President Bush has had almost eight years to improve our nation’s health care system. But the President and his Republican allies in Congress – who have valued tax cuts above all else, pursued ideological policies, and rewarded special interests – have produced dismal results. Skyrocketing health care costs are straining family budgets as well as state budgets, forcing employers to drop or scale back health insurance coverage for their workers, increasing the number of uninsured Americans, and impeding access to needed health care services.
The health care proposals offered by the President and Congressional Republicans, would do little or nothing to make health coverage more affordable, and would actually leave many Americans worse off than they are today. The Republican nominee for President, Senator McCain, shares President Bush’s misguided vision and promises four more years of the same harmful proposals. Astonishingly, John McCain has even made the case for deregulating the health insurance industry by extolling the virtues of deregulation in the banking sector.
Democrats are committed to pursuing real solutions for our nation’s health care system: containing health care costs and securing guaranteed affordable health coverage for all Americans. Since taking control of Congress two years ago, we have made a significant down payment towards achieving these goals, but we are far from satisfied. All too often, Bush-McCain Republicans have stood in the way of progress and refused to work with Democrats in good faith to address the needs of the nation. The American people are tired of these partisan tactics and Senate Democrats share their frustration. That is why Democrats will continue to lead the way for change – to address the key health care priorities that Republicans have ignored.
Bush-McCain Republicans: The Wrong Prescription for Remedying Our Nation’s Health Care Challenges
Misplaced priorities. President Bush entered the White House claiming to be a “compassionate conservative.” But when presented with a $5.6 trillion 10-year budget surplus, he chose to make large tax cuts that disproportionately benefited the wealthiest Americans instead of investing in the health of American families. And in order to partially offset the high cost of tax cuts, and to bankroll his $10 billion per month failed Iraq policy, the Bush Administration and Congressional Republicans have supported spending cuts for critical health programs, like Medicare, Medicaid and the National Institutes of Health.
Policies driven by ideology. When the Bush Administration and the Republican-controlled Congress pursued new health care legislation, they often advocated untested ideological proposals. Bush-McCain Republicans have called for deregulation of the health insurance market and championed Health Savings Accounts (HSAs) as a free-market tool to contain health care costs, despite studies showing these plans would shift more costs to older and sick patients – the very people who are struggling the most to afford health care. And in this Congress, Bush-McCain Republicans have continuously blocked bipartisan legislation to renew and improve the Children’s Health Insurance Program (CHIP), based on their free-market ideology. As a result, millions of children will not have access to doctors, life-saving prescription drugs, immunizations, preventive screenings and the basic medical care necessary to start life healthy.
Defenders of special interests. The Bush Administration and the Republican-controlled Congress have crafted legislation that benefits special interests and have blocked legislation that is opposed by them. The Medicare drug benefit included an additional $10 billion reserve fund for certain private health plans and prohibited the Health and Human Services Secretary from negotiating lower-priced drugs with pharmaceutical companies, a provision supported by drug companies. Republicans have also refused to support the use of a tobacco tax to pay for CHIP legislation - protecting big tobacco instead of providing health coverage to America’s children. And this year, they blocked bipartisan legislation to protect access to health care for our nation’s seniors in the Medicare program in order to protect health insurance industry profits.
Interference with science. President Bush has placed restrictions on scientific research and overturned the judgments of independent scientists. The Bush Administration has limited the number of embryonic stem cells that are eligible for federally funding, which is hindering progress in medical research and slowing the search for new treatments for dreaded diseases. The Administration has also overruled the opinion of an independent advisory committee and the scientific review staff at the FDA and blocked efforts to allow the emergency contraceptive Plan B to be sold without a prescription.
