Are We Heading toward Socialized Medicine?

Timely Analysis of Immediate Health Policy Issues April 2008 By: Stan Dorn and John Holahan

Summary: Amid a spirited campaign where health reform will be Market-oriented approaches proposed by President Bush a leading issue, some have charged that proposals to and some current and former Republican presidential restructure the nation’s health care system represent candidates would expand coverage by granting tax dangerous steps that would move the United States subsidies that people could use to buy insurance in the toward a government-run health care system and socialized individual market. But if tax subsidies are inadequate at low medicine. Similar rhetoric was heard last fall when levels of income and there is little or no improvement in President Bush vetoed reauthorization legislation for the the nongroup market’s pooling of risk, many low-income State Children’s Health Insurance Program (SCHIP) that households and people with health problems will face passed the House and Senate with bipartisan support. difficulties obtaining essential care – exactly the problems This paper examines that rhetoric and, in short, finds no of poor access and quality that supposedly characterize evidence to support it. public-sector coverage.

Strictly speaking, socialized medicine involves government No reform proposal under serious consideration would financing and direct provision of health care services, result in either a purely government-run system or a free as with the traditional British system. Neither SCHIP market that offers entirely unregulated and unsubsidized reauthorization nor proposals from the major Democratic health care. All serious proposals are on a continuum presidential candidates fit this description. While these between these extremes. For example, market-oriented policies would provide additional public resources to plans retain significant public-sector responsibilities for help the uninsured pay for coverage and would increase Medicaid, Medicare, medical research, product safety, etc. the pooling of risks in insurance markets, none would Similarly, proposals to replace the current tax deductibility overturn the dominant role of private insurance and of employer coverage with refundable tax credits would private providers in America’s health care system. However, redistribute a substantial amount of income from higher- some single-payer proposals (like former candidate Dennis to lower-income households – one of the major ways the Kucinich’s plan) would limit the ability of individuals to government affects Americans’ lives. obtain, and providers to render, care outside the public system – potentially giving the federal government The core issue in health reform is not specifically the role sufficient power to constitute the functional equivalent of government, but what policies yield the best possible of socialized medicine. consequences for the American public. Such results include the number of people with health coverage, individuals’ Some suggest that almost any expanded role for access to quality care, curbing cost growth, and consumers’ government in health care inevitably leads to strict limits ability to make choices about their health care and health on consumer choice, rationing, delays, and poor quality coverage. Inaccurate rhetoric about socialized medicine — all concerns traditionally associated with socialized and government-run health care is a distraction from these medicine. These concerns, however, do not apply to the much more fundamental concerns. 2007 SCHIP proposals or to plans advanced by leading Democratic candidates, which would offer workers more choices among competing, private health plans than they currently receive from their employers. Introduction Finally, this paper describes proposals Medicare program belong to the public- from a number of current and former contract category. Some would regard Last year, Bush administration officials presidential candidates because they these systems as comprising “socialized claimed that congressional proposals to illustrate a range of policy options medicine” since the public sector reauthorize the State Children’s Health and arguments that frequently arise organizes and finances much of the Insurance Program (SCHIP) could lead in discussing health care issues. The demand side of the market even though, to an eventual government takeover purpose of this analysis is to shed by comparison to the first model, the of American health care. Before he light on these recurring health reform government plays much less of a role vetoed the SCHIP legislation, President concepts and their relationship to the in the actual provision of services. Bush characterized it as a “step toward government’s role in the health care the goal of government-run health system, not to explore the advantages ➤ In the public-contract/private care for every American.”1 Presidential or disadvantages of any particular insurer model, public payers contract candidates, including former Republican candidate’s proposal. with private insurance companies to candidates Rudolph Giuliani and Mitt deliver care. This model—the only Romney, likewise labeled the health What Is “Government-Run component of our classification system care plans from current and former Health Care” and that is not directly borrowed from Democratic presidential contenders as “Socialized Medicine?” OECD—differs from the previous “socialized medicine.”2 Similar rhetoric category in important ways. When programs like Medicare, Medicaid, was used to defeat national health care To define these terms, this section 3 and SCHIP deliver care through private reform proposals in the 1990s and, divides health coverage systems into insurers, decisions about covered with less success, to argue against the four categories, a modification of the 4 services, provider networks, and creation of Medicare in the 1960s.* approach used by the Organisation provider reimbursement are made both for Economic Co-operation and by public payers and by the contracting This paper examines these claims. We Development (OECD).6 The four private insurers. Private insurers bear begin by exploring the meaning of categories move from greatest to least some of the risk that public agencies such terms as “government-run health government involvement: care”5 and “socialized medicine.” We then assume in the public contracting model, and competition among insurers, not analyze SCHIP reauthorization legislation, ➤ “The public-integrated model just providers, is possible. On the other broader national reform proposals combines on-budget financing of health- hand, coverage in this category differs from current and former Democratic care provision with hospital providers from the next model in that a public presidential candidates (some of which that are part of the government sector. agency, not a private employer or resemble bipartisan reforms enacted These systems, which merge the individual, purchases the insurance. in Massachusetts), and more market- insurance and provision functions, oriented reform approaches from the are organized and operated like any ➤ “A private insurance/provider Bush administration and Republican government department.” The best model uses private insurance combined presidential candidates, including example of this model is probably the with private (often for-profit) providers.” some who are no longer running. We United Kingdom, though recent reforms The private employer-based system in conclude that recent rhetoric is neither have privatized part of the system. the United States falls in this category, as accurate nor helpful in clarifying the Outside the health care arena, another would most American reform proposals most important issues involved in health example of a purely public model for that rely on changes in tax incentives. reform. The real question facing the service delivery is the U.S. system of Businesses and individuals contract public and policy-makers is determining public K–12 education, in which state directly with insurance plans, albeit not the health policy with the strongest and local governments provide free with considerable government subsidies or weakest role for government, but the education that is tax financed and provided through the tax code. policy that yields the best results for the delivered by public employees. American people in terms of coverage, The first OECD category of “publicly quality, choice, and cost. ➤ “In the public-contract model, integrated” health care involves public payers contract with private 4 government-run systems that provide * While we focus on the claims made by some conservatives, health-care providers. The payers can be rhetoric on the other side can be equally inflammatory and citizens with health care through public exaggerated. For example, during the SCHIP debate, comments either a state agency or social security from Democratic lawmakers included, “How many children will agencies, employees, or contractors, be dead” if the president prevents SCHIP reauthorization, and “the funds.” In many public-contract systems, financed with taxpayer dollars. Axis of Evil isn’t just in the Middle East, it’s just down here on the private hospitals and clinics are Pennsylvania Avenue’’ (Jeff Emanuel, “The SCHIP Wars: Democrats The deployment of those funds, the Are Fighting Dirty, but Are Not Winning in the Process,” American run on a for-profit or nonprofit basis. Spectator, October 29, 2007). development of health care infrastructure, Independent private contractors and the provision of health care services generally supply ambulatory care. Most are all controlled by government policy. European countries, Canada, and the U.S. Only this model fully and unambiguously

