REPORT AIR DATE: Sept. 11, 2012

Making Sen$e of Health Care: Competing Claims on Campaign Trail About Reform

SUMMARY

Paul Solman compares and contrasts "Obamacare" policy with health care reform proposals from Mitt Romney. Economists on both sides of the political debate discuss increasing efficiency, technological innovation, market competition and vouchers.

GWEN IFILL: Next, how economic philosophy defines the presidential campaigns' approach to health care.

NewsHour economics correspondent Paul Solman has our story, part of his ongoing reporting Making Sense of financial news.

TRACY MORGAN, North Carolina: I was actually on jury duty when I got a call from my husband, and he said, "I have a brain tumor."

PAUL SOLMAN: Tracy and Mark Morgan were married in 1995, bought this house in Charlotte, N.C., four years later. She was creative director at an ad agency. He was a freelance commercial photographer.

TRACY MORGAN: I asked questions. Of course, one of them is, how much time does he have? And they said two months to a year.

PAUL SOLMAN: That was back in October 2009. Ten months later, while nursing him, encouraging him, Tracy lost her job in advertising.

TRACY MORGAN: Our 33-person agency had shrunk down to nine, two of them principals. And one of them came to me and said, "We're closing the doors. We're filing bankruptcy."

PAUL SOLMAN: And that's when your health insurance ends?

TRACY MORGAN: Yes. When you're with a company and they go into bankruptcy, you don't have COBRA, so you don't have health insurance. So, even if you're someone that had insurance your entire life, every job, paid your premiums, it doesn't matter. You don't have health insurance.

PAUL SOLMAN: For the Democrats who assembled in Charlotte last week, Morgan was a prime exhibit in defense of the president's Affordable Care Act.

Because when you have a spouse facing treatments that would, as in this case, cost over a million dollars, just try to buy health insurance in a free market.

TRACY MORGAN: He was on radiation. He had the craniotomy. He had two forms of infusion twice a month. He was going to be declined. Who is going to take a man that has stage four brain cancer, receiving the amount of care that he was requiring?

PAUL SOLMAN: So, then what do you do?

TRACY MORGAN: North Carolina was an early adopter of the Affordable Health Care Act. And because of that, they had a program. It's called Inclusive Health. And they take patients with preexisting conditions.

I didn't believe it. I was incredulous. But it happened. I got the card. He received his treatments. Just unbelievable when I see the costs that were coming in.

PAUL SOLMAN: To Democrats like former President Bill Clinton, the argument is simple.

BILL CLINTON, former president of the U.S.: And the Republicans call it, derisively, Obamacare. They say it's a government takeover, a disaster, and that, if we will just elect them, they will repeal it. Well, are they right?

CROWD: No!

BILL CLINTON: Let's take a look at what's actually happened so far.

PAUL SOLMAN: What's happened, say Clinton and others, is that millions of uninsured Americans are finally covered, or soon will be, in large part because so many of them, like the Morgans, can no longer be rejected for preexisting conditions.

Vice President Joe Biden's former economic adviser, Jared Bernstein:

JARED BERNSTEIN, former chief economist to Vice President Biden: If you repeal the Affordable Care Act, what you just heard is part of what you lose.

PAUL SOLMAN: Now, it may seem unfair to the Republicans to pit them against a heartrending case study. But the unlimited amount spend on Mark Morgan's care illustrates one of their key arguments, that America's health care system costs more than anyone else's, yet gets no better results, because we rely on government, said vice presidential candidate Paul Ryan in Tampa, not on a competitive market.

REP. PAUL RYAN, R-Wis.: Obamacare comes to more than 2,000 pages of rules, mandates, taxes, fees, and fines that have no place in a free country.

PAUL SOLMAN: And that's why, says presidential candidate Mitt Romney:

MITT ROMNEY (R): That we must rein in the skyrocketing costs of health care by repealing and replacing Obamacare.

(CHEERING AND APPLAUSE)

PAUL SOLMAN: On day one of a Romney presidency, as he's repeatedly said.

But on "Meet the Press" this week, Romney seemed to suggest he would be open to keeping some parts of the Affordable Care Act.

MITT ROMNEY: There are a number of things that I like in health care reform that I am going to put in place. One is to make sure that those with preexisting conditions can get coverage.

PAUL SOLMAN: But Romney's campaign later clarified that he would provide coverage only for the continuously insured.

