18 September 2008

McCain's Health Plan

McCain never talks much about his health care plan. Probably because it's not an issue the republicans fare well on, while it is a core Democratic issue. Maybe also because his plan doesn't really offer much to take on the critical issues in American health care today. He's got a plan, because it's sort of obligatory to have one, but it's just not an important issue to him or a core part of his campaign to be elected. (Which is unfortunate for him, because health care still ranks highly on the list of voters' concerns.) But there's been a lot of talk recently about the McCain health plan, after the journal Health Affairs published a review of the estimated impact of the plan. My take home points from the wider discussion are these:

  • This is an incredibly risky scheme. For the past 60 years, healthcare in this country has been financed through employers. While this is a poor system at best, McCain's plan to tax healthcare benefits as income will radically change that. McCain's plan is to replace this system with: nothing at all, tossing 20 million consumers into the private insurance market to sink or swim on their own.
  • This scheme places consumers' health at risk. The cross-state marketing of insurance means that insurers will domicile in states with the least protections and safeguards for consumers.
  • This represents a hidden tax increase on consumers. Yes, there is a tax credit of $5,000 per family, but with a family premium costing upwards of $11,000 annually, it is not hard to see that most families will wind up paying more out of pocket, and paying more in taxes. (Some analysts differ on this point.) And for those employers who continue to offer health care as a benefit, it represents a massive payroll tax increase, making job creation more difficult.
  • Roughly 20 million consumers would be forced into the private insurance market, which typically features higher premiums, higher deductibles and lower benefits.
  • Patients with pre-existing conditions would be commercially uninsurable and no viable market exists to cover them, neither now or in the McCain plan.
  • More people are estimated to become uninsured under this plan, which also does nothing to remedy the 45 million who are currently uninsured.
According to Health Affairs:
“The McCain plan would shift coverage toward the nongroup market, lead to reductions in the comprehensiveness of coverage in that market through deregulation, and encourage employer-based coverage to become less generous as well. These changes would have the effect of shifting costs from insurance premiums toward out-of-pocket payments, and people with chronic or acute illnesses would likely incur much higher out-of-pocket health care costs than they do now. [...] The McCain plan will force millions of Americans into the weakest segment of the private insurance system — the nongroup market — where cost-sharing is high, covered services are limited and people will lose access to benefits they have now. [...] These changes would diminish the security of coverage for most Americans, especially those who are not--or someday will not be--in perfect health."
While this sounds somewhat dystopian, understand that for conservatives, it is the intent of the plan! It's a feature, not a bug! The right wing believes that Americans simply use too much healthcare, and the solution is to make insurance more expensive and less generous, and to increase the cost for patients.

Health Affairs also has a skeptical critique of the Obama plan. I was a little disturbed by the fact that two of the three authors of this review have significant conflicts of interest, whereas the McCain authors are, as best I can tell, standard-issue academicians. So there was some ideological bias in the review, IMHO, but it was not a hack job. The key point, I think, is valid: Obama's plan does not control spending. Perhaps I am cynical, but since this plan was posited pre-election, I am not surprised that Obama chose to elide over the difficult decisions and cuts that might become necessary to control costs -- the electoral success record of politicians who promise tax hikes and benefit cuts is not so good. Ezra said it well: "The quiet assumption of the plan, however, is that the steady march of health inflation ensures that, eventually, cost control will be introduced into the equation."

What is given short shrift in this analysis, are some of the key advantages of the Obama plan:
  • It creates a market for small business (like mine!) to purchase affordable coverage for their employees.
  • It allows individuals who wish to keep their existing coverage to do so.
  • While not universal, it would bring 15-30 million of the uninsured into some degree of coverage.
  • It reforms the insurance industry so that those with health problems are not discriminated against.
Neither plan is perfect -- I've not seen one that is. And, no, Kevin, neither does squat to address the primary care crisis. That is, however, a micro-regulatory proposition of the sort that doomed HillaryCare, and I'd just as soon see that get worked out between the AMA, ABMS, and CMS, because the devil is in the details on that one. But they do certainly accurately reflect the ideological values of the parties: the republicans are free-marketeers at all costs, deregulators extraordinare, and willing to throw consumers to the wolves to do so. The Democrats, while dodging the question of spending, craft a plan to increase the fairness and inclusiveness of health care funding for all Americans.

It's a pity that we never got a chance to do this in 2000, before the republicans bankrupted the federal government.

14 comments:

  1. I'm confused. Is today Wednesday, or Saturday?

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  2. This is health policy; that's good any day of the week.

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  3. Most of your assumptions are hopelessly out of whack, but I'll just focus on the two errors that drive the rest of your argument off the cliff:

    Error # 1: This represents a hidden tax increase on consumers. Yes, there is a tax credit of $5,000 per family, but with a family premium costing upwards of $11,000 annually, it is not hard to see that most families will wind up paying more out of pocket, and paying more in taxes.

    This KFF policy report clearly says, “Annual premiums for family coverage averaged $12,106 in 2007, with employees on average paying 28% of the cost, or $3,281.”If we assume a hypothetical tax rate of 25%, the increased federal tax burden on the $3,281 would be $820. That's less than $5,000.

    Error # 2: Roughly 20 million consumers would be forced into the private insurance market, which typically features higher premiums, higher deductibles and lower benefits.

    Your seem to assume that health insurance is a kind of zero-sum game in which premiums remain static or increase. But if McCain’s proposed reforms relating to benefit mandates and interstate purchase of health policies are inacted, the resultant competition will drive premiums down.

    Oh, BTW, is it not a little ironic that the necessity of trashing McCain's plan has forced all you "progressives" to fiercely defend the health insurance status quo?