Timely Analysis of Immediate Health Policy Issues 2 meets the test of “socialized medicine,” While only the first model involves involve no such ambiguity, as is made where government, through publicly true socialism, which has as its “main clear below. employed providers, actually furnishes institutional cornerstone” the “social health care, going well beyond financing or state ownership of the means of The U.S. Health Care and regulation. production,”11 the second model System Today can include such a strong role for Postwar Britain illustrates the broader government that the model becomes Our country’s health care system context for this model. When the the functional equivalent of socialized reflects a long history of multiple, Labour government took control of medicine. If the government controls incremental changes, in both the coal mines, gas, electricity, rail, iron and enough of the demand side of the public and private sectors. The result steel, and the Bank of England, part of market that providers have little or no is tremendous complexity. Different this systemic effort included creating choice but to operate within the public portions of the country’s health care 7 the National Health Service (NHS). system, the government could exert system thus embody each of the four The NHS classically financed and such influence in terms of payment coverage models described above: delivered care wholly through publicly rates, covered services, quality of care owned hospitals and publicly employed standards, and the like that the system ➤ Publicly integrated systems play physicians and other personnel. In would essentially be government-run. a minor role in American health care, recent years, British health care has That outcome would be reinforced limited to the VA (described above), become somewhat more privatized by a dominant public-sector role in state- and county-run inpatient and 8 for some services. determining the nature of permitted residential programs treating mental capital investments in health care. This illness and substance abuse, and a Closer to home, another example approach can certainly be defended number of county-administered systems of government-run health care is the as promoting equity and reducing of indigent care.12 Veterans Administration (VA), which the rate of growth in health care provides subsidized care to veterans spending, but any objective observer ➤ The public contract model is used who qualify. Services are typically would characterize such a system as with traditional, fee-for-service Medicare provided by physicians and nurses government-run. and Medicaid. This includes the majority employed by the VA, in facilities of Medicare beneficiaries. In terms of owned and operated by the VA. The On the other hand, if the government Medicaid, this model includes a minority VA determines the scope of covered buys care from providers on behalf of a of beneficiaries but a majority of services, the health care information significant but not dominant segment of spending, since the elderly and disabled technology that providers use, and the the population, it would amass significant are disproportionately likely to be access and quality standards that guide buying power and could thus reshape enrolled in fee-for-service coverage. This system management. Yet in some ways the health care system. The direct model also includes less than one in five even the VA does not represent a pure results of government purchasing are children enrolled in SCHIP.13 government-run system. If necessary sometimes augmented by “ripple effects,” services, such as emergency care, are through which private insurers emulate ➤ The public contract/private insurer unavailable in the VA system, the VA will public-sector practices. But so long as model applies to Medicare Advantage 9 pay for services elsewhere. Moreover, individuals and families retain meaningful and Medicare Part D, both of which the VA does not monopolize veterans’ access to private insurance and private- involve the Centers for Medicare & health care; many eligible veterans can sector providers have ample opportunity Medicaid Services (CMS) contracting and do use other sources of coverage to market their services outside the with insurers to deliver Medicare and care. public system, the second model cannot benefits. It also applies to most of fairly be characterized as a socialized or Medicaid for low-income families The VA is a highly unusual exception government-controlled system. and most of SCHIP. to America’s overall health care system, which relies heavily on private health Some proposals that embody the ➤ The private insurer/private provider care providers. Among U.S. hospitals, public-contract model may leave model predominates in American health 77 percent are privately owned and room for ambiguity and debate in care. It includes employer-sponsored operated, and over 90 percent of deciding whether the government’s insurance and nongroup plans, which physicians work in the private sector, role is so central that the health care together cover 68 percent of all the usually in relatively small solo or group system would no longer be pluralistic, country’s residents.14 practices.10 Terminating the private with significant decision making character of health care providers responsibilities shared among a range From a different perspective, the and shifting to a publicly integrated, of public and private actors. However, government’s role in U.S. health care “government run” system of health care the proposals advanced in the SCHIP can be viewed in terms of demand would represent a dramatic change. debate and the presidential campaign (helping pay for coverage or care),

Timely Analysis of Immediate Health Policy Issues 3 supply (helping finance the capacity are available, these entities controlled proposals change this basic structure; to deliver health care services), and approximately $490 billion in assets the exception would be some single- regulation. On the demand side, most and obtained over $500 billion in gross payer systems in which individuals health spending is private, but much receipts,23 suggesting a substantial value have little practical ability to purchase spending is subsidized by government. to their tax subsidies. insurance outside of the government- Federal income-tax subsidies for the run insurance system and providers purchase of health coverage and health Outside the hospital system, lack any significant residual private care, including the exclusion government spending and tax subsidies market. of employer health insurance payments finance the development of other from taxable income, are projected aspects of the country’s health care Pending Proposals to reach $186 billion in FY 2008.15 supply. For example, for SCHIP and National The employer exclusion helps finance Reforms health coverage received by 58 percent ➤ Federal resources support medical of all Americans and 61 percent of the education and student loans, helping This section examines two questions: nonelderly.16 educate virtually every graduate of an whether proposals advanced in the American medical school, residency, or context of SCHIP reauthorization In terms of direct spending, federal internship.24 and the contest for the Democratic subsidies for health care and coverage, presidential nomination are accurately provided through Medicare, Medicaid, ➤ The National Institutes for Health described as leading to socialized and other programs, are projected (NIH) and other federal agencies medicine or government-run health to equal $829 billion in FY 2008.17 finance a significant amount of basic care, and whether such proposals create Medicaid and Medicare cover 42.7 scientific research that ultimately the problems of choice and quality of million18 and 42.4 million people,19 translates into new pharmaceuticals care that are at the heart of concerns respectively, with some poor seniors and medical technologies.25 NIH alone about socialized medicine. and people with disabilities receiving spends more than $28 billion a year to coverage from both programs. The reach this goal.26 As a preliminary matter, by helping the government also provides publicly uninsured purchase health insurance, funded health care to almost 9 million In addition to financing a significant each proposal would increase the current and former federal employees portion of health care demand amount of publicly funded health care and dependents through the Federal and subsidizing the development subsidies. The same is true of more Employees Health Benefits Program; of health care supply, federal and market-oriented proposals to expand 3.7 million veterans who receive state governments extensively coverage by giving the uninsured fully health care through the VA;21 and the regulate the provision of health care refundable federal income tax credits. country’s active-duty soldiers and services by private entities. Those However, such increases in the total their dependents. Only 5 percent of regulations include rules that bar amount of federal subsidies for health the insured population in the United employer-sponsored insurance from coverage do not seem to us to represent States does not receive some kind of discriminating against older and steps on a road to socialized medicine as government subsidy, either directly chronically ill employees in providing long as the private sector continues to or through a tax benefit.22 These benefits and charging individual play a clearly dominant role in providing government expenditures involve premiums;27 that forbid insurers from health care, as explained below. sizeable transfers of income, generally denying coverage for maternity care from higher-income to lower-income based on hospital stays that exceed SCHIP Reauthorization. In vetoing individuals, particularly in the case of certain limits;28 that require insurers the Children’s Health Insurance Program the general revenues used to finance to meet solvency requirements, so Reauthorization Act (CHIPRA), President Medicare and Medicaid. consumers who pay premiums will Bush argued that the legislation was “an receive promised services;29 that incremental step” toward the “goal of On the supply side, the government prohibit fraudulent and deceitful government-run health care for every plays a major role supporting the advertising by health care providers American.”32 Others likewise described nation’s health care infrastructure. and health plans;30 that require the legislation as a “chip off the old, Large numbers of hospitals and health physicians and other health care socialized-medicine block.”33 systems are exempt from federal providers to be licensed; and that income taxes and, in most of the safeguard medical privacy.31 The basic claim seems to be that country, state and local income, sales, CHIPRA would establish a beachhead of and property taxes; in exchange, they In short, government supports many socialized medicine for children, which are expected to provide community aspects of the current health care could eventually expand to engulf benefits, such as indigent care. In 2001, system but with few exceptions the country’s health care system as a the most recent year for which data does not “run” it. Nor would pending

