Health care is a mess, candidates agree

WASHINGTON (Reuters) - Barack Obama and John McCain agree that the U.S. health care system is a mess. They agree Americans spend too much and get too little for it, and they agree that 47 million Americans without health insurance need coverage.

The prominent health economists enlisted by each presidential candidate laid out clear differences between the campaigns that reflect the relative importance each candidate places on health care reform, in exclusive interviews with Reuters reporters and editors.

Obama, the Democratic candidate, hopes to get government, employers and industry to lead the way. McCain, the Republican candidate, is counting on patients themselves to do it.

McCain adviser Gail Wilensky noted that opinion polls indicate that health care reform is a more important issue among Democratic voters than Republican voters.

On Monday, McCain referred to "some of the minor items like health care plans." Wilensky winces when she reads the statement.

"I wouldn't have chosen that particular phrasing," said Wilensky, a senior fellow at Project HOPE, an international health education foundation, and former administrator of the Health Care Financing Administration, directing the Medicare and Medicaid programs under the first President George Bush.

Obama has said health care reform leads his agenda, second only to Iraq, said David Cutler, a Harvard economist who has been working for health-system change for 15 years and now is advising Obama.

FALLING APART

"It is really bad and getting worse. It is dysfunctional and falling apart," Cutler said.

Studies show that Americans spend double what people in other industrialized countries do on health care, but often have more trouble seeing doctors, are the victims of more errors and go without treatment more often.

The nonprofit Commonwealth Fund found last year that Americans spent $6,697 per capita on health care in 2005, or 16 percent of gross domestic product, compared to $3,326 in Canada, or 9.8 percent of GDP, for example.

"You basically need three things," Cutler said. "One, is you need to cover everybody. Second, you need to improve the value of what you're getting for what you spend. And third, you need to have a public health system that actually works."

One key approach would be rewarding good behavior, in part by compensating doctors who spend time with patients to counsel them on healthier lifestyles and who help patients stay on medications such as diabetes and blood pressure drugs, said Cutler.

Wilensky believes patients can figure this out.

"Most people don't know how much their employers spend on their behalf for health insurance," Wilensky said.

"It makes something that is high-cost and impacts behavior look as though it is free," she added. "People are thinking they are spending other people's money."

McCain is proposing a $2,500 tax credit, $5,000 for a family, to buy insurance. People can choose to continue to do this through employers if they like, Wilensky added.

Cutler says Obama's plan can save families $2,500 apiece on average by rewarding healthy behaviors and getting rid of administrative expenses. He says it will reduce overall health care spending by 8 percent.

SLOWING GROWTH

Wilensky disagrees on the need to do this. "The concern is how to slow the growth rate, not how to spend absolutely less," she said.

As for encouraging healthier behaviors, Wilensky noted that some employers are beginning to offer weight loss and smoking cessation programs.

Obama proposes some big-ticket federal intervention in setting up a cohesive system for electronic medical records.

An Obama administration would spend $50 billion to make that happen, Cutler said. Obama has said he would raise revenue for health care reform by reversing President George W. Bush's tax cuts for the wealthiest Americans.

Cutler and Wilensky both quote a study by the nonprofit Rand Corporation that found widespread use of electronic health records could save up to $77 billion a year, in part by preventing errors.

Cutler, who served on the Council of Economic Advisers and the National Economic Council under President Bill Clinton, said the political climate is different from 1993 and 1994, when efforts led by then-first lady Hillary Clinton to reform the U.S. health care system failed.

"Corporate CEOs have not traditionally been involved in the health care debate. They ought to be involved. They're paying for this stuff," Cutler said.

(Additional reporting by Caren Bohan, Will Dunham, Susan Heavey, Lisa Richwine, Kim Dixon, Tim Dobbyn, John Crawley and Deborah Lutterbeck, editing by David Wiessler)

(For more about the U.S. political campaign, visit Reuters "Tales from the Trail: 2008" online at blogs.reuters.com/trail08/)