual mandates, and a state-run agency through which individuals and employees of small companies can buy private insurance. That law just happened to be passed when Mitt Romney was governor of that state. Now that he is a Republican Presidential candidate, Romney says he is opposed to a "one-size-fits-all" approach. Instead, he's calling for states to devise their own plans.
And as Senator Hillary Clinton (D-N.Y.) talks up her ideas, she has found a sympathetic ear in the National Federation of Independent Business. That's the same small business advocacy group that once mounted a vigorous lobbying campaign against President Bill Clinton's health-care plan—spearheaded by his wife. Back in 1993, the NFIB and the First Lady were at loggerheads over a proposed payroll tax on small companies that failed to provide health coverage. This time around, Senator Clinton met with the NFIB as she drafted her plan, one that notably offers small business owners a carrot, not a stick. And the NFIB is willing to let bygones be bygones. "It's a new day," says Amanda Austin, the NFIB's senior manager for legislative affairs. "We are very encouraged that Senator Clinton is taking the concerns of small employers so seriously."
What has not changed is that entrepreneurs are clamoring for health-care reform. Small business owners have rated health-care costs as their biggest concern in NFIB polls for decades. They have good reason to worry: Health insurance premiums rose about 80% between 2002 and 2007, while both prices and wages have risen less than 20% during that period. "Our dysfunctional health-care system is both threatening our competitiveness in the global economy and leaving tens of millions of middle-class Americans uninsured," says Len Nichols, director of New America's Health Policy Program, a nonpartisan think tank in Washington, D.C.
Although the amount of detail in the candidates' proposals far surpasses that of most previous campaigns, they are just rough outlines. "These are guideposts of where they want to go," says Diane Rowland, executive vice-president of the Kaiser Family Foundation, a health policy research organization in Menlo Park, Calif. "The President will still have to negotiate with Congress." How much the proposals actually cost, and how they will be funded, are still fuzzy. And, of course, any true reform of the system will take years.
Although there are important distinctions among the contenders' proposals within each party, the real break in ideas is along party lines. Clinton and her two main rivals, Senator Barack Obama (D-Ill.) and former Senator John Edwards (D-N.C.), all seek to reduce the ranks of the uninsured while allowing those who are satisfied with their health insurance to keep it. On the Republican side, Romney, former New York Mayor Rudolph Giuliani, and Senator John McCain (R-Ariz.) have proposed tax-based solutions aimed at strengthening the individual insurance market.
The Democratic candidates' plans call for an employer mandate that requires all but the smallest companies to provide insurance. The candidates all propose creating a government agency that will offer individuals and employees of small companies the option of enrolling in a public plan. Perhaps the biggest difference among the three Democrats is that Clinton would offer small companies a generous tax credit, probably about 75% of total health-care costs, according to Neera Tanden, Clinton's policy director.
The Republican contenders, by contrast, want to reform health care by altering the tax code. Romney would make all medical costs, including insurance premiums, fully tax-deductible. And all three candidates envision a bigger role for the individual insurance market. "We hope to supercharge Health Savings Accounts," says Sally Canfield, Romney's national policy adviser. Health savings accounts, in which employeees with high-deductible insurance plans can make pretax contributions to an account used to pay medical expenses, are part of Giuliani's plan as well. He would simplify the rules for HSAs and give those who buy individual coverage the same tax break that those with group coverage now receive through their employers. And to reduce Medicaid spending, he wants to give low-income Americans a refundable tax credit to enable them to buy private insurance. "We want all Americans to shop for their own health insurance," says Scott Atlas, a fellow at the Hoover Institution and a health adviser to the Giuliani campaign. Although McCain's tax treatment is similar to his opponents' proposals, he also advocates boosting association health plans and allowing residents of one state to buy insurance in another. But those two ideas have been bouncing around Congress for the past several years without much success. Small business owners faced with rising health-care costs have to hope that regardless of who becomes the next President, some relief finally may be on the way.
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