Timely Analysis of Immediate Health Policy Issues 4 President’s Proposal* SCHIP

➤ Subsidies to help low-income Figure 1. Children Enrolled in SCHIP, by Type of Health Coverage: 2005 consumers obtain coverage, through either Medicaid, SCHIP, or the health 16% insurance exchange or purchasing pool. Fee-for-service care How these subsidies are financed varies considerably.

14% These proposals would keep the Primary care case country’s health care system anchored management predominantly within the current private insurance/private provider 70% model, although the government would Private managed care plans play an enhanced role in organizing the market and provide additional financing. However, the proposals that allow Source: McInerney 2007. public-sector plans to compete with Note: Primary care case management systems assign children to primary care providers, who serve as gatekeepers private coverage would incorporate managing their overall care. elements of the intermediate “public contract” model, through which a whole. That claim is inaccurate, since Edwards, Obama, and Richardson, this government agency contracts directly SCHIP provides most children with health reform strategy has the following with private providers. None of these coverage through private health plans34 key elements: proposals would shift the country into and care from private physicians35 “government-run health care,” or the (Figure 1). CHIPRA thus fits squarely ➤ A new option—but not a “public integrated model,” in OECD within the “public contracting/private requirement—for consumers and parlance. In fact, they would all increase insurer” model that cannot reasonably employers to obtain coverage through the amount of coverage provided by be characterized as government-run or a health insurance exchange offering private insurers. socialized medicine. competing private plans that include some diversity in out-of-pocket cost- “Medicare for All” Proposals. SCHIP reauthorization would not sharing, covered benefits, provider Qualitatively different proposals create a dominant role for the federal networks, and access to out-of-network have been advanced by former government in the country’s overall services. Most individuals who select presidential candidate Dennis Kucinich health care system, or even children’s coverage that is more costly would pay and a number of federal legislators, health care. Within SCHIP, decision- some or all of the resulting increase including Senator Kennedy (D-MA) and making authority is shared between in premiums. The proposals forbid Representatives Stark (D-CA), Dingell the federal government, states (which or limit variation of premiums and (D-MI), and Conyers (D-MI). These possess considerable flexibility in covered services based on individual “Medicare for all” or “single-payer” structuring benefits, cost-sharing, characteristics like health status, age, proposals would expand Medicare by health care delivery, eligibility rules, gender, etc. Proposals differ in terms covering nonelderly Americans and etc.), and private insurers. Moreover, of precisely which consumers and adding benefits. Most proposals would CHIPRA would result in a total SCHIP employers may use this option and fund coverage through an increased enrollment of 7.4 million children in whether a public-sector plan competes payroll tax. Some of these proposals 2012, according to the Congressional for business with purely private plans. would permit employers to opt out of Budget Office,36 or less than one in 10 the new “Medicare for all” plan. Some children.37 The vast majority of pediatric ➤ In many (but not all) proposals, would allow individuals to keep private coverage and care would remain private. a requirement for some or all residents insurance but opt into Medicare for all to purchase insurance. if they deemed themselves better off Health Insurance Exchange under the latter arrangement. Proposals. Along similar lines, health ➤ A requirement for some or reform proposals from most Democratic all employers to help fund health Even this more expansive approach to presidential candidates resemble the coverage, by either paying a tax or reform would not interfere with the policy enacted in Massachusetts as contributing to the cost of their largely private character of the country’s a bipartisan compromise between a employees’ coverage. Proposals vary in health care providers. Accordingly, largely Democratic legislature and a terms of the size of company to which “Medicare for all” proposals would Republican governor. Embodied in this requirement applies and the level not involve “government-run health various forms within proposals made by of contribution required from each care” along the lines of the “public current and former candidates Clinton, employer. integrated model” described by OECD.

Timely Analysis of Immediate Health Policy Issues 5 Such proposals would, however, shift concerns involving consumer choice As a starting point for this analysis, the country’s basic coverage system and quality of care. Several fundamental consumer choice is far from unlimited into a “public contract” model like that fears are at the heart of the opposition today. Just 49 percent of American used in Canada, a number of European to an increased government role in workers have employers who offer countries, and the current Medicare the country’s health care system. First, health coverage with a choice of more program in the United States. some believe that a strengthened public than one plan.40 Low-income workers sector could take health care choices are even less likely to have health Some single-payer proposals would away from consumers. In the words of coverage options at work; in firms go much further; an example is that a recent Cato Institute report, “a patient offering coverage, the percentage of advanced by Congressman Kucinich should always be able to spend his employees with a choice of more than (HR 676). A new federal program would own money on the health care services one plan falls from 59 percent among be the exclusive source of coverage he desires. Yet that freedom is often those earning more than $60,000 to for a broad range of services, including threatened or denied when government 37 percent for workers earning less primary care and prevention, inpatient tries to provide universal health than $20,000.41 care, outpatient care, emergency care, insurance coverage…”38 Second, some prescription drugs, durable medical believe that public-sector involvement By contrast, with SCHIP, most low- equipment, long-term care, mental in health care inevitably dilutes income families are offered multiple health services, dental services (other health care quality. As President Bush choices from competing private than cosmetic dentistry), substance explained to justify his veto of SCHIP plans.42 Within each state, all SCHIP abuse treatment, chiropractic care, legislation, “government-run health plans offer a uniform set of benefits. basic vision care, and hearing services. care” leads to “rationing, inefficiency, Nevertheless, enrollees can “vote with Private insurance would be forbidden and long waiting lines.”39 their feet” if they are unhappy with from offering services in the areas their insurer—a choice not available covered by the national plan. For-profit In analyzing the merits of particular to most low-income recipients of medical care would be forbidden, proposals, these underlying concerns employer-based coverage. CHIPRA and profit-making health care entities about choice and quality can and should would further expand those options. would be required to convert to be evaluated on their own terms, as we It would increase states’ capacity charitable organizations. Government do in the following sections. to offer families the choice of using authorities would make decisions SCHIP subsidies to enroll in employer- about capital investment in health Pending Proposals and Consumer sponsored family coverage rather than care infrastructure, promulgate quality Choice. In this section, we argue the state-contracting, private plans serving standards, define a national formulary following: children only. for prescription medication, and set reimbursement levels. Providers ➤ SCHIP reauthorization proposals Going farther along these general accepting reimbursement from the would expand consumer choice; lines, proposals to establish health public program could not accept insurance exchanges offering diverse, any payments from patients. Put ➤ National health reforms built competing health plans represent a simply, individuals would have little around health insurance exchanges significant expansion of consumers’ or no choice over their insurance would expand choices for most health plan choices. In the context of arrangements and providers would consumers, though some would lose the Massachusetts health insurance have very few options to provide care the option to remain uninsured, if exchange, Heritage Foundation analysts outside of the government-financed the proposal contains an individual agree that this policy mechanism system. While health care providers mandate, as many do; represents an “approach to making would nominally remain private, the consumer choice and ownership of government’s authority would be ➤ Proposals to enroll all Americans in health insurance the fundamental so all-encompassing that the system an expanded Medicare program would organizing principle of a state’s health would be the functional equivalent of offer significant consumer choice of system.”43 The same basic mechanism socialized medicine. health care providers and, in some would give millions of American versions, choice among health plans, consumers a broad range of private Choice, Access, and though the option to retain current health insurance choices under pending Quality of Care coverage would be foreclosed; and national policy proposals.

