Kerry Jumps into Health Care Reform Pool

Published May 19, 2003

DES MOINES, Iowa, 5/16/03 – Saying his plan is “is less costly than three others,” Democratic Presidential hopeful Senator John Kerry (D-Massachusetts) introduced a $72 billion a year plan focused on middle-income Americans who face rising insurance costs. Kerry claimed his plan is an overhaul of the nation’s health care system.

Kerry told Des Moines hospital workers his proposal would control rapidly rising medical prices and expand health insurance coverage to millions. The senator used his proposal to cast himself as the spokesman for an “unheard majority” and to create a contrast in a crowded field of eight rivals for next year’s Democratic Party nomination.

Kerry’s plan focused on middle-income Americans, who may be more concerned about their own rising premiums and co-payments than about care for the needy. He also would spend billions to help those without insurance–but still billions less than rival plans floated by Dick Gephardt (D- Missouri), Howard Dean, the former Democratic Governor of Vermont, and Representative Dennis Kucinich (D-Ohio).

Gephardt made health care reform his major domestic issue last month, offering a broad, one-size-fits-all government-run plan costing $247 billion a year. Dean followed with an $88 billion a year national health care overhaul, and Kucinich introduced a government take-over plan estimated to cost $2.2 trillion.

Questionable Data

In defense of his plan, Kerry said 59 million Americans go without health insurance for at least part of any given year; his rivals use the more commonly cited figure of 41 million uninsured. Questions have been raised about both statistics. According to published reports, the most recent from the nonpartisan Congressional Budget Office (CBO), 21 million to 31 million are uninsured for a period of one year or more.

The CBO study could fuel the debate from both political parties as they wrestle with health care issues. Republicans could cite the CBO data in support of their argument that a national one-size-fits-all plan would be a waste of financial resources, given the relatively small number of problem uninsured. Democrats, like Kerry, would use the larger estimate to promote further government intervention into the nation’s health care system.

Jerry Heaster, business reporter for the Kansas City Star, recently wrote that new research on the number of uninsured is not getting “near the attention it should.” Heaster warns “a humongously expensive one-size-fits-all remedy would be both ineffective and horrendously wasteful.”

Kerry’s Plan in Brief

Under Kerry’s newly announced reform proposal, the federal government itself would pay 75 percent of catastrophic insurance claims of more than $50,000. Moreover,

  • New regulations would lead to more competition and lower drug prices by ending the patent protections drug manufacturers currently receive for their intellectual property.
  • Drug manufacturers would be required to disclose any financial incentives offered to those who manage pharmacy programs.
  • Federal grants would help hospitals and health care providers update technology to cut paperwork and bureaucracy.
  • New regulations, not spelled out in the Kerry proposal, would cut the cost of malpractice insurance.

Central to Kerry’s proposal for near-universal coverage is an effort to rein in soaring health care costs by cutting into the $350 billion spent each year on health care administration. The waste, Kerry says, “can be cut in half.” He would cover the $72 billion-a-year cost of his plan by repealing or freezing some of President George W. Bush’s tax cuts.

Kerry aides said the focus on controlling health care costs was a key distinction between his plan and those offered by Gephardt and by Dean. Joe Trippi, Dean campaign manager countered by noting “Our plan has a cost containment component, but we chose not to underscore it.”

Sharp Curves Ahead

Few observers dispute health care is a major domestic issue. Addressing it is not only good, but necessary, politics: the Democrats have little choice but to outline plans in order to compete with viable reform measures already in the works from Republicans.

“Hospital costs, doctors’ costs, the cost of pharmaceuticals are all going up at double-digit rates,” noted Larry Akey, a spokesman for the Health Insurance Association of America (HIAA). “So Americans are justifiably concerned about whether they will be able to continue to afford health insurance.”

Andrew Stern, president of the Service Employees International Union, said health care has become the top priority for workers, supplanting wage increases as the most contentious issue in contract negotiations.

Gephardt, Dean, and Kerry claim their approaches, while obviously requiring more government control of the free market, do not over-reach the way Bill and Hillary Clinton did in 1993-94. Even so, all three are moving in a direction opposite the dominant trend in health care today: consumer-driven care, defined by patients demanding more choices and more freedom to make their own health care decisions.

Glen Bolger, a Republican pollster, reports, “Americans generally say they’re for major changes, but when you get into the specifics, they say, ‘we didn’t mean that.’ Any specific plan is going to face a high degree of skepticism from the electorate.” Gephardt hardly finished detailing his plan when the National Federation of Independent Business (NFIB) described it as a tax hike on small business.

Kate Sullivan, director of health care policy at the U.S. Chamber of Commerce, attacked Gephardt’s, Dean’s, and Kerry’s proposals as shifting even more of the burden to employers as the default providers of health care. “Employers are not in the business of providing health coverage. They’re in the business of providing jobs,” she said. The Democratic plans “force all these employers to become insurance companies.”

Sullivan also chided the Democratic Presidential contenders for focusing on health care for purely political reasons. “It has become a priority with some of the unions, and the Democrats are all fighting for the union endorsement.” Reform-demanding billboards in Iowa and New Hampshire were paid for by the Service Employees union, which has also called on local Democrats in those states to press the candidates for specific health care proposals.

HIAA’s Akey said the issue is clearly going to take center stage during the Democratic primary. But he also said it’s too early to tell how much political staying power the issue will have in the general election or beyond, when campaign promises meet face-to-face with legislative realities.

Conrad F. Meier is managing editor of Health Care News, a publication of The Heartland Institute. His email address is [email protected].