The Bush-McCain Republican Record: Skyrocketing Health Care Costs and More Uninsured, While Pharmaceutical Companies and Health Insurers Profit
Less affordable health care. The cost of family health insurance has skyrocketed nearly 80 percent since 2001. This is compared to a 24 percent increase in overall inflation. The average premium for a family of four rose to $12,680 in 2008, with the average family contribution of over $3,350. When premium growth outpaces increases in wages and inflation, workers typically have to spend a greater portion of their income each year in order to maintain coverage. From 2001 to 2008, the amount families have paid out of pocket for their share of premiums has increased by approximately $1,550. Prices for the brand-name drugs most commonly used by seniors enrolled in the Medicare Part D program rose by an average of 7.4 percent last year – nearly two and a half times the rate of inflation. Since 2002, brand-name drug prices have increased far more quickly than the rate of inflation, with dramatic spikes since 2006 when Medicare Part D was implemented.
Seven million more Americans without health insurance. Rising health care costs jeopardize employer-sponsored coverage. When the cost of premiums increases, employers have more difficulty providing health coverage, and their workers have more difficulty affording their share of the cost. With the increased cost of premiums during the Bush Administration, there has been an erosion of employment-based health benefits. The percentage of non-elderly individuals with employment-based health benefits decreased from 68.4 percent in 2000 to 62.2 percent in 2007.
A significant cause of the increase in the number of uninsured Americans is this decline in the number of people receiving health coverage through their employer. The number of uninsured Americans has increased by seven million people since President Bush took office, from 38.7 million in 2000 to 45.7 million in 2007. While children have been protected from the rising uninsured rate during recent years (thanks to Medicaid and CHIP – programs Republicans have sought to cut), the number of uninsured children in our country was still an astonishing 8.1 million in 2007. 
In 2007, nearly two-thirds of U.S. adults, an estimated 116 million people, struggled to pay medical bills; went without needed care because of cost; were uninsured for a time; or were underinsured. And given the weak economy, the number and percentage of uninsured can be expected to rise in 2008, and probably 2009 – the problems for Americans struggling with health care costs are only getting worse.
A windfall for the health insurance and pharmaceutical industries. When the Republican Congress approved the current system that makes increased payments to private plans compared to traditional Medicare, Republicans said that the excess payments would be returned to beneficiaries. But it turns out that the government is subsidizing administrative costs and profits for big health insurance companies that operate private Medicare Advantage plans. In the case of Medicare Private Fee-for-Service plans, about half of this excess payment has gone towards these plans’ administrative and marketing costs – and boosted profits. The Government Accountability Office (GAO) found that in a single year, private Medicare Advantage plans reaped over $1 billion in extra profits, having spent less on beneficiaries than they had initially projected – these extra profits are on top of the $35 billion the plans made that same year. In addition, the Medicare drug benefit approved by the Republican Congress has generated billions in profits for the drug industry though a combination of increased utilization, higher prices, and switching “dual-eligible” beneficiaries from Medicaid to Medicare. In only the first six-months following the start of the Medicare drug program, profits for the ten largest pharmaceutical companies increased by over $8 billion.
Impediments to medical research. Progress in cutting-edge medical research is also being hindered. The possibilities of embryonic stem cell research have excited researchers and are giving hope to people suffering from debilitating diseases and disabilities. But the great promise of this research has been impeded by President Bush’s embryonic stem cell policy, which limits federal funding to only a small number of embryonic stem cell lines created before August 9, 2001.
More broadly, the Bush Administration’s funding priorities have been constraining medical research. In Fiscal Year 2006, the Republican-controlled Congress and President Bush imposed the first cut to funding for the National Institutes of Health (NIH) since 1970. And the President’s Budget has since continued to propose millions in cuts for the NIH. Inadequate levels of funding for the NIH results in reductions in the number and/or size of grants supporting research about the causes of and cures for diseases like cancer, diabetes, AIDS and Parkinson’s disease. Insufficient funding also affects the ability of researchers to pursue new and promising lines of research and to develop a new generation of researchers to carry out important research in the coming decades.