While we regard as overstated the ➤ All of these proposals would On the other hand, many Massachusetts- claim that any but the final proposal significantly expand health care choices type proposals require some or all described above moves towards for uninsured consumers who gain consumers to purchase coverage. “socialized medicine,” many think health coverage. Likewise, some or all employers would otherwise and have real fears and be required to make contributions

Timely Analysis of Immediate Health Policy Issues 6 59% 60 President’s Proposal* SCHIP 50 59% 60 42% President’s Proposal* 40 SCHIP 50 59% 6030 42% 40 32% President’s Proposal* SCHIP26% 5020 30 42% 32% 10 40 26% 20 2% 0% <1% 1% 300 10 150% 200% 32%250% 300% 26% 2% 20 0% <1% 1% 0 150% 200% 250% 300% to cover health care costs. These 10 100.000000 mandates would not affect the Figure 2. Consumer Satisfaction Ratings, by Source of Coverage, 2% majority of individuals or firms, since Adults Age 50–70:0% 2004 <1% 1% most individuals receive coverage 0 44 150% 200% 250% Medicare 300% 83.333333 today and most companies offer it 60% 58% 56% Employer coverage 100.000000 (particularly among firms with 25 or 52% 45 66.666667 more workers). However, uninsured 45% Individual insurance individuals and companies that do not 41% Medicare 83.333333 60% 35% cover their workers today could be 58% Employer coverage 50.000000 56% 28% 100.000000 compelled to make significant new 52% 27% 66.666667 45% 22% Individual insurance20% payments to the government, depending 41% 33.333333 12% Medicare35% 83.333333 on the proposal’s details. In sum, this set 60% 50.000000 58% 56% 27% Employer28% coverage of proposals expands health coverage 52% 16.666667 22% 20% 66.666667 options for most consumers but takes 45% Individual insurance 33.333333 away the choice to remain uninsured "Very satisfied"41% "Very confident" "Excellent" insurance12% "Very good" 0.000000 and removes from employers the option with health care in getting the best coverage insurance35% coverage 50.000000 medical care 16.666667 to contribute nothing to their workers’ 27% 28% 22% 20% 33.333333 health insurance costs. Source:"V erCommonwealthy satisfied" Fund Survey"V ofer Oldery confident" Adults, 2004. "Excellent" insurance "Very good" 0.000000 with health care in getting the best coverage12% insurance coverage 60 “Medicare for all” proposals retain medical care 16.666667 consumer choice at several levels. First, if 50 Medicare keeps its current configuration Figure"Very 3. satisfied" Percentage "V Reportingery confident" Various"Excellent" ProblemsMedicare insurance with Care,"Very good" Medicare with health care in getting the best coverage insurance coverage 0.000000 60 (as described above), consumers can Enrollees vs. Privately Insured Adults Age 55–64:Privately 2003 insured adults age 55-64 17.4% medical care 40 choose between private managed care 50 plans and “traditional Medicare,” through 9.9% Medicare which the federal government directly 5.8% 4.6% 6030 17.4% 3.7% Privately insured3.3% adults age 55-64 40 pays health care providers. Second, the 20 traditional Medicare program offers a 9.9% 50 substantial choice of providers, greater Delayed or did not get Dissatisfied with5.8% choiceMedicare Dissatisfied with 30 care when needed of primar3.7%y care physician choice3.3% of specialist4.6% than that offered by many (but not all) 17.4% Privately insured adults age 55-64 4010 private health plans. For example, 98 20 and 97 percent of physicians accept Delayed9.9% or did not get Dissatisfied with choice Dissatisfied with 0 new patients covered by Medicare and care when needed of primary care5.8% physician choice of specialist 30 3.7% 3.3% 4.6% 10 non-HMO private insurance, respectively, Source: Trude and Ginsburg 2005. Medicare 20 compared with 86 percent who accept 0 new patients covered by private Delayed or did not get Dissatisfied with choicePrivately insuredDissatisfied adults withage 55-64 HMOs.46 care when needed of primary care physician choice of specialist 60 17.8 10 15.0 Medicare 14.8 Figure 4.12.4 Average Number of Days Waiting for Various Types of Care, In some ways, this choice among health Privately insured adults age 55-64 50 Medicare Enrollees vs. Privately Insured Adults Age 55–64: 2003 0 care providers may be more important 6.2 5.0 60 than a choice among health insurance 17.8 15.0 14.8 40 plans, since consumer satisfaction 12.4 Medicare 50 with health care is much more highly Check-ups Visits6.2 for specific illness,Privately insuredVisits adultsfor specific age 55-64 30 correlated with the former than the primary care provider5.0 s illness, specialists 60 47 17.8 40 latter. On the other hand, under 15.0 14.8 “Medicare for all” proposals, most 12.4 20 Check-ups Visits for specific illness, Visits for specific 50 consumers would be unable to retain primar6.2y care provider5.0 s illness, specialists 30 their current health plan. This loss 4010 of choice could be important. More 20 than half of Americans with health Check-ups Visits for specific illness, Visits for specific 300 coverage (55 percent) report that they primary care providers illness, specialists 10 are extremely satisfied or very satisfied 48 Source: Trude and Ginsburg 2005. 20 with their current health plan. Of 0 course, the version of single-payer health care espoused by some (e.g., 10 Congressman Kucinich) would more by forbidding the private purchase of Finally, all of these policy proposals fundamentally limit consumer choice most health insurance. would significantly expand health 0 Timely Analysis of Immediate Health Policy Issues 7 care choices for the uninsured by In terms of Medicare, consumer provided by private coverage,60 thanks providing them with health coverage. satisfaction ratings generally exceed to reimbursement rates substantially The uninsured frequently are unable to those for privately insured older adults more generous than Medicaid’s. This access needed care because of cost,49 (Figure 2).55 Average waiting times to difference in financial support and and they have many fewer choices of see physicians are now comparable for access to care between Medicare and health care providers than are available Medicare beneficiaries and the privately Medicaid may ultimately result from two to people with any type of insurance insured near-elderly, with Medicare factors: the federal government runs coverage.50 beneficiaries less likely to report delays the former and states essentially run the or denials of necessary care (Figures 3 latter; and Medicare’s constituency is a Pending Proposals and Quality and 4).56 broader segment of the population in and Access. The kind of health care terms of income distribution. access and quality problems that Three final comments on this issue are the president described as typifying important. First, as the above charts Third, concerns over choice, quality, and publicly run health care do not apply suggest, much evidence casts doubt access are fair to raise with proposals to SCHIP or the main national health on the belief that public involvement in which the government is the sole reforms proposed in the presidential in health care inevitably worsens the buyer of an overwhelming share of the race. When children enroll in SCHIP, quality of care and access to necessary country’s health care services, leaving numerous studies document significant services. In fact, the VA, one of the neither individuals nor providers improvements in access to care, country’s only health care systems that is much real choice beyond participating relative to being uninsured.51 Despite entirely publicly administered, has been in the government-financed system. low reimbursement rates that limit a pioneer in the use of electronic health Such proposals achieve equity, since provider participation and access to records and the successful management everyone has the same coverage, and care, much research suggests that of chronic conditions, outperforming they offer the ability to control the access to primary care for children most private coverage on a range of key rate of growth in expenditure. But in public programs like SCHIP and quality indicators.57 Moreover, although this ability to control spending can Medicaid is generally comparable to the American health care system also have adverse effects on quality or, in some cases, better than that in provides insured residents with excellent and access. It can lead to provider privately funded insurance.52 One access to the latest medical technology dissatisfaction, which could readily possible explanation is that, typically, and is capable of rapid change to address translate into consumer dissatisfaction. benefits are more generous and out-of- consumers’ changing preferences,58 With centralized rather than dispersed pocket costs are more limited in public other countries with stronger public- responsibility over health care policy, programs serving low-income children sector roles outperform the United mistaken decisions can have much more than with private insurance developed States on numerous quality measures, significant unforeseen consequences. to meet the needs of adult workers. The including waiting times for doctor visits These results are a function of the exception may be access to specialty to treat medical problems. On the other extent of government control, the lack care and the latest technologies, hand, Americans are more likely than of realistic alternative options, and which may be more affected by low the residents of many other developed budget pressures. They are unlikely reimbursement rates.53 countries to receive preventive care, to to materialize if the government- receive recommended care for certain administered health plan operates Moreover, observers who believe chronic conditions, and to have only as one of many competing choices that quality of care and access short waits for diagnostic tests, specialty offered to consumers, permitting are inherently better with private care, and elective surgery.59 providers to furnish care in public insurance than publicly provided and private insurance systems. Such health care need to recognize that Second, quality and access problems a pluralistic approach, with widely private managed-care plans deliver encountered by publicly funded dispersed responsibility for health care most SCHIP services and have financial programs have resulted primarily from decisions and a significant role for incentives to provide high-quality care, limits on financial support reflected in consumer choice and market pressures, both to maintain their contracts with low reimbursement rates for Medicaid is essentially the model that leading state health agencies and to attract and, to a somewhat lesser extent, Democratic contenders have espoused. enrollees. Such market mechanisms SCHIP. This is a function of funding for improving quality are even more levels, not public-sector involvement, Market-Oriented Proposals powerful in the case of reforms based however, and reflect the unwillingness on health insurance exchanges, which of state legislatures to commit the Other proposals pursue a more market- are structured to facilitate competition resources necessary to adequately pay based approach, giving people tax among insurers based on quality, physicians and hospitals. Even though subsidies they can use to purchase among other factors.54 it is a public program, Medicare has coverage in the individual market. secured better access to care than that These approaches seek to provide a