That would seem to leave out any of the tens of millions of people with preexisting conditions who, if they lost insurance for at least a month, like the Morgans did when Tracy's employer went bankrupt, might not be able to get new insurance.

Moreover, repealing the Affordable Care Act is a cornerstone of the overall Republican economic program. At a spanking new training facility at the University of South Florida in Tampa, John McCain's economic adviser in 2008, Douglas Holtz-Eakin, elaborated.

DOUGLAS HOLTZ-EAKIN, former Congressional Budget Office director: There is a lot of evidence that, in health care in general, we misuse, overuse and underuse different treatments. And getting the efficiency in the health care sector is the key.

PAUL SOLMAN: Getting efficiency. In general, says Holtz-Eakin, America spends too much on medical care for what it gets. A competitive market-based system would cut costs and improve service.

The argument is exemplified by this O.R., he says, where surgeons do everything from a catheterization to a bypass in the very same room and operate by remote control.

DOUGLAS HOLTZ-EAKIN: Look at this, the power of innovation. We have seen it in the private sector. America has the finest medical science and we need to capture that, get it good incentives. And those incentives are -- typically come from winning a contract, winning a bid.

PAUL SOLMAN: And isn't that true, we asked Jared Bernstein. Don't economists like him agree that in general competition works?

JARED BERNSTEIN: It's a good point. And there will be competition in the Affordable Care Act between insurers as they compete within the health care exchanges. It's part of the act.

PAUL SOLMAN: But we need competition within Medicare, Holtz-Eakin insists.

DOUGLAS HOLTZ-EAKIN: What the Republicans want to do is start with entitlement reform, because Medicare in particular is a fee-for-service system where doctors are paid for whatever they do, as much as they do it.

Hospitals are paid separately. Some insurance companies are paid in a separate silo. And over here, the drug companies get paid. And there's no coordination of that medicine. There's no patient at the center of it. And they want to fix that.

PAUL SOLMAN: Fix it with health care providers vying for the older Americans' business.

DOUGLAS HOLTZ-EAKIN: If you can provide the care cheaper and the quality is sufficiently high, you're going to get that senior's money.

PAUL SOLMAN: The mechanics of the Republican Medicare plan hinge on vouchers, credits you can use to buy medical care at places like this presumably or anywhere elsewhere the costs are lower.

DOUGLAS HOLTZ-EAKIN: It's a very close cousin to the prescription drug bill, which brought competitive bidding into the entitlement programs for the first time.

PAUL SOLMAN: So, if you give me, as a senior, a voucher, a certain amount of money, which is capped...

DOUGLAS HOLTZ-EAKIN: Yes.

PAUL SOLMAN: ... it's only 1 percent more than GDP growth?

DOUGLAS HOLTZ-EAKIN: It will grow at GDP plus 1 percent.

PAUL SOLMAN: And then I get to spend the money on insurance or not. If I take a cheaper plan, I get to keep some of the money?

DOUGLAS HOLTZ-EAKIN: Yes. But if you want a more expensive plan, you can pay for more as well.

PAUL SOLMAN: Make that a lot more, says Jared Bernstein. Medicare costs have been rising far faster than GDP growth plus 1 percent.

JARED BERNSTEIN: The way the Republicans have set it up, it actually will just shift the cost on to the beneficiaries themselves.

If the voucher doesn't cover their Medicare, they have to reach into their pocket and make up the difference.

And the median income for a Medicare beneficiary is about $22,000-$25,000 a year. And those folks cannot really dig into their pockets to make up the difference between the voucher and what Medicare actually costs.

PAUL SOLMAN: Even with the Affordable Care Act, Tracy Morgan did have to dig deep into her own pocket.

TRACY MORGAN: I paid a premium. And I had a deductible. I went through about $60,000 of our own personal savings, which, you know, I feel fortunate to have. I know a lot of people don't have $60,000 to go through.

PAUL SOLMAN: What would you have done had North Carolina not adopted Affordable Care Act?

TRACY MORGAN: I would have lost everything to keep up with the payments and the treatments. There's no way I would have just stopped them. He probably would have wanted me to.

That was another wonderful thing is, like, I was always able to assure him that this wasn't coming out of my pocket. It's OK, honey, you can -- this care is expensive, but you have deserved it. You have deserved it. And you do deserve it.

PAUL SOLMAN: Mark Morgan died last December, having lived nearly two years beyond his initial prognosis. Tracy says the time together was priceless.

But, on the other hand, we all paid for it, and price was no object.