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Obama would encourage the continuing participation of employers in the health insurance system, expand eligibility for Medicaid and the State Children's Health Insurance Program (SCHIP), and create a new insurance market "exchange"—with consumer protections, choice of public and private health plans, and income-based premium subsidies—that would largely replace the individual market. According to one estimate, discussed below, in 10 years McCain's proposal would reduce the number of people who are uninsured by 2 million out of a projected 67 million. Obama's plan would reduce the number of uninsured people by 34 million in 10 years.

Obama's Approach: Private and Public Group Insurance with Consumer Protections and Income-Based Subsidies. Senator Obama has proposed a plan for universal coverage that would build on the current system of mixed private and public group insurance. Some of its features are similar to the universal coverage law now being implemented in Massachusetts. All employers, other than small businesses, would be required to offer health insurance to their employees or contribute to the cost. Eligibility for Medicaid and SCHIP would be expanded. Small businesses, self-employed individuals, and people who do not have coverage through their employers, Medicaid, or SCHIP would be able to purchase a plan through a new insurance market called the National Health Insurance Exchange. Through this exchange, people could choose a private plan or a new public plan similar to that offered to federal employees and members of Congress. All insurance carriers would be required to offer plans to all applicants and could not charge premiums based on health status. Small businesses would be eligible for tax credits to offset their premium costs and individuals would be eligible for income-based premium subsidies. Obama has not yet defined the size of eligible small businesses and those not subject to the requirement to offer coverage.

There are several differences between McCain and Obama's proposals to reform the health insurance system (Figure ES–1): Requirement to have coverage: Children only

Obama's proposal would require all employers, other than small businesses, to offer coverage to their employees or pay part of the costs to cover them. This would allow most people to keep the coverage they have and maintain the more than $400 billion in employer contributions to health insurance currently in the system. He would provide tax credits to small businesses to buy coverage through the insurance exchange and would offer federal reinsurance for employers that experience catastrophic claims

Obama would raise income eligibility levels for Medicaid and SCHIP, allowing more people to join the programs. This would expand the large risk pools of Medicaid and SCHIP

Writ large, that is one of the significant concerns about Mr. Obama’s health plan, which like this state’s landmark 2006 law would subsidize coverage for the uninsured by taxing employers who do not cover their workers. And it is a primary reason that so-called play-or-pay proposals have had an unsteady history for nearly two decades.

With Mr. Obama’s plan, business leaders say, the devil will be in the unknown details.

Mr. Obama would prohibit insurers from rejecting applicants because of medical conditions, require health insurance for children and create a new federal health plan to provide comprehensive coverage to the uninsured. Those beneath certain income levels would be granted tax credits to make premiums affordable, and small businesses would be offered tax credits to provide benefits.

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May 29. 2007

Require all children to have health insurance. Require employers to offer “meaningful” coverage or contribute a percentage of payroll toward the costs of the public plan; small businesses will be exempt from this requirement.

Expand Medicaid and SCHIP. Create a new public plan so that small businesses and individuals without access to other public programs or employer-based coverage could purchase insurance. Plan coverage would offer comprehensive benefits similar to those available through FEHBP. Coverage under the new public plan would be portable.

Make federal income-related subsidies available to help individuals buy the new public plan or other qualified insurance

Provide small businesses with a refundable tax credit of up to 50 percent of premiums paid on behalf of their employees if employer pays a “meaningful share” of the cost of “a quality health plan”. Provide federal subsidies to partially reimburse employers for their catastrophic health care costs if the employers guaranteed that premium savings would be used to reduce employee premiums.

Create a National Health Insurance Exchange through which individuals could purchase the public plan or qualified private insurance plans. Require participating insurers to: offer coverage on a guaranteed issue basis; charge a fair and stable premium that is not rated on the basis of health status, and meet standards for quality and efficiency. Require plans of participating insurers to offer coverage at least as generous as the new public plan. Exchange would evaluate plans and make differences among them transparent.