Timely Analysis of Immediate Health Policy Issues 8 range of health coverage choices, using care and health coverage; supporting This would be done by replacing the market forces rather than government health care supply by financing current open-ended tax exclusion regulations to provide the kind of care the development of health services of employer coverage with either that consumers want, at an affordable and health care infrastructure; and a fixed standard deduction or a price. In this section, we argue the regulating the services and coverage refundable tax credit usable in the following: that may be bought and sold. The Bush individual or employer market. The administration would also maintain current exclusion is highly regressive ➤ Proponents of these market- (and has expanded funding for) an with greater tax benefits at the high oriented proposals agree that a strong extensive system of community health end of the income distribution than public-sector role is appropriate if it centers, a delivery system with a at the lower end.63 A fixed standard accomplishes important objectives. major government role in financing, deduction is also regressive. While That is why these proposals retain most administration, and regulation. increasing incentives to economize functions served by government today on health care, it would benefit those and, in some cases, embrace aggressive Nonetheless, proposals from the in the highest tax brackets and do new government interventions. Bush administration and market- little to help those in lower income oriented presidential candidates are tax brackets to purchase coverage. ➤ Many market-oriented proposals fundamentally different than the But the Bush administration has more would create problems of quality and approaches described in the previous recently made it clear that it will access to care for some people— section of this paper. Rather than also support the replacement of the the very problems some argue are having the government contract with tax deduction with a refundable tax characteristic of publicly run systems. diverse plans and letting individuals credit.64 A fixed dollar, fully refundable choose among them, many of these income tax credit would be equally The Bush administration and current proposals would give people additional valuable to all individuals. This could and former Republican candidates resources through tax deductions or result in more people being willing for president have proposed several tax credits and allow them to purchase to take up coverage relative to the significant changes in tax policy coverage “that best suits their needs” standard deduction. But it would intended to expand coverage while in a relatively unfettered individual also mean, depending on the credit’s achieving other policy goals. These insurance market. generosity, that substantial amounts changes have included refundable, of income would shift from higher- advanceable tax credits for low- The tax proposals that have granted income to lower-income households. income, uninsured workers that were tax-preferred status to high-deductible While market oriented, the proposal proposed during the president’s first health plans and HSAs have the intent thus retains a key role for government term and that Governor Huckabee of shifting much health care spending redistributing income via the tax code. and Senator McCain support;61 out of third-party payment and into several rounds of tax subsidies direct agreements between consumers Such tax proposals could have other for high-deductible coverage and and health care providers, with the consequences as well, largely because Health Savings Accounts (HSAs); goals of increasing market competition of their effects on the pooling of and proposals from both the Bush among providers and restraining health risk. Letting people use their own administration, Senator McCain, care spending. These tax changes were money coupled with tax subsidies to and Mayor Giuliani to replace the introduced to counter the incentive purchase coverage in the individual current tax exclusion of employer- inherent in the employer exclusion as market would likely lead to a greater sponsored insurance with either currently structured, which favors the range of benefit package offerings. This a fixed deduction or a refundable, purchase of comprehensive coverage. would likely increase the amount of advanceable tax credit for health The objective was to get individuals to risk segmentation. That is, those who coverage obtained from employers choose less comprehensive coverage do not want a particular benefit (e.g., or the individual market. and thus reduce the incentives to prescription drugs) can choose a plan overuse health services, thereby without it. But healthy people would While many of these proposals have lowering health care spending and be more likely to choose such a plan, been couched in terms of increasing making coverage more affordable. not those with chronic illnesses. There the role played by market mechanisms would be less pooling of risk—that and consumer choice, none would Also using federal tax policy to is, people would self-insure for the make substantial reductions62 to galvanize significant changes in the benefits that are not covered. The same the government’s current role in country’s health care system, proposals argument applies to the elimination the country’s health care system. As by the Bush administration and of mandated benefits; there would explained above, this role involves Mayor Giuliani would shift millions of be no pooling of risk for benefits supporting health care demand by Americans from employer-sponsored that disappear from coverage when subsidizing the purchase of health insurance to the individual market. mandates are repealed.

