As the 2008 Presidential primary race continues to evolve, health care reform is emerging as one of the major domestic policy points for both Republicans and Democrats. Health care spending accounts for an ever increasing chunk of the U.S. economy—already claiming $1 of every $6 spent—and both citizens and politicians remain concerned about the number of Americans without health insurance. Moreover, the risk of going without health insurance is threatening even middle-income families, as small businesses and other employers strain under the financial pressure of providing employer-sponsored coverage to their workers.

In a closely related problem, employees frequently remain locked in jobs they might otherwise leave for fear of losing coverage. The leading presidential candidates have each laid out proposals for health care reforms, but their policies differ substantially in addressing these challenges.

Controlling Costs

Republican Senator John McCain, who at the time of this writing was leading Mike Huckabee and Ron Paul by substantial margins, believes that ballooning health care costs and the growing ranks of uninsured Americans are one and the same problem. According to McCain, rapidly rising costs have put health insurance beyond the reach of many Americans, and slowing cost growth would dramatically alter the insurance landscape. Not surprisingly, McCain’s health care platform centers around cost-containment, and in contrast to other Republicans who are or were formerly in the race, he places a stronger emphasis on achieving universal coverage.

McCain supports interventions that focus on prevention and disease management, and he is a proponent of accelerating the adoption of ­electronic-­medical-record (EMR) systems. All of these programs are associated with short-term cost increases, but they would likely lower spending substantially in the long run. McCain has also emphasized what he views as the importance of competition among health plans, and he supports re-importation of drugs, a position that is wildly unpopular among pharmaceutical companies, since it undermines their ability to charge U.S. consumers monopoly prices (though it may raise drug costs in foreign countries).

In tandem with these policies, McCain hopes that providing individuals and families with tax credits to purchase insurance—with an eye toward ultimately dismantling the subsidized employer-based health insurance system—will boost coverage, relieve labor market distortions, and make American firms more competitive by taking health insurance off their balance sheets. McCain’s aggressive position on health care costs may ultimately be successful in controlling growth, but his promotion of plan competition could give insurers incentives to compete for healthy, low-cost patients, leaving sick patients unable to afford insurance. The dissolution of monopoly pricing, though beneficial in the present, may also come at the price of lower investments in drug research and development and a thinner flow of innovations in the future.

Extending Coverage

Democratic Senator Barack Obama has proposed reforms for cost-­containment that are largely similar to McCain’s, but overall, his plan places greater emphasis on the politically liberal ideal of universal coverage. He hopes to achieve this goal by expanding Medicaid and the State Children’s Health Insurance Program (SCHIP), creating a new public insurance program for self-employed individuals and small businesses, and subsidizing premiums for low-income individuals and families.

Importantly, he also supports permitting Medicare to negotiate drug prices with pharmaceutical companies, a policy that the Bush administration has vehemently opposed. Because of Medicare’s buying power, which is driven by its 43 million enrollees, direct negotiations could mean a sharp drop in drug prices and pharmaceutical profits, with similar attendant risks and benefits as drug re-importation.

Compared to Senator McCain’s proposal, Obama’s plan would more aggressively deflate the size of the uninsured population, but costs would almost certainly rise considerably. Even in Massachusetts, where former Governor Mitt Romney helped craft a universal coverage plan for state residents, the cost of expanding health insurance is anticipated to cost taxpayers hundreds of millions of dollars more than initial estimates. Obama’s plan, however, does not include the individual mandate that is a key feature of the Massachusetts program.

The No-choice Option

This is not the case for Obama’s Democratic opponent. Senator Hillary Clinton, well known for her failed attempt to push through major health care reform in the 1990s during her husband’s presidency, supports a proposal similar to Obama’s, but also champions an individual mandate. Though Obama’s health care plan includes mandates for children, he has shied away from imposing this constraint on adults. Many researchers believe mandates are useful instruments in health insurance markets because of the tendency of these markets to fail.

Stephen Soumerai, HMS professor of ambulatory care and prevention at Harvard Pilgrim Health Care, noted that universal coverage may be difficult to achieve in their absence. “Without mandates, we have to worry about the problem of market segmentation: healthy people opt out of insurance, leaving sicker people to pay more for coverage.” This can ultimately make health insurance unaffordable for everyone. Furthermore, uninsured people are often “free-riders,” passing on hospital bills they cannot afford to taxpayers and other insured people. Indeed, Clinton’s plan is best suited to achieve universal insurance, but its heavy-handed mechanisms are likely to be unpalatable to lawmakers and voters, and estimates place its cost at several billion dollars above the price tag of Obama’s plan.

Robert Blendon, HSPH professor of health policy and political analysis, put the contrast among the candidates into perspective. “The Republicans are focused more on containing cost through private market initiatives, while the Democrats’ first priority is universal coverage, with a secondary emphasis on cost issues. We may see health reforms over the next few years, but their focus will depend on which party dominates Washington decision-making.”

Joseph Ladapo is a Harvard medical student and a PhD student in health policy.

The opinions expressed in this column are not necessarily those of Harvard Medical School, its affiliated institutions, or Harvard University.