1992 Democratic Presidential Primary

                                 The Tsongas Committee

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NH flyer
Position Paper - 8 1/2" x 11", 4 pages.

Paul Tsongas
Democrat for President
Health For All Americans Plan Detailed Description

THE CRISIS IN AMERICAN HEALTH CARE DEMANDS SERIOUS ATTENTION. It needs honest answers and solutions that can be implemented and will work. This proposal meets the following objectives:

Universal Coverage. Everyone must receive an acceptable level of health care.

• Cost Control. Medical costs must be brought under control in order to provide universal coverage and to insure that no one fails to seek medical care when they need it.

• Highest Quality. U.S. health care must remain the best in the world. But our health care system must be reoriented so that we devote more attention to keeping people healthy, rather than to performing more and costlier procedures.

• Realistic and Practical. Reforms must be practical and therefore have a realistic chance of enactment. We must take the best elements of our existing health care system, and improve on them.

The Health For All Americans Plan is a series of reforms carefully designed to provide universal health care coverage, effective cost control and the highest quality health care.

These reforms use the power of government to create meaningful competition - managed competition - in the health care market and to make that market function more effectively. Under this plan, purchasers and consumers of health care have the necessary incentives and information to make informed and intelligent choices among competing health plans. Insurers and health providers have the necessary incentives to compete for subscribers by providing the highest quality care at the lowest price. Those health care plans that produce the best results - the healthiest population - at the best price will thrive, and those that don't will improve or fail.

This plan will lead to a more cooperative, and less adversarial, relationship between doctor and patient, and encourage medical providers to use their expertise to control costs.

These reforms are realistic, practical and can make an immediate difference.


The principal elements of the Tsongas Health for All Americans Plan, which utilizes the concept of "managed competition" developed by Professors Alain Enthoven and Richard Kronick, are as follows:

Mandatory Coverage by Business. All businesses will be required to provide a choice of family health . insurance plans for their full-time employees. Businesses with less than 50 employees may choose to purchase this insurance through new State Buyer agencies.

Businesses will also pay a payroll tax of approximately 6-8% of wages for any part time, temporary or seasonal employees who are not covered by the company's health insurance (up to a maximum of approximately $2,400 per employee) unless they are covered by Medicare or receive health insurance through a family member.

Coverage by State Buyer Agencies. Everyone not covered by private business health plans or by Medicare will receive health insurance through new State Buyer agencies. The State Buyers will not act as insurers themselves, but will negotiate with private insurers and make available a choice of private insurance coverages, just as a private business would. By pooling their purchasing power, the large groups of individuals buying through the State Buyers can exercise the same leverage in negotiating with health insurers as large employers. States may establish more than one Buyer agency to cover geographical subdivisions if greater efficiencies can be achieved by doing so.

Comprehensive Standard Benefit Package. The Federal government will mandate a comprehensive package of benefits which businesses and State Buyers must provide and insurers must offer. A standard benefits package will eliminate most differentiation on the basis of coverage, and will require insurers to compete on the basis of price and quality.

The basic benefit package will include a broad range of health care. It will emphasize prevention, well-patient care, immunizations and screenings to promote healthiness and to facilitate early dia:gnosis when treatment is most effective and least costly. It will also include inpatient and outpatient hospital services, primary and specialist physician and nursing care, emergency treatment, home health services, family planning, alcohol and drug abuse and fertility treatment. The basic benefits will include all coverage required under the Federal HMO Act, plus some pharmaceuticals and additional inpatient mental health care.
No Pre-Existing Condition Limitations. Pre-existing condition limitations will be prohibited. No insurer may refuse any person coverage for the full standard Federal benefits on the basis of any illness or condition from which that person suffers.

Premiums, Deductibles and Co-Payments. Premiums, deductibles and co-payments should be set at levels which create effective economic incentives to purchase cost effective care, but which do not cause anyone to delay or forego necessary treatment because of excessive cost.
Premiums. Businesses and State Buyers will be required to pay an amount at least equal to 90-100% of the premium for the most cost effective health insurance plan containing all of the Federally-mandated benefits in the relevant geographic area. A person who chose a more expensive plan would be expected to pay the entire difference. This creates a real economic incentive for employees and others to choose the most cost effective plan, and for insurers and providers to compete on the basis of cost, bearing in mind that all plans will provide the same Federally-mandated standard benefits. Frequently, the choice will be between a more expensive fee-for-service plan and less costly managed care, although this need not be the case.