Prohibit insurers from denying coverage based on pre-existing conditions. Children up to age 25 could continue family coverage through their parents’ plan. In market areas where there is not enough competition, require insurers to pay out a “reasonable share” of premiums on patient care benefits. Prevent insurers from abusing monopoly power through unjustified price increases. Require health plans to disclose the percentage of their premiums that actually goes to paying for patient care as opposed to administrative costs.

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BARACK OBAMA AND JOE BIDEN’S PLAN TO LOWER HEALTH CARE COSTS AND ENSURE AFFORDABLE, ACCESSIBLE HEALTH COVERAGE FOR ALL

Under the plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year. If you don’t have health insurance, you will have a choice of new, affordable health insurance options.

Barack Obama and Joe Biden believe we must redesign our health system to reduce inefficiency and waste and improve health care quality, which will drive down costs for families and individuals. The Obama-Biden plan will improve efficiency and lower costs in the health care system by: (1) adopting state-of-the-art health information technology systems; (2) ensuring that patients receive and providers deliver the best possible care, including prevention and chronic disease management services; (3) reforming our market structure to increase competition; and offering federal reinsurance to employers to help ensure that unexpected or catastrophic illnesses do not make health insurance unaffordable or out of reach for businesses and their employees.

LOWER COSTS TO MAKE OUR HEALTH CARE SYSTEM WORK FOR PEOPLE AND BUSINESSES – NOT JUST INSURANCE COMPANIES Barack Obama and Joe Biden will require hospitals and providers to collect and publicly report measures of health care costs and quality, including data on preventable medical errors, nurse staffing ratios, hospital-acquired infections, and disparities in care and costs. Health plans will be required to disclose the percentage of premiums that actually goes to paying for patient care as opposed to administrative costs.

􀂾 Reform medical malpractice while preserving patient rights. Increasing medical malpractice insurance rates are making it harder for doctors to practice medicine22 and raising the costs of health care for everyone.23 Barack Obama and Joe Biden will strengthen antitrust laws to prevent insurers from overcharging physicians for their malpractice insurance. Barack Obama and Joe Biden will also promote new models for addressing physician errors that improve patient safety, strengthen the doctorpatient relationship, and reduce the need for malpractice suits.

􀂾 Allow consumers to import safe drugs from other countries. The second-fastest growing type of health expenses is prescription drugs.29 Pharmaceutical companies should profit when their research and development results in a groundbreaking new drug. But some companies are exploiting Americans by dramatically overcharging U.S. consumers. These companies are selling the exact same drugs in Europe and Canada but charging Americans a 67 percent premium.30 Barack Obama and Joe Biden will allow Americans to buy their medicines from other developed countries if the drugs are safe and prices are lower outside the U.S.

􀂾 Allow Medicare to negotiate for cheaper drug prices. The 2003 Medicare Prescription Drug Improvement and Modernization Act bans the government from negotiating down the prices of prescription drugs, even though the Department of Veterans Affairs’ negotiation of prescription drug prices with drug companies has garnered significant savings for taxpayers.32 Barack Obama and Joe Biden will repeal the ban on direct negotiation with drug companies and use the resulting savings, which could be as high as $30 billion,33 to further invest in improving health care coverage and quality.

(1) GUARANTEED ELIGIBILITY. Obama and Biden will require insurance companies to cover pre-existing conditions so all Americans, regardless of their health status or history, can get comprehensive benefits at fair and stable premiums.

The Exchange will have the following features: 􀂾 Comprehensive benefits. The benefit package will be similar to that offered through the Federal Employees Health Benefits Program (FEHBP), the program through which Members of Congress get their own health care. Plans will include coverage of all essential medical services, including preventive, maternity and mental health care. 􀂾 Affordable premiums, co-pays and deductibles. Participants will be charged fair premiums and minimal co-pays for deductibles for preventive services. 􀂾 Simplified paperwork. The plan will simplify paperwork for providers and will increase savings to the system overall. 􀂾 Easy enrollment. All Exchange health insurance plans will be simple to enroll in and provide ready access to coverage. 􀂾 Portability and choice. Participants will be able to move from job to job without changing or jeopardizing their health care coverage. 􀂾 Quality and efficiency. Participating hospitals and providers that participate in the new public plan will be required to collect and report data to ensure that standards for health care quality, health information technology and administration are being met.