Timely Analysis of Immediate Health Policy Issues 9 There is also generally little insurance they involve inadequate low-income private providers while increasing regulation proposed in these types subsidies and minimal pooling of risk. consumers’ freedom of choice and of market proposals. In fact, the Bush access to care. administration and current and former Conclusion Republican candidates Giuliani and By contrast, single-payer plans can McCain propose to let individuals buy In this paper, we have argued that involve such a major expansion of the individual insurance sold across state there are four basic models for health government’s role that they would lines, thereby undermining strong coverage, which include considerable become the functional equivalent of regulatory regimes that exist in a variation. At one extreme is the socialized medicine. However, federal minority of states. A largely unregulated public integrated model, where the policy-makers are unlikely to consider individual market can make it difficult government finances, manages, and seriously such proposals, unlike the for individuals with health conditions controls both the demand and supply plans advanced by more prominent to obtain coverage or let them obtain it side of the market. The other extreme Democratic presidential aspirants and only at a very high premium. It would envisions private insurance, loosely the SCHIP reauthorization legislation allow those in relatively good health to regulated, combined with tax subsidies approved in Congress by wide find plans that are much less expensive. helping lower-income people purchase bipartisan margins. This occurs not because of increased coverage in the individual market. The efficiency but because there is less debate in this country is generally not More market-oriented proposals pooling of risk. about the former and only in some by President Bush and current and circles about the latter. Most proposals former Republican candidates for High deductible plans and health involve a mixture of public- and private- president would use tax subsidies savings accounts have similar effects. sector responsibilities. The government to give more Americans access to Individuals essentially self-finance the would expand its role in both financing individual coverage. Depending cost of care below the deductibles and, under some proposals, contracting on their details, these proposals in plans. Individuals with health with private insurers and/or private may undermine access and quality, problems are more likely to incur providers for care, but clearly would not effectively imposing a form of health care costs that require paying “run” the health care system under most rationing, particularly for people these deductibles. Thus, there is reform proposals. with limited income or significant more self-financing of care by the health care needs. In addition, they sick than under plans that have more No serious reform proposal of which would do little to change the current comprehensive coverage. That is, we are aware would result in either reliance on Medicaid and Medicare those who have health conditions and a purely government-run system or a for the care of the poor, disabled, and face higher deductibles are asked to pure free market, with unregulated and elderly. And they would still use the perform the rationing function that unsubsidized health care. All serious power of government to redistribute comes with facing higher prices. proposals are on a continuum between a considerable amount of income and these extremes. The real challenge achieve other policy goals. Another issue with these tax proposals facing policy-makers is finding the relates to the adequacy of subsidies. right spot in the continuum—the The core issue in health reform is not The criticism of the public contracting combination of public- and private- specifically the role of government, but model (in the view of some, the basic sector roles and responsibilities what policies yield the best possible criticism of socialized medicine) is that yields the best outcome for the consequences for the American public. that rationing and poor quality of care American people. Such results include the number result. But if subsidies are inadequate of people with health coverage, to purchase decent coverage in the It is a significant exaggeration to consumers’ quality of and access to private market, or if purchase of claim that proposals like SCHIP necessary care, health care cost growth, coverage in the private market is reauthorization and plans advanced by and consumers’ ability to make choices difficult because of the presence of the leading Democratic presidential about their health care and health health conditions, then the inability candidates, current and former, coverage. Rhetoric about socialized to pay will lead to plans with more represent steps toward socialized medicine and government-run health limited benefits, more limited access, medicine. None of these approaches care is a distraction from these much and in the end poor quality of care. The would change the country’s heavy more fundamental concerns. job of rationing shifts from government reliance on private health care to private plans. Put differently, providers. In fact, both SCHIP and the problems of access and quality are not most widely endorsed reforms among inherent in government contracting Democratic presidential contenders and can just as easily occur with would preserve, if not expand, the more market-oriented approaches if central role of private insurance and

