Unbiased Analysis of Today's Healthcare Issues

Guide to the Republican Candidates

Written By: Jason Shafrin - Jan• 09•08

So you’re a Republican and you don’t know who to vote for. Which of the Republican candidates has the best plan for health care reform? This is what I will discuss today.

If you are a Democrat, please read my “Guide to the Democratic Candidates” yesterday.

Similarities

Almost all the Republican candidate are in agreement on the following issues:

  • Do not expand SCHIP.
  • No insurance mandate, although Mitt Romney did provide over an insurance mandate while he was governor of Massachusetts.
  • Decrease Regulation. Most Republican candidate voiced support for an individual’s ability to buy insurance from out-of-state providers and to simplify state and federal insurance regulations. All the candidates would give states more freedom to come up with innovative health care solutions.
  • Medical Malpractice award caps. Almost all the candidates, with the exception of Ron Paul, support caps on the amount of money that can be awarded through medical malpractice. This should drive down the cost of malpractice insurance.

Differences:

A chart will be helpful here (ordered from most to least votes in Iowa caucus).

 


Huckabee Romney Thompson McCain Paul Giuliani
Insurance mandate? N N N N N N
Expand SCHIP? N N N ? N N
Guaranteed issue? N N N N N N
Community Rating? N N N N N N
Insurance subsidies? Y Y N Y N Y
End tax deductability of employer-provided ins? N N N N N N
Begin tax deductability of individual ins? Y Y N Y Y Y
Regional Purchasing N N N N N N
Allow drug imports? ? ? N Y Y N
Expand HSA? Y N N Y Y Y
             

The Republican candidates seem much more satisfied with the status quo than the Democrats. Philosophically, Republicans want to put more health care decisions into the hands of consumers. Thus, most candidates support making individually-purchased health insurance tax deductible with the exception of Fred Thompson. Rudy Giuliani would allow a standard tax deduction of $15,000 for families and $7,500 for individuals.

Huckabee, Romney, McCain and Giuliani would all give poor individuals subsidies to purchase health insurance, but none claim that they will end Medicaid. Likely, they would offer low income families the option of purchasing health insurance with a subsidy or possibly the ability to opt out of Medicaid. Thompson and Paul do not support these subsidies.

One would think that free-market Republicans would support the right to import drugs, but only McCain and Paul believed this was a good idea.

Health savings accounts (HSAs) were very popular as well. Many candidates supported allowing the creation of an HSA without having a high-deductible health plan (HDHP). Romney and Thompson did not explicitly support this idea, but they were not against it either.

Healthcare Economist’s Take

Most Republican candidates believe that less–not more–government involvement is the best way to cure what ails the healthcare system. While I am sympathetic to this line of thought, pure political ideology will not improve the healthcare system.

Huckabee calls for a “complete overhaul” of the health care system but only does not really offer concrete solutions. His plan to increase HSAs is widely shared by almost all of the candidates. I am not sure why HSAs are a good idea. They limit the liquidity of consumers income. This means that only individuals with large savings (i.e.: the rich) will be able to take advantage of HSAs while the liquidity constrained poor will need to have their money available for food, utilities, gas clothes and shelter and will not be able to benefit from HSAs.

Despite significant health care reforms in Massachusetts, Romney’s national health care reform plans are meager: make health care expenses and insurance premiums–including nongroup policies–tax deductible.

Thompson’s health care plan is basically to be content with the status quo.

McCain gives the most detailed healthcare plan. Like Barak Obama, he wants to create national standards for measuring and recording treatments and outcomes. He also supports clinics in retail outlets (e.g.: Minute Clinics) and the expansion of the role of nurse practitioners and physician assistants, and a $2,500 tax credit ($5,000 for families) to increase incentives for insurance coverage.

 

Ron Paul is the most radical candidate. He wants reduce the role insurers–especially HMOs—play in the financing of healthcare. He wants patients to be responsible for paying the first dollar of health care. Despite his qualifications as a physician, Paul does not offer very creative solutions to the healthcare problem. While he is a libertarian, he does not propose any limits on Medicare or Medicaid and in fact wants to expand government coverage to include alternative medicines.

While McCain supports a tax credit, Giuliani supports a tax deduction of $15,000 Family, $7500 health insurance deduction. This helps those with a higher marginal tax rate more (i.e.: the rich) and the poorest individuals who don’t pay tax will not even benefit from this legislation. Giuliani does advocate a Health Insurance Credit for the poor as well and poor individuals could use these funds–as well as funds from Medicaid or their employer–to purchase private health insurance.  Any social program that gives money to the poor and then tells them how to spend it–on this case on health care–must be compared against a simple government cash transfer program.