(3) TAX CREDITS FOR FAMILIES AND SMALL BUSINESSES. Barack Obama and Joe Biden understand that too many families that do not qualify for public health programs like Medicaid and SCHIP have trouble finding affordable health insurance. They know from talking to small business owners across the nation that the skyrocketing cost of healthcare poses a serious competitive threat to America’s small businesses. The Obama- Biden health care plan will provide tax credits to all individuals who need it for their premiums. They will also create a new Small Business Health Tax Credit to provide small businesses with a refundable tax credit of up to 50 percent on premiums paid by small businesses on behalf of their employees. To be eligible for the credit, small businesses will have to offer a quality health plan to all of their employees and cover a meaningful share of the cost of employee health premiums. (4) EMPLOYER CONTRIBUTION. Large employers that do not offer meaningful coverage or make a meaningful contribution to the cost of quality health coverage for their employees will be required to contribute a percentage of payroll toward the costs of the national plan. Small businesses will be exempt from this requirement. (5) REQUIRE COVERAGE OF CHILDREN. Barack Obama and Joe Biden will require that all children have health care coverage. Barack Obama and Joe Biden will expand the number of options for young adults to get coverage by allowing young people up to age 25 to continue coverage through their parents’ plans. (6) EXPANSION OF MEDICAID AND SCHIP. Barack Obama and Joe Biden will expand eligibility for the Medicaid and SCHIP programs and ensure that these programs continue to serve their critical safety net function.

(2) SCHOOL SYSTEMS. Childhood obesity is nearly epidemic,41 particularly among minority populations,42 and school systems can play an important role in tackling this issue. For example, only about a quarter of schools adhere to nutritional standards for fat content in school lunches.43 Barack Obama and Joe Biden will work with schools to create more healthful environments for children, including assistance with contract policy development for local vendors, grant support for school-based health screening programs and clinical services, increased financial support for physical education, and educational programs for students.

(4) INDIVIDUALS AND FAMILIES. Preventive care only works if Americans take personal responsibility for their health and make the right decisions in their own lives – if they eat the right foods, stay active, and stop smoking. Barack Obama and Joe Biden will ensure that all Americans are empowered to monitor their health by ensuring coverage of essential clinical services in all federally supported health plans, including Medicare, Medicaid, SCHIP and the new public plan. Americans also benefit from healthy environments that allow them to pursue healthy choices and behaviors that can help ward off chronic and preventable diseases. Healthy environments include sidewalks, biking paths and walking trails; local grocery stores with fruits and vegetables; restricted advertising for tobacco and alcohol to children; and wellness and educational campaigns. In addition, Barack Obama and Joe Biden will increase funding to expand community based preventive interventions to help Americans make better choices to improve their health.

