* Former Obama officials favor broad, systemic changes
* Competing plan sees premium support for Medicare, employer
By David Morgan
WASHINGTON, Aug. 1 Democrats and Republicans
agree that the next U.S. president will have to contend with
rising healthcare costs that pose a growing, destabilizing
burden for families, employers and government budgets.
But two articles published in the New England Journal of
Medicine on Wednesday show how far apart each side stands on the
question of what to do, ahead of a November election showdown
between President Barack Obama and presumptive Republican
nominee Mitt Romney.
Twenty-three co-authors led by former Obama health adviser
Dr. Ezekiel Emanuel argue for broad changes for the public and
private sectors that would limit cost growth by state, reward
high-quality care and accelerate the move away from a costly
system that compensates doctors and hospitals for the number of
services they perform rather than the outcome of their work.
Their recommendations build upon more indirect efforts to
control costs under the Obama healthcare law, which will take
full effect in 2014.
A second plan, from three Republican-aligned authors led by
Joseph Antos of the conservative American Enterprise Institute,
calls for market-based incentives that would encourage seniors
enrolled in the government's Medicare health program to buy
their own insurance and would limit tax breaks on coverage
provided through an employer.
The two articles offer a glimpse of the rival approaches
that could emerge in 2013, when Congress will again have to
tackle a skyrocketing national deficit, tax reform and the
future of Medicare and the Medicaid program for the poor.
An Obama administration official said policymakers looked
forward to reviewing the articles.
The U.S. healthcare system, which is expected to generate
$2.8 trillion in spending this year, is the world's most
expensive. Compared to other countries, however, it delivers
only mediocre care, according to the Paris-based Organization
for Economic Cooperation and Development -- and at a cost of
more than $8,400 a year for every man, woman and child.
Growth in healthcare costs has slowed in recent years,
mainly as the result of a weak economy. But government
forecasters warn that costs will accelerate, reaching $4.8
trillion in 2021.
Within 25 years, healthcare spending in the United States is
expected to account for one-quarter of the U.S. economy and 40
percent of total federal spending.
"These trends could squeeze out critical investments in
education and infrastructure, contribute to unsustainable debt
levels and constrain wage increases for the middle class," wrote
the Emanuel team, which includes former Senator Tom Daschle and
Obama's former budget director Peter Orszag.
SOME COMMON GROUND
The two sides appear to find some common ground on Medicare,
the popular healthcare program for the elderly and disabled that
is expected to top $590 billion this year.
Both advocate the expanded competitive bidding to rein in
costs for medical devices and services in traditional Medicare
and a more aggressive push away from fee-for-service programs.
Emanuel also envisions Medicare spending 75 percent of its
payments on alternatives to fee-for-service within 10 years.
In the private sector, the plan advocates "tiered" insurance
plans that reward consumers who use "high-quality" providers and
recommends that new state health insurance exchanges created
under Obama's healthcare law use their leverage power to keep
premiums in line.
It also recommends that public and private insurance plans
negotiate payment rates for doctors and other providers on a
state-by-state basis. The cost per person should be closely
aligned with wage growth on a local level.
The plan calls for greater price transparency for medical
services, a wider use of non-physician professionals such as
nurse practitioners and liability protections for doctors who
practice low-cost, high-quality methods of delivering care.
The rival team, including President George H.W. Bush's
former adviser Gail Wilensky and Wharton School health economist
Mark Pauly, advocate a politically risky Republican approach
that would retain traditional Medicare but offer beneficiaries
the option of receiving financial support for the purchase of
"This would give seniors an incentive to select lower-cost
plans and provide plans with an incentive to provide appropriate
services in a cost-effective manner," the authors say.
The Antos group also would use Medicare to encourage change
in the private sector by requiring the country's largest
purchaser of health services to compete with private insurers
and offer a bundled payment system to providers that would set a
single payment rate for a range of related services.
In the private sector, changes would include ensuring that
employer-sponsored health insurance is no longer exempt from
taxation. Instead, employees and other individuals would receive
tax credits to help pay for private insurance or the exclusion
would be capped at a rate calculated to grow more slowly than
Employer-sponsored insurance currently accounts for 90
percent of all private health insurance for people below
retirement age and $250 billion in annual subsidies.
(Editing by Michele Gershberg)