Republican Response: Misguided, Ideological Proposals and Obstruction
Pushed for deregulation of the health insurance industry. Bush-McCain Republicans have advocated a radical transformation of our health care system, where most Americans would shop for health insurance on their own in a highly deregulated market, and consumers would be charged greater deductibles and copayments to encourage them to use less care. The theory is that the marketplace is all that is needed to keep health insurers in check, but the reality is that this approach would reduce costs for insurers at the expense of people – allowing health insurers to avoid state rules mandating that specific benefits and providers be covered. Even in the current market, insurance companies deny or price-out of coverage nearly nine out of every ten Americans who apply for insurance in the individual market.
While some Bush-McCain Republicans have called for greater regulation of the financial system since its near collapse due to lack of regulation and oversight, they still maintain that the government has no role in limiting health insurers’ ability to deny coverage to sick people, jack up premiums, or rescind coverage after a policy holder generates substantial medical costs. In support of his plan for deregulating health care, Republican presidential nominee, John McCain, has ironically pointed to the deregulation of the banking industry as a model:
Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.
Indeed, deregulation of the banking industry serves as a powerful example — of why rules and standards for the health insurance industry are necessary, not dispensable. The health insurance industry, like the banking industry, has shown that it needs more oversight, not less. In California, for example, one insurer has recently been fined $13 million for improperly rescinding coverage when policy holders became ill and incurred high medical bills; another insurer was fined $3.6 million for the same misconduct. California regulators also fined another plan $1 million for lying about its practice of linking employees’ bonuses to their success at canceling policies sold to customers that incurred high medical bills.
If Bush-McCain Republican proposals were enacted, millions of Americans with preexisting conditions would likely find it difficult, if not impossible, to find or afford coverage. An estimated 137,000 people died from 2000 through 2006 because they lacked health insurance, including 22,000 people in 2006 alone. Yet Bush-McCain Republicans would provide less coverage, not more, while increasing families’ medical costs. They would allow insurance companies to deny a cancer patient the treatment she needs to survive, or refuse to pay for the diabetes medication for a sick child. And patients with coverage would be incentivized not only to avoid unnecessary care, but also needed treatment – undermining effective and preventive care that can bring down overall health care costs. Senator McCain, who says he is “fundamentally a deregulator,” would apply the same lack of oversight that has crippled the financial system to the health care system – and the results would be just as devastating.
And Senator McCain promises four more years of the same misguided Bush-Republican health care proposals, including:
· Allowing insurance companies to avoid state regulation by selling policies across state lines. Bush-McCain Republicans want to permit health insurers licensed in one state to do business in the other states without complying with the other states’ insurance laws. This would allow insurance companies to choose states with weak consumer protections as their base for national operations, effectively deregulating the health insurance industry. Most insurers would be free to target coverage to those with the fewest health care expenses – maximizing their profits while excluding older and sicker individuals who need coverage the most. And as more of these older and sicker individuals go without insurance, skip needed doctor’s visits and medication that they can’t afford, and end up in the emergency room, overall health care costs would go up even more.
· Eliminating the existing tax exclusion for employer-sponsored health insurance. Bush-McCain Republicans have proposed replacing the existing tax exclusion for employer-provided medical benefits with a standard deduction or credit for everyone with health insurance. They expect families to use the deduction or credit to purchase coverage in the individual market. But with skyrocketing health care costs, vouchers or tax credits would be insufficient to purchase adequate coverage, and these subsidies would adversely affect the availability of employer-based health coverage. Moreover, in the individual market, the exclusion of basic insurance reforms allows for discriminatory insurance practices that effectively make health insurance inaccessible, particularly for older and sicker individuals. In addition, shifting coverage from the group market to the individual market could generate billions of dollars in new administrative costs, since insurers would have to spend more money on marketing and underwriting. In short, this approach would fail to meaningfully reduce the number of uninsured Americans, while disrupting and jeopardizing coverage for those who already have it.
