The Faults In McCain’s Health Care Plan

Obama is becoming more critical of McCain’s health care plan in his campaign appearances and ads. I have been urging this for quite a while as, besides doing little to help the uninsured, McCain’s plan is harmful to those who currently have insurance coverage and harmful to businesses. While Republicans have been successful by resorting to scare tactics about Democratic health care proposals in recent years, this year it is the Republicans who offer a plan which most Americans have real reason to rear.

Previously some fact checkers have questioned Barack Obama’s criticism of John McCain’s health care plan. While quick campaign spots don’t have the time to fully make the case, a longer analysis does connect the dots and show that Obama’s criticism is correct. Jane Bryant Quinn performs a more through analysis of the plan than can be done in a thirty second commercial:

If you think that “The Market”—whatever market—always works for the best, you’ll love John McCain’s version of health insurance reform. It uses the tax code to shove you toward individual policies (more “choice!”) and away from comprehensive, employer supported plans. The nonpartisan Tax Policy Center puts the cost of his proposed subsidies at $1.3 trillion over 10 years.

But a funny thing happens on the way to spending that much money. Almost all of the subsidy goes to people who have health insurance already, says Sherry Glied, a professor of health policy at Columbia University. The Tax Policy Center figures that, after 10 years, the plan cuts the number of uninsured by only 1 million, out of 45.7 million now. Barack Obama’s $1.6 trillion plan would take 34 million off the rolls of the uninsured.

Some of the criticism of Obama’s ads is based upon claims that McCain’s offer of a tax credit will make up for the higher costs which come from taxation of health benefits. Quinn shows the problems with this defense of McCain’s plan:

If youre uninsured, the tax credit helps you purchase coverage . The only hitch—a big one—is that you have to be able to afford the premiums up front. The tax credit comes later. The government will send it to the insurance company, which will apply it to your account.

To see how much the McCain plan helps, I asked Scott Leavitt, president of the National Association of Health Underwriters, to price typical policies for healthy singles, couples and families in the Chicago area. It appears that the credit could pretty much cover the premium in your 20s and 30s, even early 40s, making it a good deal. At 55, however, a couple might pay more than $12,000—difficult for older people with modest incomes.

Quinn also points out that the tax credit might be a good deal at first, but the credit would not keep up with inflation, making individuals lose in the long run. The ultimate goal of McCain’s health care plan is to move more people from employer paid coverage to individual coverage:

The Tax Policy Center estimates that 20 million workers will leave the employer-based system, not always voluntarily . Midsize and smaller companies are likely to drop their plans and tell you to use the credit to buy a policy yourself.

Its a shock to move from group plans into the harsh world of individual insurance . You get “choices” (rah, rah). But the policies cost more and cover less than company plans do—especially for women, older people and those whose health is less than perfect.

That is, if you can find coverage at all. In 2006, the Commonwealth Fund studied working-age adults hunting for individual policies. One fifth were charged more or rejected for health reasons. More than half found it hard or impossible to secure a policy they could afford.

McCain’s plan is based upon the faulty assumption that the best way to reduce health care costs is to transfer more of the cost to individuals.

Conservatives love health plans that throw more of the costs on you. When it’s hard to pay the bills, you see the doctor less. Through the “magic of the marketplace,” that’s supposed to slow the rate of increase in medical costs.

Friends, there’s zero evidence that that works. In the long run, tax credits will raise your costs without changing the game. And we still won’t have helped most of the uninsured.

Additional problems with McCain’s plan were recently reviewed in a report from The Commonwealth Fund. Obama’s campaign has also posted an eleven page pdf on “Five Pitfalls of the McCain Health Plan.

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2 Comments

  1. 1
    Tatiana says:

    Very useful post. where can i find more articles about mccain health care plan?

  2. 2
    Ron Chusid says:

    Check the articles linked in this post and the Health Care tag for more.

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