The Healthcare Economist Democratic Pick: McCAIN

While little separates the Republican candidates in terms of their view on health care reform, I would support John McCain.  I am strongly in favor of importing pharmaceuticals from other countries and innovative medical delivery systems such as the Minute Clinics.  McCain supports both of these initiatives.  Also, McCain has a $2500 tax credit ($5000 for families) for all Americans and this will help to eliminate the bias toward employer-sponsored health insurance. 

Rudy Giuliani has a very similar health care reform proposal as McCain, but does not support the importation of pharmaceuticals from developed countries.  Further, Giuliani’s tax deduction is regressive compared to the McCain tax credit which is a more proportional subsidy for everyone (although Giuliani does offer a Health Insurance Credit for the poor).  I am partial to Ron Paul’s libertarian leanings on many issues, but trying to eliminate third party payers is not a feasible solution to the healthcare crisis, especially when catastrophic illnesses are so expensive.

Candidates’ Statement on the Health Care Issue

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No Comments

  1. Atheendar says:

    Great post! I was looking for something like this to pass on to my students and friends. Thanks for doing this.

    BTW, great summary of the Basu, Heckman, et al, local IV paper in health econ.

  2. […] Study in Quality: Ambulatory Surgery Centers vs. Hospital Outpatient Departments  •  Guide to the Republican Candidates […]

  3. Jim Evans says:

    This is both helpful and discouraging. It shows that the things that are on the table are economic rationalizations of the current healthcare system, nothing more.

    I will become interested when the checklist includes items like “Payment reform: reimbursed disease monitoring and increased primary care payment” or “HIPAA rewrite to ensure that patients own their own medical records” or “Significant reimbursement differences for different care quality”. Until that point, this debate is of little consequence.

  4. […] On healthcare, he supports importation of cheaper prescriptions from outside the USA breaking the monopolistic strangle-hold big pharma has on the drug market. McCain is also a champion of healthcare delivery initiatives designed to lower the cost and increase availability of healthcare to Americans of all socio-economic strata. Last, he has proposed a tax-break to address the current bias toward employer sponsored healthcare plans. You can read an excellent article detailing the major candidate’s stances here. […]

  5. Jee says:

    I don’t think your criticism regarding Dr. Paul is accurate when you mentioned that he is in support of “expanding the government for alternative meds”. As matter of fact, if you listen to the video through the link you provided carefully, he explicitly mentions government regulation of alternative meds as one of the problems of todays healthcare system. He believes allowing nurses to be licensed to do simple checkups, and letting the patient to negotiate prices with doctors to bring prices down. the problem of universal health care is just a simple matter of supply and demand. If you tax the people to provide government health insurance, demand will far exceed supply since the government is paying for it. I’m not even going to get into the issue with quality. Just look at the VA hospitals. Another problem is that the government will hold a monopsony over all physicians. Not to mention a monopsony over all the medical equipment too, coupled with monopoly control over health care. Thus, the government will tell you which medicine to take and which procedures you need. Similar to the corporate medicine system we have today, except Americans will not have choices and will be paying for it whether they like it or not. So, if you think the solution is Socialized medicine, you will be sacrificing quality, efficiency, and last but not least, your PRIVACY! Think about it.

  6. […] On healthcare, he supports importation of cheaper prescriptions from outside the USA breaking the monopolistic strangle hold big pharma has  on the drug market.  McCain is also a champion of healthcare delivery initiatives designed to lower the cost and increase availability of healthcare to Americans of all socio-economic strata.  Last, he has proposed a tax-break to address the current bias toward employer sponsored healthcare plans.  You can read an excellent article detailing the major candidate’s stances here. […]

  7. […] On the Republican side, I tip my hat to John McCain. Some characterize him as a “moderateâ€? Repbulican, others as a “conservativeâ€? Democrat. I believe he is an honorable American hero who has spent time thinking through his answers to issues and has enough time in the trenches of politics in Washington to know what works and what does not. He is not a “Johnny-come-latelyâ€? to the political process, nor is he merely a rehash of the same-old-thing. On healthcare, he supports importation of cheaper prescriptions from outside the USA breaking the monopolistic strangle hold big pharma has on the drug market. McCain is also a champion of healthcare delivery initiatives designed to lower the cost and increase availability of healthcare to Americans of all socio-economic strata. Last, he has proposed a tax-break to address the current bias toward employer sponsored healthcare plans. You can read an excellent article detailing the major candidate’s stances here. […]