Heritage Foundation Leadership for America

President George W. Bush has outlined a series of health care initiatives that largely complement the proposals that he has already made—and in some cases, signed into law. The President’s approach is deliberately targeted and incremental, and therefore is considerably less expansive and less expensive than Senator John Kerry’s (D–MA) health plan.

A Variety of New Proposals. The President’s new health care proposals are wide ranging. They include:

The creation of refundable health care tax cred­its to cover millions of uninsured Americans;

The promotion of the recently enacted Health Savings Accounts;

An expansion of traditional public programs— the State Children’s Health Insurance Program and Medicaid—to cover uninsured children;

An expansion of federally funded community health centers and clinics;

Major changes to the health insurance markets through the establishment of broader associa­tion health plans, state-based health insurance pools, and interstate competition among health insurance plans; and

New tax deductions and tax exemptions to enhance long-term care coverage.

Beyond these various health insurance and tax code changes and public program expansions, the President continues to propose major changes in medical malpractice law. He also favors the pro­motion of information technology to streamline medical records and reduce errors, as well as new initiatives to combat the unresolved problems of waste, fraud, and abuse that continue to plague the giant Medicare and Medicaid programs.

Building on a Mixed Record. The President supported and signed into law the Medicare Mod­ernization Act of 2003, creating a universal entitle­ment of unknown cost for prescription drug coverage within Medicare. It is the largest entitle­ment expansion since the Great Society. It will add significantly to the unfunded liabilities of the Medicare program and impose higher taxes on individuals and families.

By signing the Medicare Modernization Act of 2003, President Bush also secured the enactment of Health Savings Accounts, a new health care sav­ings option. This one change in the law holds the potential of broadening direct personal control over health care decisions, while substantially improving and transforming America’s health insurance markets.

The President signed into law a limited health care tax credit for certain displaced workers under the Trade Adjustment Act of 2002. The Bush Administration has also promoted greater flexibility for states to expand coverage in innovative ways under Medicaid and the State Children’s Health Insurance Program and bolstered community health centers to provide care for low-income persons.

Costs and Consequences. There are a variety of recent estimates of the costs and the conse­quences of expanded coverage under both the Bush and the Kerry health plans. The true cost of the new Medicare law is unknown.

Beyond the Medicare legislation, the Lewin Group, a prominent econometrics firm modeling health care proposals, estimates that President Bush’s health care proposals would increase total federal expenditures by an additional $227.5 bil­lion over 10 years, while reducing the number of the uninsured by 17 percent, or 8.2 million. White House officials anticipate that the President’s pol­icy initiatives would produce a more robust expan­sion of health care coverage, reducing the number of uninsured by 11 million to 17.5 million Ameri­cans. Other analysts have different estimates based on different assumptions.

Conclusion. The Bush health care policy pro­posals are generally designed to reinforce the pri­vate sector’s capacity to expand health coverage and improve the delivery of medical services to Americans. A key achievement of the Bush propos­als, if properly implemented, would be to increase personal control and private ownership of health insurance policies.

Robert E. Moffit, Ph.D., is Director of and Nina Owcharenko is Senior Policy Analyst for Health Care in the Center for Health Policy Studies at The Heritage Foundation.