· Promoting HSAs. Bush-McCain Republicans tout Health Savings Accounts (HSAs), enacted in 2003, as a way to expand coverage and contain costs. But HSAs primarily benefit healthy and wealthy Americans, not lower- and middle-income people who are struggling to afford health coverage. HSAs would not lead to significant containment of health care costs. In fact, HSAs and the high-deductible insurance policies that accompany them, will actually make health care more expensive for many Americans. And because of high costs, people with consumer-driven health plans (i.e., a high-deductible plan with an HSA) are significantly more likely to avoid, skip or delay needed care health care. In addition, providing extra tax incentives for HSAs and high-deductible plans, as the Bush Administration has proposed, could actually increase the number of uninsured Americans by adversely affecting employer-sponsored coverage.
· Establishing AHPs. Bush-McCain Republicans have also advocated for Association Health Plans (AHPs) as a way to make health coverage more affordable to small business. AHPs would allow small employers from different states that join together to purchase health insurance to obtain coverage that is exempt from the consumer protection laws in many states. But this ill-advised approach would actually be detrimental to most small businesses. AHPs would ultimately increase premiums for the vast majority of small business employees, would have a negligible affect on expanding coverage to the uninsured, and would leave those in AHPs without important state consumer protections.
Vetoed critical Medicare legislation. Earlier this year, both the Democratic-controlled Senate and House overwhelmingly approved legislation to reverse the scheduled 10.6 percent cut in payments to physicians who care for the 44 million American seniors in the Medicare program, and save billions of taxpayer dollars by reducing overpayments to some private Medicare plans. But despite an overwhelming show of bipartisan support, President Bush vetoed the legislation. While the President and his Republican allies in Congress, including Senator McCain, fought to protect the health insurance industry, Democrats fought to protect seniors. Under Democratic leadership, Congress voted overwhelmingly to override the President’s irresponsible veto of this legislation — to ensure that physicians are fairly reimbursed, beneficiaries are able to afford Medicare’s services, and the long-term stability of the Medicare program is assured.
Blocked legislation to lower drug prices for America’s seniors. The Medicare drug benefit does not allow the Health and Human Services Secretary to use Medicare’s purchasing power to negotiate lower prices from the pharmaceutical industry. Permitting this kind of negotiation would enable Medicare to pay lower prices than what private drug plans have negotiated. While these savings would benefit taxpayers and Medicare beneficiaries, Republicans wrote this ban into law, and blocked Democrats from repealing it this Congress.
Sought drastic Medicare cuts while protecting billions in subsidies to insurance companies. Instead of setting forth a plan to address the underlying reasons for rising costs in the Medicare program, the President has proposed billions in legislative and regulatory cuts to providers in the traditional Medicare fee-for-service program — slashing payments to hospitals, nursing homes, hospices and other health care providers. While seeking drastic cuts in reimbursement for traditional Medicare, Republicans have fought to protect Medicare’s current practice of paying private insurance companies 13 percent more, on average, than it costs to treat the same beneficiaries under traditional Medicare — overpayments that will cost taxpayers more than $150 billion over ten years according to the Congressional Budget Office (CBO). Bush-McCain Republicans even opposed bipartisan legislation that generated modest savings in Medicare Advantage – not by reducing payments to private plans, but merely by requiring private fee-for-service plans to compete on the same basis with other private plans. All major physician and provider groups, and virtually all seniors’ advocacy organizations supported this legislation; the only real opposition to the bill was generated by the health insurance industry, which Bush-McCain Republicans protected at all costs.
Twice vetoed health insurance for kids. CHIP has played a crucial role in helping to reduce the number of uninsured low-income children over the past ten years. By every measure, the program is cost-effective, and has been shown to work well in meeting the basic health care needs of our nation’s children. Twice last year, Congress overwhelmingly approved bipartisan CHIP reauthorization legislation that would invest $35 billion in new funding for CHIP, extending coverage to almost four million uninsured children. And twice, the President vetoed the legislation — denying millions of our nation’s most vulnerable children the doctor’s visits and medicines they need when they are sick, and the checkups they need to stay well. Republican presidential nominee, Senator McCain, voted with the President on this bill, and against our nation’s children.
