Giuliani Rolls Out Health Care Plan

Published November 1, 2007

Former New York City mayor and current presidential candidate Rudy Giuliani made headlines at a mid-August campaign stop in Columbia, South Carolina by warning of the dangers of “socialized medicine” and mentioning Democrat candidates are advocating a “nanny state” and may raise taxes by as much as 30 percent.

Two weeks earlier, on July 30, Giuliani had rolled out his own proposal to reform the U.S. health care system. On the list of “12 Commitments” that embody Giuliani’s platform, No. 7, “[giving] Americans more control over and access to health care,” is the focus of the proposal.

The plan was developed by Giuliani’s team of health policy experts and free-market champions: Dr. Dan Kessler and Dr. Scott Atlas from the Hoover Institution, Dr. David Gratzer of the Manhattan Institute, Sally Pipes of the Pacific Research Institute, former Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Mark McClellan, and consultant Don Moran.

The team reports to Giuliani’s chief domestic advisor, former Indianapolis Mayor Steve Goldsmith, who held the same position in President George W. Bush’s 2000 campaign.

Tax Deductions Key

Giuliani’s plan centers on a concept Bush proposed in his January 2007 State of the Union address to provide tax deductions for those who buy health insurance–up to $15,000 for a family or $7,500 for an individual.

Taxpayers would get the full benefits of the deduction even if the insurance they purchased cost less, and payroll taxes on the deducted income would be recaptured. However, Giuliani’s campaign has declined comment on who will recapture that money and how it will be used. The idea never gained enough traction to move on Capitol Hill and was declared “dead on arrival” by opponents.

Fostering Innovation

Under Giuliani’s plan, Health Savings Accounts (HSAs) also would be expanded and improved.

And, borrowing from Bush’s Value-Driven Health Care program (currently being spearheaded by Health and Human Services Secretary Mike Leavitt), Giuliani’s plan includes investing in health information technology and increasing the transparency of health care cost and quality data. It is widely accepted that this kind of information is critical to the success of consumer-driven health care.

Giuliani’s plan would create a health insurance credit for low-income Americans that could be coordinated with employer contributions or government funds to purchase health insurance.

This idea has drawn fire both from the left, which alleges it will further privatize public health programs, and from the right. Michael Cannon, director of health policy studies at the libertarian Cato Institute in Washington, DC, suggested it “would increase government’s influence and make health care markets less free.”

Block Grants Possible

Guiliani also advocates block grants to encourage state innovation. While many state initiatives feature positive reform elements, others violate federal law and jeopardize the health care currently provided to more than 100 million Americans under employer-sponsored plans.

The business community is awaiting elaboration from Giuliani’s campaign on whether his administration would withhold block grants from states whose health plans violate federal law.

Giuliani’s proposal also mentions tying Medicaid payments to states’ successes in promoting preventive care and lowering childhood obesity–a move supporters say could eventually lead to savings and to quality improvements in the Medicaid program.

The plan targets further savings by overhauling the Food and Drug Administration processes of approving prescription drugs to bring new drugs to the market faster.

Challenges to Reform

Giuliani’s plan includes allowing interstate purchases of health insurance and creating incentives that encourage wellness, prevention, and chronic-disease management in health plans. He also promises medical liability (tort) reform.

These are initiatives reformers have been advocating for some time but have been unable to achieve on Capitol Hill. In the 109th Congress, Rep. John Shadegg (R-AZ) and Sen. Jim DeMint (R-SC) introduced bills that would allow Americans to buy insurance across state lines, and Sen. John Ensign (R-NV) developed several medical liability reform proposals. All were soundly defeated, and the policies have even fewer backers in the 110th Congress.

James P. Gelfand ([email protected]) is a health policy expert in Washington, DC.