Legislative Watch

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October 2003

By George G. Olsen, JD

Although eclipsed somewhat by the recall imbroglio in California, the tempo of the Democratic presidential nomination process is beginning to quicken. Several of the candidates have developed sweeping health care reform proposals, which they are touting on the campaign trail. Set out below are brief synopses of the plans advanced by Senator John Kerry (D-Mass), Governor Howard Dean (Vermont), Representative Richard Gephardt (D-Mo), Senator John Edwards (D-NC), and Senator Joseph Lieberman (D-Conn).

Senator John Kerry

Sen Kerry's health proposal provides that the federal government will assume all existing state health care costs for the 20 million children in the Medicaid program, in exchange for the states expanding their existing Children's Health Insurance Program (CHIP) to include remaining uninsured children and their parents.

His proposal would allow the public to buy into the same federal health insurance program that currently covers the President and members of Congress. The plan would be made affordable for people with marginal incomes through tax credits and other subsidies. Businesses and workers who purchase health insurance through the workplace would be aided by placing people with catastrophic ailments into a new insurance pool, which is intended to stabilize premium costs for the remaining workers and their employers. Medical malpractice costs would be controlled due to a requirement that lawsuits be reviewed by state panels and then subject to mediation before proceeding to court.

Sen Kerry would control costs by using computerized safeguards that would trim the $350 billion spent every year administering health care benefits. He would also repeal laws that prevent generic drugs from competing more vigorously with brand-name medications. The proposal includes a requirement that those who manage pharmacy programs disclose any financial incentives they receive from drug manufacturers. To help finance his plans, Sen Kerry would refuse to enact the elements of the $1.6 trillion tax cut President Bush signed into law in 2001 that are due to take effect next year and in the years beyond. The overall goal of Sen Kerry's program is to provide the closest plan possible to universal coverage within a decade.

Governor Howard Dean

Gov Dean's health care proposal would extend current programs to every child and young adult under 25 up to three times the poverty level and require employer health plans to extend coverage to dependents up to age 25. The proposal would cover parents up to 185% of the poverty level and allow parents above that level to buy into a health plan similar to the plan for government employees, while providing tax credits to keep health insurance affordable. These proposals are referred to as the Families and Children Health Insurance Program (FCHIP).

Small businesses and individuals would be allowed to buy into the federal employee program at reasonable rates-Gov Dean refers to this as the Universal Health Benefits Program. In addition, refundable tax credits would be available to the uninsured to help them afford premiums for the Universal Health Benefits Program. Gov Dean would temporarily extend existing insurance coverage for workers after they leave their jobs. The federal government would pay 70% of COBRA premiums if the employers pay the cost of extending coverage for an additional 2 months. While Gov Dean does not mandate that corporations provide health care coverage, he encourages businesses that can afford coverage but choose otherwise, by limiting their tax deductions and government contracts. The cost of this plan is $88.3 billion per year at full implementation in FY 2008. Gov Dean does not agree with Medicare's policies of paying medical providers less on a per patient basis than it pays providers in other states. He strongly supports a prescription drug benefit for Medicare, and would veto any prescription drug benefit that requires Medicare recipients to give up the right to see the doctors they want. Gov Dean intends to address cost containment, including a change in the law that closes the patent "loopholes" that he contends are used by brand-name drug companies to "unfairly" extend their patents; and allowing the importation of drugs from foreign countries into the United States.

Representative Richard Gephardt

Rep Gephardt's health care proposal requires all employers to offer insurance to employees working at least 20 hours a week. Refundable tax credits would be available to corporations, including those that now offer insurance, to offset 60% of their insurance costs. The refundable tax credit would double the value of the deduction the corporation can take; however, any company that reduces its current share of the cost of the premiums would forfeit the credit.

Rep Gephardt would provide assistance for low-income workers to help pay their share of insurance premiums, and called for smaller measures to expand coverage for Americans who are unemployed. Sixty percent of state and local government costs for insuring their workers will be subsidized. State and local governments will be able to use this money for various other needs besides health care, such as education. The total cost of Rep Gephardt's health plan proposal is $250 billion per year.

