Employers Hear Details of McCain, Obama Health Plans

Representatives of the presumptive Republican and Democratic presidential nominees met with employers on Tuesday, July 15, in Chicago to discuss each candidate’s health care plan, exposing differences in how they would close the coverage gap, reduce health care costs and affect employers.

Outlining their health policy plans, the two speakers reflected the basic ideological differences between their parties. Sen. John McCain, R-Arizona, wants consumers to be responsible for purchasing health insurance and would provide tax breaks for those who do; Sen. Barack Obama, D-Illinois, says the government will work in partnership with employers and health insurers to provide portable and affordable health care for nearly all Americans.

Speaking first, Michael Millenson, a health care consultant and advisor to Obama, said the Democrat’s “Plan for a Healthy America” would insure all but 2 percent of Americans by providing a new public mechanism to make private health insurance affordable for those Americans who do not have health care. Currently, about 47 million Americans are uninsured.

The Obama health plan would provide those who do not receive insurance through their employer or Medicaid the same benefits as those received by federal employees. To help individuals purchase insurance that would be affordable and meet this standard of coverage, Obama would create the National Health Insurance Exchange to create price and coverage standards for participating health insurance companies.

Employers that already provide “meaningful” health insurance would not be affected, while employers that do not provide coverage would pay a “percentage of payroll” toward the costs of the national plan. Small employers would receive a tax credit to help pay health benefits for their employees.

“There is a significant difference between a position paper and a priority,” Millenson told the audience of human resource executives and benefits managers from McDonald’s, Kraft, Pactiv Corp., Comcast, DuPont, Amtrak and other firms. “Sen. Obama has repeatedly promised to pass universal health care in his first term of office. Health care is a cornerstone of his candidacy. John McCain took on health care reform only when cornered into doing so by winning his party’s nomination.”

Millenson said the policy was designed to become law by meeting the often competing needs of varying constituencies. The campaign has said the program will cost $50 billion to $60 billion a year, paid for by letting the Bush administration’s tax cuts expire in 2010.

Jay Khosla, health policy advisor to McCain, said the Republican candidate believes the consumer should be at the center of the health care system with government providing support through tax credits to make health insurance more affordable.

“I think Sen. McCain’s vision for health care can be described as three small phrases,” he said. “It’s your life, it’s your heath, it’s your decision.”

McCain’s health policy is notable for its use of tax credits—$2,500 for individuals and $5,000 for families who purchase health insurance on their own. The plan would focus on giving individuals control of their health insurance by promoting the adoption of high-deductible plans and health savings accounts and increasing hospital, doctor and insurance pricing information. McCain would also allow people to purchase health insurance across state lines in an effort to open the insurance market to more competition. Current law prohibits individuals from purchasing insurance from outside states in which they reside.

“At the end of the day, Sen. McCain’s health care plan has a primary focus, and that is the consumers, the patients, should be at the center of the health care system,” Khosla said. “We don’t need big government to come in and tell us what health care should be like.”

The meeting, part of an effort to engage the candidates in issues important to the employers that pay for the health care of 160 million Americans, came at the request of  technology-benefits company VitalSpring Technologies of McLean, Virginia, and some of its Fortune 500 clients.

Sreedhar Potarazu, president and CEO of VitalSpring, said he asked the candidates to speak because employers have not been vocal enough in the national debate on health care reform.

“Everyone is ignoring the employer, the very entity that is responsible for financing health care,” he said.

Employers would be affected differently by each plan depending on their size. The Obama campaign stressed that employers currently providing adequate health care to their employees would not be affected. Millenson said universal coverage would help reduce costs normally passed on to employers and their employees.

A chief criticism of McCain’s tax credits is that they could lead to what health care economists call “adverse selection.” The tax credits could make it cheaper for healthy people to find insurance outside of their employer, leaving employers to cover the sicker, more expensive employees and dependents and driving up the cost of providing coverage.

Khosla stressed that the tax credits alone would not address the underlying problem of the health care system, which is cost.

“Tax credits are not the solution by themselves,” he said.

McCain would focus on improving price and quality information and using wellness programs to make Americans healthier. The tax credits would make prices in the individual market more competitive.

While the discussion left many employers’ questions unanswered, it initiated a conversation appreciated by those in attendance.

“There are forward-thinking but realistic people in the business community who want to be involved,” said Wayne Lednar, chief medical officer for DuPont.

Potarazu of VitalSpring said employers could be involved in the election-year discussion on health care policy by joining a task force of employers he plans to launch in the coming weeks.

Andrew Rosa, director of health and welfare benefits for Philadelphia-based Comcast, said it is important for employers to reach out to the candidates and for the campaigns to reciprocate so that those paying the health care bill would have their concerns about the cost and quality of health care addressed.

“As employers, we haven’t fully captured the power we have; we’ve been more focused on our individual issues,” Rosa said. “But if people are going to change health care, employers need to be involved.”

—Jeremy Smerd