1 Kaiser Family Foundation and Health Research and Educational Trust. (2008). Employer Health Benefits 2008, http://kff.org/insurance/7527/index.cfm; Bureau of Labor Statistics, Sept. 2008 2 David U. Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Wooldhandler (February 2005). “Illness and Injury as Contributors to Bankruptcy,” Health Affairs, http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.63v1 3 Linda T. Kohn, Janet M. Corrigan, and Molla S. Donaldson, Editors; Committee on Quality of Health Care in America, Institute of Medicine (2000). To Err is Human. Washington, DC: National Academy Press. 4 Steffie Woolhandler, Terry Campbell, and David U. Himmelstein (2003) “Costs of Health Care Administration in the United States and Canada.” New England Journal of Medicine. 5 Census Bureau, August 2008, http://www.census.gov/prod/2008pubs/p60-235.pdf 6 Id. 7 Kaiser Family Foundation, The Uninsured: A Primer (2006), http://kff.org/uninsured/upload/7451-021.pdf 8 Jeanne M. Lambrew, (April 2007). A Wellness Trust to Prioritize Disease Prevention. The Hamilton Project, Brookings Institution. http://www3.brookings.edu/views/papers/200704lambrew.pdf 9 Commonwealth Fund, Why Not the Best? Results from a National Scorecard on U.S. Health Systems Performance, September 2006, http://www.cmwf.org/publications/publications_show.htm?doc_id=401577 10 Steffie Woolhandler, Terry Campbell, and David U. Himmelstein (2003) “Costs of Health Care Administration in the United States and Canada.” New England Journal of Medicine. 11 Office of the Actuary. (February 2007). National Health Expenditures http://www.cms.hhs.gov/NationalHealthExpendData/downloads/proj2006.pdf 12 Dartmouth Atlas Project (2006), The Care of Patients with Severe Chronic Illness, http://www.dartmouthatlas.org/atlases/2006_Chronic_Care_Atlas.pdf 13 Federico Girosi, Robin Meili, and Richard Scoville (2005), Extrapolating Evidence of Health Information Technology Savings and Costs. RAND, page 79. 14 Federico Girosi, Robin Meili, and Richard Scoville (2005), Extrapolating Evidence of Health Information Technology Savings and Costs. RAND, page 36. 15 Gerard Anderson, Robert Herbert, Timothy Zeffiro, and Nikia JohnsonChronic Conditions: Making the Case for Ongoing Care (2004). Partnership for Solutions (Johns Hopkins and Robert Wood Johnson Foundation). 16 Center on an Aging Society at Georgetown Univeristy, Disease Management Programs: Improving Health and while Reducing Costs?, p4, (January 2004). http://hpi.georgetown.edu/agingsociety/pdfs/management.pdf 17 Gerard Anderson, Robert Herbert, Timothy Zeffiro, and Nikia JohnsonChronic Conditions: Making the Case for Ongoing Care (2004). Partnership for Solutions (Johns Hopkins and Robert Wood Johnson Foundation). 18 Gerard Anderson, Robert Herbert, Timothy Zeffiro, and Nikia JohnsonChronic Conditions: Making the Case for Ongoing Care (2004). Partnership for Solutions (Johns Hopkins and Robert Wood Johnson Foundation). 19 CMS. (February 2007). National Health Expenditures; Gerard Anderson, Robert Herbert, Timothy Zeffiro, and Nikia JohnsonChronic Conditions: Making the Case for Ongoing Care (2004). Partnership for Solutions (Johns Hopkins and Robert Wood Johnson Foundation). 20 National Committee for Quality Assurance (2006), The State of Health Care 2006, http://www.ncqa.org/communications/sohc2006/sohc_2006.pdf 21 Jeanne M. Lambrew, (April 2007). A Wellness Trust to Prioritize Disease Prevention. The Hamilton Project, Brookings Institution. http://www3.brookings.edu/views/papers/200704lambrew.pdf 22 Kenneth Thorpe (January 21, 2004), The Medical Malpractice ‘Crisis’: Recent Trends and the Impact of State Tort Claims, Health Affairs, http://content.healthaffairs.org/cgi/content/full/hlthaff.w4.20v1/DC1#39 23 Department of Health and Human Services (March 3, 2003), Addressing the New Health Care Crisis: Reforming the Medical Litigation System to Improve the Quality of Care, http://aspe.hhs.gov/daltcp/reports/medliab.htm 24 Edward Langston, “Statement of the American Medical Association to the Senate Committee on the Judicary, United States Senate” (September 6, 2006). Testimony. 