Comparing Federal Health Plans: Who Wins?

I haven't given much thought to health plans proposed at the federal level. Consensus is difficult enough to reach at the state or local level, it seems believing an agreement can be reached at the national level any time soon requires a leap of both faith and logic.

And by the time something does move forward in Congress and make it to the president's desk, the proposals that are currently before our federal government will be little more than a distant memory, anyway.

But a new analysis by the independent Commonwealth Fund of four major national reform proposals is still interesting because it provides a quick, yet thorough, glimpse into what federal reform would do and what it would cost.

The four main plans investigated were:

1. The Health Care Tax Reform Proposal (President Bush)
   
2. The Healthy Americans Act (Sen. Wyden)
   
3. Federal/State Partnerships Bill (Rep. Baldwin and others)
4. AmeriCare (Rep. Stark, Sen. Kennedy, and others)

Here's a handy chart that breaks down the coverage and costs involved in all four:

Putting the Federal/State Partnerships Bill up against the others probably wasn't the best thing to do since it's a proposal that depends almost entirely on state proposals that have yet to be defined.

But it's clear the other three plans, according to the Commonwealth Fund review (which was actually completed by the Lewin Group), would all decrease overall health system spending while increasing the number of insured.

Of course, the term "insured" doesn't always mean the same thing. Although the Healthy Americans Act and AmeriCare seek to extend comprehensive insurance, as the Commonwealth Fund report explains (emphasis mine), "The president’s proposal achieves savings by reducing the comprehensiveness of coverage and inducing lower utilization of services."

You can read more about that in the update of this post.

But one of the more eye-opening sections of the Commonwealth Fund report is where it breaks down the savings under each of the proposals for individuals/families based on income level.

Here's the chart for the Senator Wyden's Healthy Americans Act:

Here's the chart for the Rep. Stark's AmeriCare plan:

Here's the chart for President Bush's Tax Reform Proposal:

The trends there are unmistakable. And they're also consciously crafted by the sponsors of each proposal.

And don't forget the Healthy Americans Act and AmeriCare proposals would insure roughly five times the number of people as the Bush tax plan, and do so using comprehensive insurance rather than scaled down coverage.

These proposals aren't going anywhere, at least in the near future, but it is useful to look at where each puts its priorities for health care reform.

UPDATE: I should add that the Commonwealth Fund report is mostly a short term analysis. Long term prospects for each plan discussed are likely to be different.

The big long term problem I have with the Bush plan is that it provides incentives for the healthy to leave the insurance market. By doing so it concentrates the market risk on those less healthy individuals/families who remain, subsequently concentrating the cost on them. And the manner in which the tax deduction is indexed, over time a larger portion of people who remain in the insurance market -- i.e., the less healthy -- will see their taxes increase as annual premiums surpass the deduction cap.

As for AmeriCare, the short term savings come from reduced administrative costs associated with a single payer system. Whether these savings can be sustained over time by providing incentives for people -- and providers -- not to over-indulge in their comprehensive coverage is a big question.

It's my belief that the Wyden plan offers the most promise for short term and long term sustainability because it provides incentives for both remaining in the insurance market and being at least somewhat conscious of the health care choices that are made. How conscious, of course, is key to making sure spending is controlled into the forseeable future.

In a roundabout way, looking at the short term and long term propects of these federal plans really sheds light on the promise of the Wisconsin Health Plan. Not only does the WHP cover everyone and make sure the healthy remain in the market for risk pooling purposes, it also provides unquestionably strong financial incentives for people to be conscious of their health care spending without risking their health by encouraging them to bypass on preventative or emergency care.