NCPA - National Center for Policy Analysis

KERRY HEALTH PLAN: IS IT WORTH THE COST?

October 11, 2004

John Kerry's health care plan has one overriding goal: to reduce the number of the uninsured. Yet roughly two-thirds of the spending under the plan is devoted to subsidizing the cost of health insurance for those who already have coverage. As a result, the plan is very expensive in terms of what it attempts to achieve, says John C. Goodman, president of the National Center for Policy Analysis.

The Kerry plan would build on existing federal programs, explains Goodman:

  • First, the federal government would pay the full cost of 20 million children in Medicaid, in exchange for states expanding coverage under Medicaid and the State Children's Health Insurance Program (SCHIP) -- including uninsured children in families with incomes up to $56,550 for a family of four.
  • Second, the Kerry plan would have the federal government "rebate" three-fourths of employers' catastrophic health claims costs (above about $30,000 per employee) if employers offer insurance to all employees and pay one-half the premium costs.
  • Third, Kerry would create the Congressional Health Plan, similar to the federal employees insurance program, and offer numerous subsidies to individuals and small businesses to join this federally regulated health system.

The Kerry plan provides numerous subsidy programs for various groups. Based on estimates by Emory University Professor Kenneth Thorpe, who helped construct the Kerry plan, the annual cost to insure one new person varies from $2,217 for subsidies to the near-elderly (ages 55 to 64) to $14,190 to subsidize employers' catastrophic health care expenses. He estimates the average cost per newly insured at $2,445. Independent estimates put the cost much higher.

As a result, the cost of insuring a family of four under the Kerry plan would be about $20,000 or higher. Clearly it would be much cheaper to give them free health care, says Goodman.

Source: John C. Goodman, "Kerry Health Plan: Is It Worth the Cost?" National Center for Policy Analysis, Brief Analysis No. 489, October 8, 2004.

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http://www.ncpa.org/pub/ba489/

 

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