25 Kaiser Family Foundation and Health Research and Educational Trust. (2006). Employer Health Benefits 2006, http://kff.org/insurance/7527/index.cfm 26 Karen Davis, Cathy Schoen, Stuart Guterman et al. (January 2007), Slowing the Growth of U.S. Health Care Expenditures: What are the Options? Commonwealth Fund 27 Forbes.com, 2007 CEO Executive Compensation – Health Care Equipment & Services, http://www.forbes.com/lists/2007/12/lead_07ceos_CEO-Compensation-Health-care-equipment-services_9Rank.html 28 Glenn Hackbarth, Medicare Payment Advisory Commission (April 11, 2007), Testimony: The Medicare Advantage Program and MedPAC Recommendations, U.S. Senate Committee on Finance, http://www.medpac.gov/publications/congressional_testimony/041107_Finance_testimony_MA.pdf?CFID=6602154&CFTOKEN=81 609996 29 Karen Davis, Cathy Schoen, Stuart Guterman et al. (January 2007), Slowing the Growth of U.S. Health Care Expenditures: What are the Options? Commonwealth Fund. 30 Patented Medicine Prices Review Board, Annual Report (Ottawa, Ontario: PMPRB, 2002), p. 23. 31 Marc Kaufman (April 25, 2006), “Drug Firms’ Deals with Allowing Exclusivity,” Washington Post, http://www.washingtonpost.com/wp-dyn/content/article/2006/04/24/AR2006042401508.html 32 Families USA (December 2005), Falling Short: Medicare Prescription Drug Plans Offer Meager Savings, http://www.familiesusa.org/assets/pdfs/PDP-vs-VA-prices-special-report.pdf 33 Roger Hickey & Jeff Cruz (April 2007), Waste and Inefficiency in the Bush Medicare Prescription Drug Plan: Allowing Medicare to Negotiate Lower Prices Could Save $30 Billion a Year, Institute for America’s Future, http://cdncon.vo.llnwd.net/o2/fotf/medicare/National_Savings.pdf 34 Mark W. Stanton and Margaret Rutherford (June 2006), The High Concentration of U.S. Health Care Expenditures. Agency for Healthcare Research and Quality. Research in Action Issue 19. 35 Mark W. Stanton and Margaret Rutherford (June 2006), The High Concentration of U.S. Health Care Expenditures. Agency for Healthcare Research and Quality. Research in Action Issue 19. 36 Census Bureau, “Census Bureau Revises 2004 and 2005 Health Insurance Coverage Estimates,” March 23, 2007. http://www.census.gov/Press-Release/www/releases/archives/health_care_insurance/009789.html 37 Census Bureau (2008), Income, Poverty, and Health Insurance Coverage in the United States: 2007. Table C-1. 38 Gerard Anderson, Robert Herbert, Timothy Zeffiro, and Nikia JohnsonChronic Conditions: Making the Case for Ongoing Care (2004). Partnership for Solutions (Johns Hopkins and Robert Wood Johnson Foundation). 39 CDC, http://www.cdc.gov/nccdphp/overview.htm 40 CDC, http://www.cdc.gov/nccdphp/press/index.htm 41 NIH, Childhood Obesity, June 2002 Word on Health http://www.nih.gov/news/WordonHealth/jun2002/childhoodobesity.htm 42 CDC National Center for Health Statistics, http://www.cdc.gov/nchs/pressroom/06facts/obesity03_04.htm 43 GAO (2003), School Lunch Program: Efforts Needed to Improve Nutrition and Encourage Healthy Eating, http://www.gao.gov/new.items/d03506.pdf 44 The Robert Graham Center (October 2003), http://www.graham-center.org/x468.xml; Institute of Medicine (2002), The Future of the Public’s Health in the 21st Century, p.364. 45 Bob Prentice and George Flores (December 15, 2006), Local Health Departments and the Challenge of Chronic Disease: Lessons From California, NIH, http://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=1832141

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Obama/Clinton

But the big difference is mandates: the Clinton plan requires that everyone have insurance; the Obama plan doesn’t.

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Senator Obama's $65 billion-a-year plan makes insurance mandatory, but only for children. He wants family plans to cover kids up to age 25, and would create a national health insurance exchange to offer a range of plans and prices to small businesses and the uninsured.

"If you change jobs, your insurance will go with you," Obama said.