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Benefits Column

Health Reform, Democratic-style

Healthcare proposals by Democratic presidential candidates Hillary Clinton and Barack Obama are almost clones of each other. And both would require employers to provide coverage for workers -- or to contribute to the cost of coverage.

Monday, March 17, 2008
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For all of the intensity of coverage, discussion and public reaction, a close look at the health plans proposed by the Democratic presidential candidates finds only minor differences. But both would mean change for employers.

The proposals of Sens. Barack Obama, D-Ill., and Hillary Clinton, D-NY, reflect their commitment to achieving universal healthcare protection.

What are the key similarities? First, both want a mixed system of public and private insurance with a central role for employment-based insurance. 

Both would create a new public insurance exchange so individuals could purchase private insurance with low transaction costs. The Federal Employee Health Benefits Program would either be the program -- or the model -- with all of the policies being manufactured and serviced by the private sector.

Both would require that employers either provide coverage to their workers or contribute to the cost of coverage. (Clinton has special treatment for small employers.) 

Both would expand public program reach.

Both would provide subsidies to individuals for the payment of premiums.

Both would provide some subsidies for employers, with a primary focus on relief from catastrophic healthcare costs. Obama has one approach for all employers, while Clinton focuses on small employers and those that provide retiree-health insurance. 

Both would make major changes to private insurance, with the greatest implications for the individual market. There would be guaranteed issue and guaranteed renewal; an elimination of all pre-existing-conditions provisions and no benefit carve outs; and a provision for specified minimum loss ratios for insurers.

Obama provides some special treatment for those up to age 25 and Clinton, provisions on prevention services.

Both would essentially keep the current pre-emption provisions of the Employee Retirement Income Security Act.

Both provide a similar listing of cost initiatives and approaches for improving health quality and health system performance, such as comparative-effectiveness research and dissemination, national-prevention initiatives, price and data transparency, etc.

Words differ, but the concepts could have been pulled right out of reports by the National Business Group on Health, the ERISA Industry Committee, Bridges to Excellence, the Business Roundtable, Leapfrog, the National Committee for Quality Assurance and other groups supported by business.

The Kaiser Family Foundation maintains a website that provides every CHRO and their teams a wealth of information on the issue updated by the minute.

There are only two areas that stand out as having some contrast between the candidates.

Clinton would tax "the high-end portion of very generous plans for those making more than $250,000," but otherwise not change the income-tax treatment of employment-based benefits.

Obama would not even propose this change.

Also, Clinton would require that all individuals purchase health insurance, while Obama would only require that children be covered.

Since both candidates emphasize that for coverage to expand it must be affordable, but neither has spelled out the micro-detail of insurance pricing and subsides sufficiently to determine likely outcomes, this may not be a significant difference.

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The experience of Massachusetts to date -- where a substantial portion of those mandated to have coverage have been unable to afford it, even after subsidies, and thus were allowed to opt out -- suggests that "universal insurance" is tough to achieve unless there is automatic sign up and full payment by the government/tax system.

Even then, it continues to amaze that more than one-third of those eligible for free Medicaid health protection have never signed up.

Employers that now provide health insurance could find many advantages were these candidates' proposals to be adopted.

Think of these two ultimately as running mates with their plans merged. The result?

* Greater coverage and thus, less cost-shifting to the currently insured.

* Help for employers that still provide retiree-health insurance.

* Help for employers with catastrophic health costs for active workers and their families.

* New federal funding and regulatory requirements to move the system more quickly toward interactive medical records; expansion of effectiveness research with a new agency; prevention and wellness initiatives and requirements; expanded funding and focus on chronic conditions; regulated loss ratios for all insurers that would relate to all clients and covered lives; and expanded use of the clout of government and the insured as buyers to drive down costs by driving down margins and eliminating intermediaries that add costs without adding value.

Comparing the Obama and Clinton proposals to the recommendations of business groups suggests that in all areas these candidates have been listening. Bottom line: Whoever is elected -- should one be elected -- and whether or not they are on the same ticket, it is likely to make very little difference in the health-reform proposal that will result.

Both have said they will drive for it as a major priority, and what they will drive for is similar on all the major issues of importance to health plan sponsors.

Sen. John McCain, R-Ariz., has set forth proposals that are fundamentally different in many areas, and at odds with the recommendations of most employer plan-sponsor groups. That is where we will go next month.

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