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  4. Doesn't the AMA have a comprehensive healthcare policy that's better than both candidates'? That's what I've been told, although I haven't read it.

    If my family has to bear the burden of insurance premiums upfront, then wait for a tax credit (which will leave us paying twice as much out of pocket than we do now), we will be uninsured. We don't have an extra $1,000 a month in our budget. Not many middle- and working-class families do these days.

    Republicans always claim competition will drive down prices, but it never seems to work out that way. Instead, what happens in unregulated industry more resembles price fixing, where all prices for comparable services fall within a short range.

    McCain's plan also eliminates risk pools, meaning people with pre-existing conditions will pay much more for their insurance than healthy people do, rather than spreading the risk across a larger group of individuals. This has the potential to lock older and sicker individuals completely out of the market. What happens then?

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  5. "While this sounds somewhat dystopian, understand that for conservatives, it is the intent of the plan! It's a feature, not a bug! The right wing believes that Americans simply use too much healthcare, and the solution is to make insurance more expensive and less generous, and to increase the cost for patients."

    Really? Stick to the facts man. It's downright shocking to me, as a conservative, how much the left thinks they know us.

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  6. McCain's plan will also lead to cherry-picking by insurance companies. We've already seen an example of this in the way Medicare Part D has been handled.

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  7. Pffft. Attackdog, we've had plenty of time to observe right wing policies in action. We do know you.

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  8. Anon,

    Yeah, that's why Obama has such a commanding lead. ./sarcasm>

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  9. Attackdog,

    That only speaks to the gullibility of an American public willing to believe lies.

    I'm amazed at how many people vote against their best interest because they buy into the Republican propaganda. How many families do you think are doing better today than they were 8 years ago? Yet how many of them continue to support the GOP because the party has identified single issues -- such as abortion or gay marriage -- that people are willing to cling to out of moral self-righteousness?

    McCain and Obama aren't nearly even in the polls because McCain is a decent candidate, but because Republicans are "more respectful of rednecks." (chortle.)

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  10. Could it have anything to do with the attitude so clearly on display in your comment?

    That condescending tone that you libs seem to have trademarked.

    I'm doing MUCH better today than I was 8 years ago, I have purchased my first home (since the prices went down I could afford to get into a 30year fixed mortgage) I drive a new car, and am making more money today than I ever have in my life.

    And I'm a Republican.

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  11. Attackdog,

    And according to your profile, you are 21 years old, so 8 years ago you were 13. I would expect you to be doing better financially as an adult than you were as a teenager -- unless you really mowed a lot of lawns.

    You were also lucky to be gainfully employed and have good credit at a time following the real estate bubble pop. But look around and see how many people lost their homes (thank you, Bush, for deregulated banking and allowing predatory lending) to foreclosure or lost value on the homes they kept. The value of houses in our neighborhood dropped approximately 17%, which is not uncommon. That represents a lot of people hurt by Bush-era economic policies.

    I'm 46 years old, so I've lived and worked through a couple of recessions now, and I can tell you most of us are worse off than we were under the Clinton administration. For one thing, most people's paychecks have not kept pace with inflation. My husband and I, despite being college-educated and having excellent work histories, are only making a few thousand dollars a year more than we were 10 years ago. I have read (and if I can find the reference, I'll provide it) that the typical family is actually making about $500/year less than they were 8 years ago. That's not an improvement by any measure.

    Listen to doctors talk about the state of healthcare today. Ask if they're making as much money as they were before Bush. Ask if they think Bush has done anything to improve the state of medicine during his term. As goes Bush, so goes McCain.

    And I already knew you were Republican.

    And incidentally, I'm not the one who's condescending; the "redneck" remark was a quote from one of McCain's spokespeople.

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  12. I do work with Doctors every day... shocking enough ER Docs. I help negotiate employment contracts among other things. So I know how much they make, and geography has more to do with it than anything else.

    And Yes, I'm 22 (Today is my birthday :-p) and the fact is, under the "Bush Economy", without college, I have been able to do just fine. (And no, I wasn't "Lucky")

    And I live in South Florida, we aren't known for our cost of living being affordable down here.

    Further more, if you REALLY think that what's going on is due to "Unregulated Banking" there is nothing that I can say that will convince you to see the truth.

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  13. Happy Birthday. :)

    I don't think everything that's going on has to do with deregulated banking; I think that unregulated capitalism leads to greed and exploitation. I also think bureaucracy, in general, is a problem. That's a bi-partisan issue, imo.

    My post wasn't meant to be a comprehensive analysis of everything wrong with the country, and I cut it short because I barely touched on healthcare, which is the topic of this blog entry.

    The point was that a lot of people have suffered because of the Bush administration's economic policies and lack of oversight. A lot of people. I'm glad you're not one of them, really.

    It looks like we're going to have to agree to disagree on this.

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  14. 1: Anon 11:47: Something is not kosher about attackdog. Do you honestly think ER docs would allow a 22 yo high school grad help negotiate their contracts? Just how much experience does a 22 yo have in contract law and health care contract negotiating? I suspect attackdog attack dog is some low level employee. Making pretty good money (for a single 22 yo) for the first time in his/her life. Life appears good from this limited experience. Wait until marriage, kids, job loss, health bills, elderly parent's, etc. etc.


    2: Catron: My family health insurance is over 15 K. A 5K credit? Boy thanks for the help...not. I am no socialist, but the utopian idea that the market will make health care affordable and available is just not working. But you are health care policy wonk. You sit behind your computor in your office pontificating how things should be. Just when was the last time you were in the healthcare trenches (say 02:00 in the ER)? I don't mean as a patient either. Spend some time in the REAL WORLD of healthcare then getback to us who live it every day.

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