October 12, 2004

October 12, 2004 | News Releases on Health Care

Candidates' Health Plans Would Expand Coverage but be Costly, Analysts Say

WASHINGTON, OCT. 12, 2004 - President George W. Bush and Sen. John F. Kerry both have put out a series of proposals aimed at covering Americans who lack health insurance-a topic that's likely to come up in the final presidential debate. Two papers from The Heritage Foundation show how effective each would be, and at what cost.


Neither candidate's approach would be cheap, but the Bush plan is "deliberately targeted and incremental, and therefore is considerably less expansive and less expensive than the Kerry plan," say Heritage analysts Robert Moffit and Nina Owcharenko.


The Bush administration says it will spend $534 billion more over the next decade on the new Medicare drug bill alone. The Heritage analysts say that the true cost of the Medicare drug entitlement is unknown, but it will turn out to be enormous, particularly when the baby boom generation starts to retire in 2011. Beyond the projected Medicare spending, Bush is proposing additional tax breaks for health insurance for individuals and families, including additional tax breaks for health savings accounts. These and related measures, says the non-partisan firm the Lewin Group, will amount to $227 billion over 10 years.


That's still far less than Kerry would spend. Analysts at the American Enterprise Institute, the Lewin Group, and the National Center for Policy Analysis all estimate that his proposals could exceed an additional $1 trillion in federal spending over 10 years. Simply "taxing the rich" would not enable Kerry to pay for his mammoth plan, the Heritage analysts say.


Both candidates have some good proposals and some bad proposals, according to the analysts. For example, Bush is proposing health-care tax credits and subsidies to help low-income working families get health care coverage, as well as an expansion of Health Savings Accounts, which will enhance personal control over health-care decisions. "If those changes take root," Moffit and Owcharenko write, "they have the potential to transform the health care sector."


However, both the president and Sen. Kerry also encourage the expansion of Medicaid, which, Moffit and Owcharenko say, is "the wrong direction" for the troubled program. The right direction is to get as many people off Medicaid as possible, particularly low-income working people and their children, and integrate these families into private health-care coverage. 


Kerry also says he wants to use health care tax credits to boost coverage. But many of the critical details of his tax-credit proposals remain unclear, the analysts say.


What is clear is that Kerry would give the federal government far more direct control over the financing and delivery of health care than Bush would. "He proposes that the federal government assume the bulk of the most expensive claims incurred in private health insurance, thus shifting the heaviest health-care costs to the taxpayer," Moffit and Owcharenko write.


The bottom line is that, while both candidates would decrease the number of uninsured Americans, the Bush proposals would attempt to do so through the private sector, by expanding personal choice and individual control over health care, while the Kerry proposals would tend to do so by expanding government programs.

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