September 24, 1992 Controlling Costs and Guaranteeing Care for All The Clinton/Gore Health Care Plan Governor Bill Clinton today detailed his health care reform plan and laid out the fundamental differences between his comprehensive plan and George Bush's piecemeal approach to the health care crisis. "We'll never revive our economy or cope with the deficit until we get health care costs under control," said Clinton. The Clinton/Gore plan will tightly contain costs so that they rise no faster than wages, saving Americans $700 billion by the end of the decade. The plan will also guarantee coverage for all Americans, and preserve the private health system's quality and choice. Highlights of the plan include -- Controlling costs: * Fence in national health costs by setting a national health budget to limit what consumers pay for health coverage. * Take on the insurance companies to restore competition, driving costs below the budget and protecting consumers. We will ban "pre-existing condition" exclusions, require policies to offer full benefits, and set up purchasing groups that give individuals and companies real buying power and make insurers compete for their business. * Stop drug price gouging by ending special tax breaks for companies that raise drug prices faster than inflation. * Take other steps to control costs: reform medical malpractice laws, reduce duplicative technology and streamline paperwork. Covering all Americans: * Require employers to insure their workers, either directly or through a purchasing group; phase in requirements, with small businesses coming last, and provide tax credits to protect businesses. * Guarantee private coverage for nonworkers, starting with nonworking pregnant women and children. * Dedicate federal savings from cost controls to paying for expansions in coverage. Governor Clinton said that he would put his plan before Congress in the first hundred days of his administration. "I have a plan for fundamental change and real reform," said Governor Clinton. "George Bush has a last minute political proposal." "Mr. Bush has done next to nothing to solve the health care crisis," Clinton added. "I will make sure health care costs don't rise faster than your income. He won't. I will take on irresponsible drug companies and insurance companies. He won't." George Bush's inaction has let health care costs climb to $800 billion in 1992. They now add $1,230 to the price of an American car. Over the next five years, they'll account for more than half the growth of the federal deficit. The health care reform plan Clinton detailed today is central to Putting People First, Governor Clinton's national economic strategy for America. SUMMARY OF THE CLINTON/GORE PLAN FOR AFFORDABLE, QUALITY HEALTH CARE America has the finest health care in the world, but it costs too much and leaves millions without coverage. The Clinton/Gore plan calls for fundamental change. It will make sure that no American is bankrupted by illness, ensure that all Americans have affordable, high quality health coverage, and create a health care system that is much simpler and more secure than the one today. To make a health care system that works, the Clinton/Gore plan meets three goals: 1. Cost control so that health care costs do not increase faster than Americans' wages. 2. Guaranteed universal coverage. Every American will be guaranteed affordable, quality coverage. 3. Preserves what's best in our system. Quality private care and personal choice of the world's best doctors and hospitals. COST CONTROL: RESTORING COMPETITION WITHIN A BUDGET It's time to get health care costs under control. Because of Republican inaction, we will spend $809 billion on health care this year, and we'll waste as much as $200 billion of that on a bloated bureaucracy and unnecessary tests and services. Only the insurance companies benefit. They have written the rules to prevent real competition and rational planning, and they profit mainly by avoiding "risk" -- the people who need help most. The Clinton/Gore plan will improve quality, expand choice, and control costs through a strategy of competition within a budget. This strategy is supported by leading consumer groups, including the American College of Physicians, the American Academy of Family Physicians, the American Nurses Association, and businesses from Bethlehem Steel to Xerox that belong to the National Leadership Coalition on Health Care. The Clinton/Gore plan will further cut costs by eliminating drug price gouging, cutting bureaucracy and fraud, and reforming medical malpractice laws. We will also protect consumers by making sure insurers end their discriminatory practices and turn no one away. These are the specific steps: Set a National Health Budget -- an overall limit on costs. It is time that we decide as a nation how much we want to spend on health care. The Clinton/Gore plan will establish a national health care board made up of consumers, providers, business, labor and government. Together, they will set national and state health care budgets to limit public and private health care costs. > The budget and managed care networks: Consumers will have access to a variety of local health networks -- organized systems of insurers, hospitals, clinics and doctors. These managed care networks will receive a fixed amount of money (a "capitation fee") for meeting a consumer's full health needs. States will set an upper limit on these "capitation fees" so as to meet the budget. By limiting their total spending without interfering with their practices, the budget creates incentives for hospitals, clinics and doctors to reduce bureaucracy, eliminate duplicative technology, and stop waste. > The budget and other insurers: For services covered by other (non-managed care) insurers, states will establish fee schedules applicable to all payers in order to meet the global budget targets. > The budget and Medicare: We will protect Medicare benefits for the elderly. Our fundamental reforms will reduce bureaucracy and unnecessary care, generating savings for Medicare and the private sector. Medicare payments to providers, like non-managed care insurance payments, will be subject to budgetary limits. Set new rules for insurance companies -- to create competition. The Clinton/Gore plan will fundamentally change the rules