Deductibles and Co-Payments. No deductibles will be permitted, and there will be no co-payments for well patient care and prevention (such as immunizations, check-ups and regular mammograms). A co­payment of up to 20% of the cost of other procedures (with an annual maximum of $1,000 per person and $2,500 per family) may be charged for other care (Low income persons will be exempt from co-payments). Patients must not be deterred from seeking necessary treatment by excessive charges, but must understand the true cost of their decision to obtain health care.
Tax Reform. The Federal tax subsidy for expensive and inefficient health plans will be eliminated. The tax code will allow employers to deduct an amount equal to 90-100% of the premium of the most cost effective health insurance plan containing the full Federal benefits offered in the geographic area. It is expected that 100% will be deductible, and that this amount would be reduced to 90% only if, at the time the plan is enacted, additional revenues are needed to ensure revenue neutrality.

Self-employed persons and others whose health coverage is not fully paid for by business (and who do not receive Medicare or are not covered by health insurance through a family member) will pay a charge of approximately 6-8% of adjusted gross income up to a maximum of approximately $2,400, but reduced by all payroll taxes paid by the person's employer for health coverage. Under this formula, most low income people will not pay any additional amounts. All charges will be collected by the Federal government through the tax system.

Malpractice Reform and Medical Standards. Meaningful malpractice reform must be adopted to lower the cost of malpractice insurance (now approximately $6.5 billion annually) and, more importantly, to reduce the practice of "defensive medicine" in which physicians perform excessive tests and procedures our of fear of being sued for malpractice. In conjunction with malpractice reform, doctors should be subject to rigorous, periodic recertification to insure quality standards.

Meaningful Reporting of Outcomes. Health insurers and providers will be required to provide detailed and standardized reporting of care given and results achieved. Purchasers of health care coverage will have the information necessary to make intelligent choices among policies based on quality of care.

Uniform Record keeping. Health insurers and providers will be required to maintain standardized records in order to reduce administrative costs. With a standard set of covered benefits, standardized record keeping should be easy to implement. Insurers and providers will also be encouraged to use automated medical records and aggregate data collection techniques in a standard format so that medical histories can be made readily accessible and usable ..

Federal prevention programs will be consolidated to more efficiently organize outreach and media programs targeted to at risk populations, including the consolidation of anti-smoking, drinking and drug abuse programs. Prevention efforts will be increased and better integrated into the existing delivery system.

Small Business. Businesses with 10 or fewer employees will not be required to provide health insurance until two years after the formation of State Buyers, although they may take advantage of the purchasing power of the State Buyers at any time. This will give them time to prepare for the additional costs of providing this coverage, and will allow some of the market efficiencies of this plan to take effect. If, at the end of two years, it appears that additional relief is needed for small businesses, other assistance in the form of subsidies or credits may be considered

Rural Areas. In rural areas, State Buyers will be authorized to determine whether there are too few insurers to provide meaningful competition and to set prices for medical care in those areas.

Costs. This plan will not raise the cost of health care to the Federal government or the overall level of national health care spending, and in the long run it should stabilize and may reduce costs. The Federal government will continue to provide matching funds for those who now qualify for basic health coverage through Medicaid. In order to enable the State Buyers to meet their obligations under this plan, the additional revenues generated from changes in the tax code will be contributed by the Federal government. The Federal share will be 70% of these costs.

Medicare and Medicaid. Medicare, which has functioned effectively, will continue in its current form. People now covered by Medicare will retain this coverage and will not be included in the new system.

The part of Medicaid which consists of health coverage of the kind offered under this plan will be eliminated, and the Medicaid population will receive that coverage through State Buyers.

Expanded Efforts for Children. Even with full medical coverage for all children, special efforts are needed to reach out to children and expectant mothers to be sure they receive available care. Nutritional programs and prenatal care will be provided to every pregnant mother in order to promote the birth of healthy children. All children will be immunized to protect them from preventible diseases. The WIC program will be fully funded and school-based programs will be developed to monitor children's health. Every dollar spent on these efforts saves more money later in health costs, remedial education, delinquency and other childhood and adult problems.

Long Term Care. The United States must work toward making long term care accessible and affordable to all older and disabled Americans who need these services. Long term care refers to a range of medical, social and personal services for individuals who cannot care for themselves.

An insurance funding mechanism like Social Security, the encouragement of an effective market for long-term coverage through private insurance, and incentives for appropriate levels of care - such as nursing, home care and respite care - will be considered in the development of such a plan. Ultimately, our goal for long term care must be the same as for health care - universal access to quality services.

Research. The United States has a preeminent position in research and development of medical technologies, drugs and other treatments. It is imperative that we maintain this standing both through private efforts and through government funding.

The US faces a major crisis in the growth of AIDS, and continued struggles to find cures and treatments for cancer, heart disease and other serious illnesses. Government must play a vital role in the research efforts to find cures for these diseases.

Presidential Leadership on Health. The President is in a unique position from which to encourage Americans to adopt healthy lifestyles. In the past, Presidents have used this position to great benefit, most notably John F. Kennedy in his efforts to promote physical fitness. The President must use· the White House as a platform to promote good health.