Kennedy's plan aims to provide health care to the uninsured

The proposal relies on an employer mandate, a purchasing pool and cost-cutting measures.

By Joel B. Finkelstein — Posted Feb. 9, 2004

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Washington -- As the Democrats begin to roll out this year's plans for extending coverage to the 43.6 million uninsured Americans, it seems clear Congress once again will be divided over health care legislation.

Sen. Edward Kennedy (D, Mass.), who has long been a leader on health care legislation, recently announced a proposal to address the issue by combining an employer mandate with a national purchasing pool offering subsidized benefits for both individuals and small employers. The Federal Employees Health Benefits Program would serve as a model for the purchasing pool and a standard for the benefits offered.

"The cornerstone of universal health care should be a requirement that employers share in the responsibility to provide quality health insurance for employees," Kennedy said. Employers already provide coverage to 170 million Americans, he added.

Kennedy's approach "builds on the pillars of the current system," said Edwin Park, a senior health policy analyst at the Center for Budget and Policy Priorities in Washington, D.C.

By spreading health care costs evenly across a broad group of employers, such an approach can help even the playing field, he said.

But mistrust and resistance to federal regulation in the business community and Republican opposition might prove significant obstacles for Democrats to overcome in pushing forward with any employer mandate.

"Loading a poorly crafted, astronomically costly regulation on the backs of small-business owners is unfair," said Dan Danner, senior vice president of the National Federation of Independent Business. "A national mandate on small-business owners will further stress an already critical situation."

The federation would prefer legislation to deregulate association health plans at the state level, an approach promoted by President Bush. But health policy experts have raised a red flag over this concept. They point out that state regulators help ensure that fly-by-night insurers don't defraud employers and employees.

Cutting costs

Kennedy's proposal also contains strategies to lower health costs through the use of information technology, quality-based reimbursement and disease management. "Fortunately, the right way to control costs is also the right way to bring better and more efficient care," he said.

The senator and other Democrats hope that these efficiencies can help bring down the cost of health care by reducing redundancy, paperwork and medical errors.

Reform is needed not just for those who consume health care services, but also for the physicians and others who make up the system, Kennedy said. "They're the backbone of our health care system, and we have an obligation to help them provide the quality care that every patient deserves," he said.

Kennedy's office estimates that the proposal would cost the federal government $70 billion a year. He also estimates that it would save the country $100 billion in the form of reduced need for charity care and less waste in the system -- although that money would not be reflected in the federal budget.

Currently, Kennedy is drafting a bill based on his proposal. He has floated the approach by some Democratic leaders but has not started officially signing up co-sponsors.

It is unclear whether the Democrats will be able to maintain this focus on the uninsured. Many are still bitter over provisions of last year's Medicare reform bill and are pushing for changes.

The pharmaceutical manufacturers and health plans won that round, said Sen. Debbie Stabenow (D, Mich.).

The Medicare legislation "went from being a bill that provides prescription drug coverage for seniors and lower prices for everybody to being a bill that does neither for the majority of people," she said. "But having said that, that was just round one."

Democrats also pledged to oppose such Republican priorities as individual health insurance tax credits and tort reform.

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