Timely Analysis of Immediate Health Policy Issues 10 Notes 15Joint Committee on Taxation, Estimates Insurance: Progress and Challenges in of Federal Tax Expenditures for Fiscal Years Implementing 1996 Federal Standards, May 2007-2011, September 24, 2007, authors’ 1999, GAO/HEHS-99-100. 1Office of the Press Secretary,Press Conference calculations, October 2007. by the President, September 20, 2007. Available 28D.E. Kuper, “Newborns’ and Mothers’ Health at http://www.whitehouse.gov/news/releases 16Urban Institute tabulations from the 2007 ASEC Protection Act: Putting the Brakes on Drive- /2007/09/20070920-2.html. (March Current Population Survey). through Deliveries.” Specialty Law Digest: Health Care Law. 1998;(227):9–31. 2“Giuliani Seeks to Transform U.S. Health Care 17Centers for Medicare & Medicaid Services, Coverage.” NY Times, August 1, 2007. Available Office of the Actuary,National Health 29M. Kofman and K. Pollitz, Health Insurance at http://www.nytimes.com/2007/08/01/us/ Expenditure Projections 2006-2016, February Regulation by States and the Federal politics/01giuliani.html?_r=2&oref=slogin 2007, available at http://www.cms.hhs.gov/ Government: A Review of Current Approaches &oref=slogin. J. Rovner, “Clinton Unveils NationalHealthExpendData/downloads/ and Proposals for Change, Health Policy New Health Care Plan.” All Things Considered, proj2006.pdf. Institute, Georgetown University, April 2006. September 17, 2007. Available at http://www.npr. Available at http://www-tc.pbs.org/now/politics/ org/templates/story/story.php?storyId=14478117. 18This estimate is for June 2006. J. Holahan, Healthinsurancereportfinalkofmanpollitz.pdf. M. Cohen, D. Rousseau, Why Did Medicaid 3R.E. Moffit, “A Guide to the Clinton Health Plan.” Spending and Enrollment Decline in 2006? 30See, e.g., Title 28, California Code of Regulations, The Heritage Foundation, November 19, 1993. A Detailed Look at Program Spending and Article 5, regulating health plan advertising. Available at http://www.heritage.org/Research/ Enrollment, 2000-2006, Urban Institute and HealthCare/tp00.cfm. the Kaiser Commission on Medicaid and the 3145 Code of Federal Regulations Part 6 (HIPAA Uninsured, October 2007. privacy regulations). 4L.R. Jacobs, “Institutions and Culture: Health Policy and Public Opinion in the U.S. and Britain.” 19Centers for Medicare & Medicaid Services, 32President’s Radio Address, October 6, 2007, World Politics, 44(2): 179-209, January 1992. Medicare Enrollment: National Trends: 1966 – available at http://www.whitehouse.gov/news/ 2005, available at http://www.cms.hhs.gov/ releases/2007/10/20071006.html. 5Office of the Press Secretary,President Bush MedicareEnRpts/Downloads/HISMI05.pdf. Visits Cleveland, Ohio July 10, 2007, available 33U.S. Rep. Steve King (R-IA), “SCHIP expansion: at http://www.whitehouse.gov/news/releases 20Employee Benefits Information and Advice: One step closer to socialized health care,” Des /2007/07/20070710-6.html. Federal Employee Health Benefits (FEHB) Moines Register, September 27, 2007. Program. Available at http://cpol.army.mil/ 6E. Docteur and H. Oxley, Health Care Systems: library/permiss/2222.html. 34In 2005, 70 percent of SCHIP children received Lessons from the Reform Experience (Paris: coverage through private managed care plans; OECD Health Working Papers, 2003). 21C.F. Liu, and M.L. Maciejewski., “Insurance 14 percent were enrolled in primary care case Coverage and Access to Care for Non-Elderly management programs; and 16 percent were 7J. Tomlinson, “Mr. Attlee’s Supply-Side Socialism,” Veterans,” Abstract Academic Health Services enrolled in fee-for-service coverage. McInerney, Economic History Review 46(1):1-22, 1993. Research, Health Policy Meeting Abstract, 2000: op cit. 17. Available at http://gateway.nlm.nih.gov/ 8See generally D. Yergin and J. Stanislaw, The MeetingAbstracts/102272524.html. 35A survey conducted by the American Academy Commanding Heights: The Battle Between of Pediatrics found that 89.2 percent and 88.6 Government and the Marketplace That Is 22Authors’ calculations from the 2007 ASEC. percent of pediatricians participated in Medicaid Remaking the Modern World (New York, NY: and SCHIP, respectively, with 67.2 percent and Simon & Schuster, 1998). 23Statement of The Honorable Mark Everson, 68.9 percent accepting, without restrictions, Commissioner, Internal Revenue Service, new patients covered by these programs. B.K. 9VA Frequently Asked Questions, accessed on Testimony Before the Full Committee of Yudkowsky, S.S. Tang, A. M. Siston, Pediatrician October 5, 2007. Available at http://www.va.gov/ the House Committee on Ways and Means, Participation in Medicaid/SCHIP, Survey of healtheligibility/Library/FAQs/ECFAQ.asp. Phillip May 26, 2005. Accessed October 10, 2007 at Fellows of the American Academy of Pediatrics, Longman, Best Care Anywhere, 2007. http://waysandmeans.house.gov/hearings.asp? 2000. Even for Medicaid coverage of both formmode=printfriendly&id=2710. children and adults, 69.5 percent of all physician 10The Commonwealth Fund, Framework for care (measured by dollars of reimbursement) a High Performance Health System for the 24G.F. Anderson, G.D. Greenberg, and B.O. Wynn, is provided in solo or group practices or HMOs, United States, October 2006, citing data from “Graduate Medical Education: The Policy entirely outside institutional settings such as the American Hospital Association for 2004 and Debate.” Annual Review of Public Health, 22: community health centers, academic medical from the American Medical Association for 2001; 35-47, May 2001. Available at http://arjournals. centers, and hospitals. P. Cunningham and J. May, Authors’ calculations from the US Department annualreviews.org/doi/full/10.1146/annurev. Medicaid Patients Increasingly Concentrated of Labor, Bureau of Labor Statistics, May 2006, publhealth.22.1.35?cookieSet=1. “Medical School Among Physicians, Center for Studying Health National Occupational Employment and Wage Tuition: Frequently Asked Questions.” American System Change, August 2006. Estimates, October 24, 2007. Medical Student Association. Accessed October 9, 2007 at http://www.amsa.org/meded/tuition_ 36Congressional Budget Office,Cost Estimate 11A. Bajt, “Property in Capital and in the Means of FAQ.cfm. for Children’s Health Insurance Program Production in Socialist Economies,” Journal of Reauthorization Act of 2007, October 24, 2007. Law and Economics, 11(1): 1-4, April 1968. 25“About NIH.” Available http:/www.nih.gov/ about/index.html. Directory of HHS Agencies, 37Authors’ calculations from Population 12In the latter systems, public hospitals and clinics U.S. Department of Health and Human Services. Projections Branch, U.S. Census Bureau, U.S. use county funds to serve poor residents who Available at http://www.hhs.gov/about/agencies. Interim Projections by Age, Sex, Race, and are ineligible for federally-funded coverage. Hispanic Origin, May 11, 2004. 26U.S. Office of Management and Budget, 13J. McInerney, SCHIP Delivery Systems, National “Department of Health and Human Services,” 38K.M. Brown, The Freedom to Spend Your Own Academy for State Health Policy, October 2007. Budget of the United States Government, Money on Medical Care: A Common Casualty Fiscal Year 2008, February 2007, available of Universal Coverage, Cato Institute Policy 14U.S. Census Bureau, Current Population Survey, at http://www.whitehouse.gov/omb/budget/ Analysis No. 601, October 15, 2007. 2007 Annual Social and Economic Supplement, fy2008/hhs.html. August 2007, Authors’ calculations, November 39Office of the Press Secretary, President Bush’s 2007. 27U.S. Government Accountability Office (GAO), Radio Address, October 6, 2007, available at Appendix II, “HIPAA Access, Portability, and http://www.whitehouse.gov/news/releases/ Renewability Standards,” in Private Health 2007/10/20071006.html.