for insurance companies. We will ban the anti-competitive practices that increase red tape and force up prices. We will restore consumer choice, end job lock, and give businesses greater bargaining power. These steps will restore real competition, drive costs below budget limits and ensure that health costs rise no faster than Americans' wages. We will make insurance companies play by a new set of rules: > Open enrollment. We will ban "pre-existing condition" exclusions. Insurers will have to take all comers, freeing workers locked into their jobs because they fear losing their insurance. > Equitable pricing. Insurers will have to use "community rates," which stop insurers from charging consumers more based on such factors as size of employer, health condition or gender. > Comprehensive benefits package. We will require insurers to offer a comprehensive benefits package, as detailed by the National Health Care Board. This package will cover the preventive and primary care Americans need to stay healthy -- including pre-natal care, well-child care, mammograms and routine health screenings. It will also include full protection in case of illness -- including physician visits, hospital care, prescription drugs, and basic mental health care -- and allow consumers to choose where to receive care. > Purchasing groups to drive competition. We will establish publicly-sponsored purchasing groups that band together small businesses and individuals to buy private coverage. Health networks will have to compete -- at lower costs, with more choices and higher quality -- to win the business of the companies and individuals in these groups. Eliminate drug price gouging. To protect American consumers and bring down prescription drug prices, the Clinton/Gore plan will eliminate special tax breaks for pharmaceutical companies that raise their drug prices faster than the rate of inflation. We must stop drug companies from charging more in the United States than they do in other advanced nations. Reduce paperwork and fraud. To control costs and trim the "paper hospital," the Clinton/Gore plan will replace expensive and complex financial forms and accounting procedures. We will implement a single claims form, standardized billing codes, electronic processing, and other steps that will reduce the paperwork now consuming as much as 80 hours a month of a physician's time. We will also crack down on billing fraud and remove incentives that invite abuse. Reform medical malpractice law. We will reform medical malpractice laws to reduce the cost of "defensive medicine" -- doctors' practice of ordering unnecessary tests to protect themselves against malpractice lawsuits. We will make alternative dispute resolution mechanisms available in every state -- mechanisms that take disputes out of the court system and effectively and fairly address the concerns of patients and physicians. We will also encourage the development of medical practice guidelines to eliminate improper care and to help physicians defend against charges of negligence. Reduce duplicative technology. To reduce the proliferation of duplicative technology, the National Health Board will develop recommendations and incentives for the shared use of new forms of technology. UNIVERSAL COVERAGE: PRIVATELY PROVIDED, PUBLICLY GUARANTEED The Clinton/Gore health reform plan will guarantee coverage for all Americans by building on our system of coverage through employment. All workers and their families will receive coverage through the workplace. Government will guarantee coverage for nonworkers. Guaranteed coverage for working families. > Affordable coverage. The Clinton/Gore plan to control costs will make sure health benefits are affordable for employers and employees. > Employer responsibilities. 85% of workers and their families get coverage through jobs. We will make sure that all do. We will require companies to insure their employees, and provide tax credits to offset costs for companies that need help. > Employer options. Employers will purchase benefits directly from insurers or through the publicly sponsored purchasing groups. > Protection for business. The Clinton/Gore plan will provide assistance to make sure that small businesses and their workers are not jeopardized by the new responsibilities. We will take a number of steps in addition to the small group market reforms already described: -- Provide assistance through tax credits to protect businesses. -- Phase in employer requirements with the smallest businesses coming in last. We will not throw businesses into today's broken health insurance system. -- Require employees to pay a share of the costs of new health benefits. -- Raise the health insurance tax deduction for the self-employed from 25% to 100%. Guaranteed coverage for nonworkers. The Clinton/Gore plan guarantees nonworkers and their families private coverage through the publicly sponsored purchasing groups. They will pay a sliding scale premium based on income. We will fold Medicaid into this program for private coverage. Savings dedicated to expanding coverage. We will dedicate federal savings from cost controls to expanding coverage to all. Once universal coverage is achieved, savings will be used to reduce the deficit. OTHER STEPS FOR NATIONAL HEALTH REFORM Expand Health Education and Demand Personal Responsibility The Clinton/Gore plan gives Americans the ability to help themselves. We will make an intensive health education effort in the workplace and in schools to educate Americans about behavior that causes ill health and high costs. We will make sure adequate information for finding high quality, cost-effective coverage is available. The right to affordable health care must be accompanied by the responsibility to maintain our own health and to use the system wisely. Expand School-based, Rural and Urban Health Clinics Simply providing health insurance coverage is not enough. Too many Americans in underserved rural and urban communities, and too many school children across the country, lack access to the health care they need, even when they have excellent insurance coverage. The Clinton/Gore plan will expand the number of community health clinics in rural and inner-city areas. In Arkansas, school-based clinics have been highly effective in reaching children and families on issues