Senator John Edwards

Sen Edwards' health care proposal seeks to provide health insurance for every child in America and offer relief for families attempting to deal with the rising costs of doctor visits, insurance premiums, prescription drugs, and other health care costs. Sen Edwards' plan will cover 21 million Americans at a cost of $53 billion per year. His plan will require that every child have quality health insurance. He intends to make it affordable for parents to cover their children, offering tax breaks for high-quality health insurance, as well as automatic enrollment for millions. Parents would be required to cover their children under age 21. Sen Edwards will offer tax credits for parents who buy insurance from their employers or CHIP. The credits will be passed down based on income and would be available to all parents earning less than $75,000 and to parents in larger families earning less than $100,000. Private plans, which qualify for tax credits, need to provide high-quality coverage and reasonable co-payments and deductibles, all at least as generous as CHIP. Parents can also claim tax credits for coverage through CHIP. No lower-income family would have to pay more than 30 cents a day to insure all of their children, as well as families of four earning less than $60,000 would pay no more than $1 per day to cover their children. Parents will be able to provide private insurance or children will be automatically enrolled in CHIP or Medicaid when they are born, register for school, or go to health clinics, or when a parent files a tax return. If parents find they are unable to afford coverage due to extraordinary circumstances, they will be able to apply for additional help. Parents who still do not provide coverage will receive a warning and then face a reduction in tax benefits equal to the cost of CHIP. Their children will automatically be enrolled in the appropriate program.

Sen Edwards would also provide full funding so that states can allow adults to buy into Medicaid or CHIP at highly subsidized rates. Insurance would be free for an individual whose income falls below 100% of poverty and subsidized for incomes up to 250% of poverty. All businesses with less than 50 employees will be able to access high-quality health plans through state purchasing pools that lower rates and reduce red tape. Sen Edwards would require insurance companies to allow families to cover their children under age 25. States would be able to further subsidize the cost of the adult buy-in to CHIP/Medicaid for individuals under 25.

He supports allowing the reimportation of prescription drugs from Canada. He has a six-point plan to reduce the costs of prescription drugs including stopping "misleading" prescription drug advertisements; holding pharmacy benefits managers accountable; using America's purchasing power to get a "fair price" on prescription drugs; making prescription drug companies "play by the rules"; enacting the Edwards legislation to encourage competition and stop "abusive" patents; and convening an expert commission to review all drug patent laws. Sen Edwards also intends to establish a national 24-hour medical translation hotline for rural and smaller hospitals.

Senator Joseph Lieberman

Sen Lieberman's health care proposal focuses on a center for developing cures for chronic diseases such as AIDS, Alzheimer's, and cancer. He intends to allot $150 billion over 10 years to fund research for drug treatments and vaccines. He wants to rescind President Bush's restrictions on stem cell research. Sen Lieberman will extend the children's health insurance program to cover every child in America, as well as providing the parents of children who cannot afford health insurance with the option of buying into the Medicaid program. Sen Lieberman believes that a first-rate temporary health insurance program for unemployed Americans should be available. He will offer tax credits for small businesses to aid them in providing health insurance for their workers.

On September 2, 2003, Sen Lieberman announced a proposal that would create a program called "MediKids" that would extend health insurance coverage to all children regardless of the income level of the family. The program is based on the Federal Health Insurance Benefits Program. The plan would also create a national network of school-based health centers that would work in tandem with the MediKids program to provide access to care, preventive services, and health education.

The Senator's proposal also calls for a new purchasing pool program entitled "MediChoice" that would extend health insurance to single mothers, part-time and seasonal workers, small business employees, and the unemployed.

There is little doubt that health care issues will play a central role in the quickly approaching presidential and Congressional elections. As the debate develops, the candidates can be expected to highlight their health care proposals. ®

George G. Olsen, JD, is a partner of the firm Williams & Jensen, PC, Washington, DC. He is also legal counsel for the National Association of Rehabilitation Agencies and Providers.

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October 2003