Communities: Plan Design & Financing Strategies

What Is the Difference Between Obama and Clinton's Health Care Plans?

By Joseph Paduda, principle, Health Strategy Associates

 

As the Democratic presidential nominee race between Senators Hillary Clinton and Barack Obama continues to tighten, examining the differences between their health care plans is critical. Before we dissect the differences, let’s talk about their main similarity: what the plans are not. Neither Clinton or Obama’s plan is “socialized medicine," single payer, or any version thereof.
     The plans of both candidates rely on private insurers to provide coverage, and neither makes changes to the health care provider community. Physicians and other providers do not become government employees under either candidate’s scenario.
     The first, and most obvious, difference between the two plans is mandated universal coverage. Clinton's plan requires a mandate; Obama's doesn't.
     Obama's campaign literature and speeches indicate that the Senator is in favor of mandated universal coverage. Obama's rhetoric is inconsistent with his plan, leading me to suspect he wants to have his cake, eat it too, and not get fat. 
     Obama does have a mandate, but it is specific to children. He requires all kids to have coverage, but his plan does not require working-age people obtain coverage. Obama has said he would consider a universal mandate if coverage was not progressing rapidly (but he does not definite rapid).
     Clinton doesn’t equivocate. Her plan mandates universal coverage; every American has to have insurance.      
     Here are the highlights of several other key differences in the two health care plans. Some issues may seem picayune, but the devil is in the details, and details in health care add up to half a trillion bucks or so.
     

Guaranteed Eligibility
     Insurers have to take all comers. That is, individuals with cataracts and family history of cancer and hypertension get coverage. They can't be denied coverage or care.

 

Benefit Plan Design
     Both senators call for a benefit design similar to the Federal Employee Health Benefit Plan, which is not too shabby. By definition, this eliminates individual states' ability to mandate or restrict the coverage of certain types of care (e.g., acupuncture). Therefore, it transfers determination and regulation of health plan benefits from the states to the feds.
     Obama would allow states to experiment with richer benefits and plans, as long as those exceed the national standard. Mental health parity is a part of both candidates' plans.
 

Insurance Buying/Regulatory Agency
     Both candidates propose to set up a health insurance exchange/agency/entity to regulate insurers, facilitate enrollment, and provide information to consumers and employers. Obama goes quite a bit further, perhaps up to and over the edge of insurance price control. His website says the "plan will force insurers to pay out a reasonable share of their premiums for patient care instead of keeping exorbitant amounts for profits and administration."

Funding
     Both plans will require contributions from employers, insureds, and taxpayers. Those in lower income brackets will be subsidized by taxpayers on a graduated scale. In contrast to Obama, Clinton's plan relies on direct tax subsidies for low-income folks to help them buy coverage.
     In Obama's, some small employers (he provides no definition of “small”) will not have to help pay premiums. Clinton offers small employers (also not defined) a federal tax credit to help pay for insurance.
     Obama also promises to cover some portion of employers' high-cost claims; the assumption here is that his plan would have the feds provide stop-loss insurance for claims above a certain dollar threshold. Clinton provides a similar mechanism, but only for retiree coverage. This is a significant difference, and a major change from today’s funding mechanism, but one no one is talking about it. (A potential problem arises with claims that ‘pierce’ the stop-loss threshold. Since the employer or insurance company is no longer “on the risk” for these high-cost claims, they are not likely to exert themselves in an effort to control additional costs.)
     In addition, Clinton would partially fund her program by rolling back the Bush tax cuts on families with incomes of more than $250,000.

Cost and Premiums
     Here, Obama's plan is silent on age rating, the actuarially sound process of charging older folks more because they are more likely to need care. Clinton specifically prohibits "charging large premium differences based on age, gender, or occupation." (One wonders, what is large?) Clinton will also base premium payments on income.


Medical Malpractice Reform
     Clinton calls for "adoption of a model that provides liability protections for physicians who disclose medical errors to patients and who offer to enter into negotiations for fair compensation." The plan would reduce their liability if they complied with reporting requirements, a measure that would both cut costs and encourage reporting.
     And one other nuance: Clinton's plan specifically allows individuals to keep their existing coverage or to replace it with another private or public plan (modeled on Medicare); Obama’s plan is silent on the ‘Medicare for all’ option.

     Notably, Obama’s public relations message is focused on cost containment. He claims that universal coverage cannot be achieved until costs are reduced. Yet his ‘cost reduction’ programs, such as automation, greater use of technology, better reporting of medical outcomes and errors, and a strong focus on managing chronic care, are essentially identical to Clinton’s plan.
     Both candidates’ plans also support portability and pay for performance—along with requirements that providers publish their outcomes data, re-importation of prescription drugs, and allowing the feds to negotiate prescription pricing for Part D and other federal programs.
     So how do you decide which plan is better? Ask yourself this: do you believe universal coverage is central to health care reform? 
     (Stay tuned for a comparison of each parties' health care reform platform once the Democratic nominee is announced.)

 

Based in Madison, CT, Joseph Paduda is a national health care expert who works with insurers, managed care organizations, and employers to reduce the costs of health care. Before starting Health Strategy Associates, LLC, he held high-level positions with major insurance companies, including United HealthCare and Travelers. He can be reached at 203-314-2632, jpaduda@healthstrategyassoc.com, or via his blog, www.ManagedCareMatters.com.

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