like teen pregnancy and early childhood care. We want to see these clinics expanded across the country. We will expand the National Health Service Corps which pays for the education of health care professionals in return for service in underserved communities. And we will carry out the recommendations of the National Governors' Association to provide incentives for students and mid-career health professionals to serve in primary care professions in underserved areas. Emphasize Preventive and Primary Care Failure to obtain preventive and primary care -- such as prenatal care, immunizations, check-ups, and routine screenings -- is costing billions of dollars in avoidable health care. The Clinton/Gore plan will guarantee preventive coverage for all Americans. We will also reform our medical education system to prepare more physicians to practice preventive and primary care. We will expand support for graduate training for mid-level health professionals, such as certified nurse-midwives and nurse practitioners. Expand long-term care No Americans should have to impoverish themselves to qualify for long-term health care, and no family should have to choose between long-term care for grandparents and education for children. We can provide more services to the elderly and disabled by expanding Medicare. We will phase in long-term care benefits, starting with diversified coverage of home-based and community-based care. In Arkansas, we've launched a popular pilot program called ElderChoices, which gives the elderly the right to take money previously available only for nursing home care and spend it instead on home health care, personal care, transportation to senior centers, nurses' services, or attendance at an adult day care center. THE BUSH RECORD: A HEALTH CARE NIGHTMARE DOING NOTHING WHILE COSTS EXPLODE AND MILLIONS LOSE INSURANCE Since 1980, health care costs have tripled, going from $2500 to $7500 for an American family. [Health Care Finance Authority, Office of the Actuary] Annual national health care spending increased from $249 billion in 1980 to more than $800 billion today. [HCFA, Office of the Actuary] In 1990, 35 million Americans were uninsured. Each month under George Bush, 100,000 people have lost their insurance -- mostly workers who lose their jobs or benefits. [Current Population Reports, Bureau of the Census] WATCHING WHILE COSTS HIT BUSINESSES, WORKERS, AND THE ECONOMY For the first time in American history, health care costs now exceed business after-tax profits. [Health Care Finance Review, Winter 1991] 1 million jobs have been lost since 1980 due to rising health care spending for business -- 200,000 under Bush alone. [Kenneth E. Thorpe, UNC Working Paper, 8/31/92] Health benefits consume 8% of payroll today. By the end of the decade, they will cost as much as 20% if nothing is done. [Karen Davis, Commonwealth Fund] Health care costs are hurting American competitiveness. They add $1,230 to the price of cars built in America [Chrysler Corp.] Bush's own advisory commission found that workers lost 58% of potential wage increases because employers had to spend it on health care costs. [Social Security Advisory Commission, Dec. 1991] Medicare and Medicaid have grown from 8% of the federal budget in 1980 to close to 14% today. Over the next five years, they will account for more than half the growth of the federal deficit. [CBO] PROTECTING THE INSURANCE AND DRUG COMPANIES Insurance companies have given over $2 million to the Bush/Quayle re-election effort. [National Library on Money and Politics] Drug and health product interests have given another $1 million. [Center for Responsible Politics, National Library on Money and Politics] When Bush convened his 'Health Care Summit' on health care costs, Bush effectively barred groups of consumers and businesses who pay the bills. 40 representatives of health insurers and providers were invited. [Medicine and Health, 11/4/92] THE BUSH PIECEMEAL POLITICAL HEALTH CARE NO-PLAN NOTHING BUT POLITICS "Mr. Bush expressed no sense of urgency about the health care crisis until last November when the voters of Pennsylvania spoke out loud and clear for a national health plan and elected Harris Wofford to the Senate." [NYT, 8/2/92] George Bush has not introduced in Congress the key to his health plan -- his $36 billion a year health care tax credit and deduction scheme. RAISE COSTS AND COST JOBS Bush would increase national health expenditures by 2 percent over current levels -- $18 billion next year alone. It would increase federal tax expenditures by 39% or $36 billion a year. [R.D. Reischauer, CBO Director, Senate Finance Committee hearing, 5/6/92] "Bush's health proposals will drive up private sector costs at a loss of 1.5 million jobs in the next five years. [Kenneth E. Thorpe, UNC Working Paper, 8/31/92] SEND MORE MONEY TO INSURANCE, DRUG COMPANIES "The large inducements for insurers... would increase the already horrendous administrative costs of the current system." [Henry Aaron, Brookings Institute, House Energy and Commerce testimony, 7/29/92] "[Bush's reforms] leave in place some of the worst anticompetitive features of the present failed market. [Alain Enthoven, New England Journal of Medicine, 9/10/92] Bush won't control drug prices -- increasing at three times the inflation rate. [Families USA] LEAVE MILLIONS UNINSURED No more than 7 million of the 37 million uninsured would be able to purchase health insurance under the Bush proposal. [Employee Benefits Research Institute] CREATE 'HEALTH STAMPS' -- WELFARE FOR HEALTH CARE Bush would provide a full tax credit or voucher only for those earning less than $10,000. The value falls to just $125 for an individual earning just $15,000. Bush's proposal allows middle class families to deduct only $563 out of an average cost of $6,500 -- about 1 month worth of coverage. [DPC, 2/28/92; Families USA] BUSH PROPOSALS WOULD GUT MEDICARE AND COST JOBS In his 1992 Mid-session Review, Bush proposed raising Medicare taxes and cutting Medicare benefits by a combined total of $127 billion over the next five years, increasing the average elderly American's medical bill by $2000. [OMB] The Medicare cuts required by Bush's proposals would increase private sector health costs -- and cost 2.2 million jobs. [Kenneth E. Thorpe, UNC Working Paper, 8/31/92]