Used “back-door” rules to cut kids’ health coverage. While Congress was in the midst of the bipartisan CHIP reauthorization debate, on August 17, 2007, the Bush Administration issued a letter to all state health officials that severely limits states’ ability to cover uninsured children though CHIP. With the alleged goals of better targeting low-income children and reducing substitution of private coverage with public coverage (referred to as “crowd out’), the letter, known as the “August 17th Directive,” virtually precludes states from covering children in families with gross income levels above 250 percent of the federal poverty level (“FPL”), the equivalent of $44,000 annually for a family of three in 2008. The Directive went into effect on August 18, 2008, but has already caused tens of thousands of children to miss out on coverage that they would have otherwise obtained. Although CMS has indicated that it will not immediately take any enforcement action with respect to the Directive, it nonetheless remains in place – jeopardizing the coverage and well being of children in twenty-two states.
A majority of governors and numerous members of Congress have criticized the Directive, and both GAO and the Congressional Research Service (CRS) have issued legal opinions stating that the Bush Administration’s issuance of the directive did not comply with federal law. So, in addition to blocking bipartisan CHIP legislation that would cover millions of uninsured children, the Bush Administration has also used an improper, back-door channel to implement its misguided CHIP policy — undermining state efforts to cover their uninsured children who, in the face of rising health care costs and a faltering economy, need CHIP now more than ever.
Cut Medicaid and created barriers to enrollment and access. At a time when more people were losing health coverage and struggling to afford health care, Republicans enacted a spending reconciliation bill in 2006 that included significant cuts to Medicaid. According to CBO, by 2015, these Medicaid cuts will cause 13 million people to pay higher copayments, 1.3 million to pay new premiums, and 1.6 million to have their Medicaid benefits reduced. The bill also included a new documentation requirement, purportedly aimed at preventing undocumented immigrants from improperly obtaining Medicaid, but that has instead overwhelmingly affected U.S. citizens who are eligible for the program. States that have tracked the impact of the new citizenship documentation requirement have found that it has caused thousands of U.S. citizens to lose their Medicaid coverage, and thousands of others have had to wait for weeks or months to obtain coverage, or have had their applications denied. These and other spending cuts were made to partially offset tax cuts that primarily benefit wealthy Americans.
Proposed regulations that would further undermine the health care safety net. More than 50 million low-income people – about one out of six Americans – depend on Medicaid for their health care. The Bush Administration issued a series of proposed regulations that, by reducing or eliminating Medicaid payments for certain services, would undermine the Medicaid safety net and create barriers to accessing care for millions of Americans. These regulations, touted by the Administration as “savings,” would not lower health care costs. Instead, they would shift millions of dollars in costs to state and local governments at a time when they already face strained budgets combined with increased demand for services like Medicaid. If these regulations were implemented, states would be forced either to raise revenues elsewhere or cut services to our nation’s most vulnerable at a time when they need help the most.
Citing various reports issued by the GAO and the Office of the Inspector General (OIG), the Administration claims that these regulations are necessary to fight fraud and waste in the Medicaid program. But the proposed regulations go well beyond the problems cited by the Administration, which, for the most part, have already been addressed. The GAO even recently testified in a hearing that it never recommended the Administration’s proposed changes.
That is why the Democratic-led Congress included in its Supplemental Appropriations bill a provision that would impose a delay on implementation of these Medicaid regulations – and was ultimately able to enact moratoria on 6 of the 7 proposed regulations. Democrats are committed to ferreting out any fraud that may exist in the Medicaid program. But regulations that harm our most vulnerable and place a greater burden on fiscally-strapped states are clearly not the way to accomplish this goal.