Timely Analysis of Immediate Health Policy Issues 11 4086.9 percent of private-sector employees A Comparison Across Settings,” Health Services 56S. Trude and P.B. Ginsburg, An Update On worked for a firm offering coverage in 2005. Research, 41(1): 103-124, February 2006 finding Medicare Beneficiary Access To Physician At firms offering coverage, 56.3 percent of that children with special health care needs were Services, Center for Studying Health System employees were offered a choice of more than more likely to receive out-of-school therapeutic Change, Issue Brief No.93, February 2005. one plan. Agency for Healthcare Research and services and supportive services if they received Quality (AHRQ), Center for Financing, Access public rather than private coverage; G. Kenney, 57Longman, op cit.; J.B. Perlin, “Beyond the Industrial and Cost Trends, 2005 Medical Expenditure “The Impacts of the State Children’s Health Age: Moving to an Information Age Model for Panel Survey-Insurance Component, Tables IB2 Insurance Program on Children Who Enroll: Healthcare,” The Potential of Medical Science and IB2c, available at http://www.meps.ahrq. Findings from Ten States,” Health Services –The Practice of Medicine: How to Close the gov/mepsweb/data_stats/summ_tables/insr/ Research, 42(4): 1520-1543, August 2007 finding Gap, The Brookings Institution, Washington, DC, national/series_1/2005/tib2.pdf and http://www. that children shifting from private coverage to December 15, 2006, available at http://www. meps.ahrq.gov/mepsweb/data_stats/summ_ SCHIP were less likely to receive emergency care, brookings.edu/~/media/Files/events/2006/1215 tables/insr/national/series_1/2005/tib2c.pdf. more likely to have a usual source of care for health%20care/20061215JPerlin.pdf. dental care, less likely to have an unmet medical 41J. Lambrew,“Choice” in Health Care: What Do need, more likely to have parental confidence in 58E. Docteur, H. Suppanz, and J. Woo, The US Health People Really Want? The Commonwealth Fund, accessing care and avoiding financial burdens, System: An Assessment And Prospective Directions September 2005. and less likely to have a preventive care visit For Reform, OECD Economics Department or check-up; T.M. Selden, “Compliance With Working Paper No. 350, 27 February 2003. 42N. Kaye, C. Pernice, and A. Cullen, Charting Well-Child Visit Recommendations: Evidence SCHIP III: An Analysis of the Third From the Medical Expenditure Panel Survey, 59K. Davis, C. Schoen, S.C. Schoenbaum, M.M. Doty, Comprehensive Survey of State Children’s 2000–2002,” Pediatrics, 118(6): e1766-e1778 A.L. Holmgren, J.L. Kriss, and K.K. Shea, Mirror, Health Insurance Programs, National Academy December 2006, finding an absence of statistically Mirror On The Wall: An International Update for State Health Policy, September 2006. significant differences between public and private On The Comparative Performance Of American coverage in the likelihood of children receiving Health Care, The Commonwealth Fund, May 2007. 43E.F. Haislmaier, The Massachusetts Health recommended well-child care; C.R. Woods, T.A. Reform: Assessing Its Significance and Progress, Arcury, J.M. Powers, J.S. Preisser, W.M. Gessler, 60Medicare Payment Advisory Commission, The Heritage Foundation, September 21, 2007. “Determinants of Health Care Use by Children in “Section 5: Access to Care in the Medicare Rural Western North Carolina: Results From the Program,” A Data Book: Healthcare Spending 44Urban Institute tabulations from the 2007 ASEC. Mountain Accessibility Project Survey,” Pediatrics and the Medicare Program, June 2007. 112(2): e143-e152 August 2003, finding, after 45AHRQ, Insurance Component Table I.A.2 (2005) controlling for confounding variables, more health 61Kaiser Family Foundation, 2008 Presidential “Percent of private-sector establishments that care services received for children receiving Candidate Health Care Proposals: Side-by-Side offer health insurance by firm size and selected public coverage than those with private insurance; Summary, downloaded on 11/27/2007 from characteristics: United States, 2005.” Available at L. Dubay and G.M. Kenney, “Health Care Access http://www.health08.org/repcomparison.pdf. http://www.meps.ahrq.gov/mepsweb/data_stats/ And Use Among Low-Income Children: Who Fares summ_tables/insr/national/series_1/2005/tia2.pdf. Best?” Health Affairs, 20(1): 112-121, January/ 62Some Bush administration proposals would February 2001, finding that, controlling for make minor reductions in the total amount 46Medicare Payment Advisory Committee, multiple factors, low-income children covered by of projected Medicaid and Medicare costs A Databook: Healthcare Spending and Medicaid were, relative to similar children with and would reduce the effective scope of state the Medicare Program, June 2007. private insurance, less likely to have access to insurance regulation by permitting interstate prescription drugs impaired because of cost, more sales of nongroup coverage. However, none 47J. Lambrew, op. cit. likely to receive physician visits, more likely to of these changes would substantially cut receive well-child care, more likely to receive care government’s overall involvement in subsidizing 48R. Helman and P. Fronstin, “2007 Health Confidence from a dentist or dental hygienist, more likely to care for the poor and elderly as well as Survey: Rising Health Care Costs Are Changing the receive hospital care and emergency room care, regulating the sale of health insurance, much Ways Americans Use the Health Care System,” EBRI and, once receiving mental health care, received a less entirely eliminate these public-sector Notes, Vol. 28, No. 11, Employee Benefit Research larger number of visits; and A. Kempe, B. Beaty, B.P. roles. For example, the president’s budget Institute Research and Education Fund, Mathew Englund, R.J. Roark, N. Hester, J.F. Steiner, “Quality proposal for FY 2008 would reduce projected Greenwald & Associates, November 2007. of Care and Use of the Medical Home in a State- Medicaid and Medicare spending by just 2.1 Funded Capitated Primary Care Plan For Low- percent from 2008-2012. Office of Management 49K. Davis, “Commentary,” Medical Care Research Income Children,” Pediatrics, 105(5): 1020-1028, and Budget, Major Savings and Reforms in And Review, 60(2)(Supp.): 89S-99S, June 2003. May 2000, finding that, relative to privately insured the President’s 2008 Budget, February 2007 children, those in Medicaid managed care were (authors’ calculations, October 2007). While 50Lambrew, op cit. more likely to be immunized, more likely to be preserving this basic role for government, the screened for anemia and lead levels in blood, less Bush administration has sought to modify the 51See studies cited in footnotes 18-20 in G. Kenney likely to receive care in the emergency room nature of these public programs by encouraging and J. Yee, “SCHIP At A Crossroads: Experiences as a proportion of total visits, less likely to be their incorporation of private insurance (via To Date And Challenges Ahead,” Health Affairs, hospitalized, and (among asthmatic children) Medicare Advantage, for example) and Health 26(2): 356-369, March/April 2007. more likely to receive physician office visits. Savings Accounts.

52Here are some examples (which are statistically 53Jack Hadley and John Holahan, “Is Health Care 63L. Burman, J. Furman, G. Leiserson, and R Williams, significant unless otherwise noted): T.M. Selden Spending Higher Under Medicaid or Private “An Evaluation of the President’s Health and J.L. Hudson, “Access to Care and Utilization Insurance,” Inquiry, Winter 2003. Insurance Proposal” Tax Notes, 114 (10), 2007. Among Children: Estimating the Effects of Public and Private Coverage,” Medical Care, 44(5) 54Quality, as reflected in customer satisfaction 64Office of the White House Press Secretary, (Supp.): I-19–I-26, May 2006 finding that, with ratings, affects plan enrollment levels within Press Briefing on Health Care by Senior multivariate controls, publicly insured children the health insurance exchange offered by the Administrative Officials, June 27, 2007, available were (compared to similar children with private Federal Employees Health Benefits Program. at http://www.whitehouse.gove/news/ coverage) more likely to receive ambulatory M. Tai-Seale, “Does Consumer Satisfaction releases/2007/06/20070627-16 care visits, more likely to receive well-child visits Information Matter? Evidence on Member as recommended by the American Academy of Retention in FEHBP Plans,” Medical Care Pediatrics, and more likely to receive hospital Research and Review, 61(2): 171-186, June 2004. care and care in emergency rooms; R.E. Benedict, “Disparities in Use of and Unmet Need for 55The Commonwealth Fund Survey of Older Therapeutic and Supportive Services among Adults, 2004. School-Age Children with Functional Limitations:

Timely Analysis of Immediate Health Policy Issues 12 Acknowledgment

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance problems facing the nation.

This research was funded by the Robert Wood Johnson Foundation. The authors appreciate the helpful advice and suggestions of Robert Berenson, Linda Blumberg, Randall Bovjberg, Brad Gray, Genevieve Kenney, Eugene Steuerle, and Stephen Zuckerman of the Urban Institute; Len Nichols of the New America Foundation; and Dean A. Rosen of Mehlman Vogel Castagnetti, Inc.

About the authors: Stan Dorn is a senior research associate at the Health Policy Center of the Urban Institute. John Holahan is the director of the Urban Institute’s Health Policy Center.

The views expressed are those of the authors and should not be attributed to the individuals named above, to the Robert Wood Johnson Foundation, or to the Urban Institute, its trustees, or its funders.

Timely Analysis of Immediate Health Policy Issues 13