Vetoed stem cell legislation twice. A growing chorus of researchers and patient advocates has warned lawmakers that President Bush’s embryonic stem cell policy is hindering progress in medical research. The stem cell lines eligible for federal funding under the President’s policy are older and of lower quality than new stem cell lines and are likely to be contaminated. Yet the President has twice vetoed bipartisan legislation that would have provided federal support for research on new stem cell lines derived from unused embryos frozen in fertility clinics. This legislation has the support of the overwhelming majority of Americans, as well as major medical and scientific associations, research universities and institutions, and dozens of patient advocacy organizations. More than 100 million Americans suffer from diseases or conditions that could one day be treated with therapies derived from stem cell research. The President’s vetoes are a devastating setback for them.
Responded inadequately to health care needs of Katrina survivors. Hurricane Katrina caused many people to lose their health coverage, crippled Louisiana’s health care system, and wreaked financial havoc for state governments on the Gulf Coast. Republicans opposed a comprehensive Democratic bill and the bipartisan Grassley-Baucus bill and, instead, approved a scaled-back approach that left many Katrina survivors ineligible for Medicaid and provided insufficient financial relief to affected states.
Advocated for capping medical malpractice damages. Republicans have argued that capping non-economic medical malpractice damages would contain health costs, but these costs represent a tiny fraction of U.S. health care spending. When CBO analyzed a House-passed malpractice bill, it estimated that private health insurance would decrease by less than half of one percent. Moreover, the caps on pain and suffering damages that are at the heart of medical malpractice legislation would do nothing to curb frivolous lawsuits. Instead, they would affect people who have suffered the most serious injuries. Again, this is another example of a Republican health care proposal that does little or nothing to address a problem – and instead makes matters worse for ordinary Americans who need help the most.
 The Henry J. Kaiser Family Foundation and Health Research and Educational Trust, September 2001, September 2008.
 Bureau of Labor Statistics CPI Inflation Calculator.
 The Henry J. Kaiser Family Foundation and Health Research and Educational Trust, September 2001, September 2008.
 The Henry J. Kaiser Family Foundation, August 2007.
 The Henry J. Kaiser Family Foundation and Health Research and Educational Trust, September 2001, September 2008.
 AARP, March 2008.
 Employee Benefit Research Institute, September 2008.
 Employee Benefit Research Institute, October 2007.
U.S. Census Bureau, August 2008; September 2001.
 U.S. Census Bureau, August 2008.
 Commonwealth Fund, August 2008.
 Center on Budget and Policy Priorities, August 2008.
 MedPAC, April 2007.
 GAO, June 2008.
 House Committee on Government Reform, September 2006.
 Center for American Progress Action Fund, June 2008.
 Think Progress’s The Wonk Room, March 2008.
 Commonwealth Fund, September 2006.
 American Academy of Actuaries, Contingencies, September / October 2008.
 Kaiser Daily Health Policy Report, July 18, 2008; September 12, 2008.
 Kaiser Daily Health Policy Report, November 16, 2007; Los Angeles Times, November 2007.
 Elizabeth Edwards, Testimony before the House Energy and Commerce Committee, Subcommittee on Health, September 2007.
 Urban Institute, January 2008.
 Health Affairs, “Cost and Coverage Implications of McCain Plan to Restructure Health Insurance,” September 2008.
 Center for American Progress Action Fund, June 2008.
 Slate, “Why is John McCain Wrong on Health Care? Think Credit Cards,” May 2008.
 Center on Budget and Policy Priorities, April 2006.
 Center for American Progress Action Fund, May 2008.
 Commonwealth Fund, April 2005.
 EBRI/Commonwealth Fund, December 2005; Commonwealth Fund, April 2005.
 EBRI/Commonwealth Fund, December 2005.
 Gruber, Center on Budget and Policy Priorities, April 5, 2006.
 Letter from the U.S. Government Accountability Office to Senators Rockefeller and Snowe, (April 17, 2008); and Letter from Morton Rosenberg, Specialist in American Public Law, Congressional Research Service, to Senator
Rockefeller, (January 10, 2008).
 Center on Budget and Policy Priorities, July 2007
 CBO, March 10, 2003.