The Election Choice: Health Care

In few policy arenas are the choices as fundamental as they are for health care. Barack Obama favors increased federal control to build a "universal" system in stages. John McCain prefers to maximize the incentives for individuals and families to buy private health insurance on their own.

- Government options. The core of Mr. Obama's reform is a new government insurance program, open to nearly everyone, including the young and even the affluent. His goal is to have everyone insured by 2012.

According to the Lewin Group, independent health-care consultants, the number of Americans with private coverage would drop by nearly 22 million from 157 million starting the first year, as people shifted toward the public option. People with coverage either through Mr. Obama's plan, Medicaid or the federal-state children's program (Schip) would increase by about 48 million.

Mr. Obama estimates the cost between $50 billion and $65 billion a year when fully phased in, though others say it would be far more. To fund it, he would impose a "pay or play" tax on employers. This would require all but the smallest employers either to provide insurance for their workers, or pay a tax on some portion of their payroll.

Mr. Obama hasn't said what the tax rate would be. If it's high, government costs would be lower and more employers might offer coverage, paying for it out of wages. If it's low, many employers would dump their coverage and pay the tax instead, transferring workers to the public option. Mr. Obama has also not elaborated on how the government would reimburse providers under his plan. The rates could be used to undercut private insurers. According to Lewin estimates, these undefined variables could boost the exodus to government to more than 60 million.

- Tax bias. Mr. McCain wants to reallocate the current federal tax breaks for health insurance. These cost the equivalent of $246 billion in 2007, yet only people who buy insurance through their employers receive this dispensation. Mr. McCain would extend tax benefits to all Americans, regardless of where they acquire their coverage, gradually replacing the workplace deduction with a refundable tax credit of $2,500 for individuals and $5,000 for families.

According to the Tax Policy Center, the McCain plan will cost $1.3 trillion over the next decade (vs. $1.6 trillion for Mr. Obama's), while the average household will be better off by $1,241 in 2009.

Some would stick with the coverage they currently enjoy, as one choice among many. Others (including of course the uninsured) would apply their credit outside their workplace, rather than taking whatever their boss offered. Though the individual market now covers only 9% of the population, equalizing the tax treatment for health care would stimulate the demand for new, more affordable insurance. With more decision-making power concentrated in the hands of individuals, Mr. McCain argues the plan would ease the third-party payer problem, where health-care dollars are laundered through insurers or the government, thereby inflating health spending.

Mr. Obama charges that the McCain tax credit would undermine the employer-based system. It would, though probably much less than Mr. Obama's government option. In any event, even some of Mr. Obama's advisers have argued against tying insurance to any specific job, and Mr. McCain's tax credit would follow the worker, rather than the job.

- Insurance mandates. Mr. Obama would impose new nationwide rules on insurance companies to prohibit "cherry picking," where companies sometimes reject applicants on the basis of pre-existing conditions. Instead, he supports "guaranteed issue," which forces insurers to accept all comers. Mr. Obama would also require every carrier's benefits to be similar to those that federal employees now receive.

Mr. McCain believes such regulations are one reason health coverage is so expensive. To that end, he would allow consumers to buy into any health plan in any state, which is currently prohibited. Though this would pose some logistical and regulatory difficulties, Mr. McCain argues it would amplify competition among insurers as well as allow people to seek out the policies that best suit their needs.

- Health-care costs. Federal spending on Medicare and Medicaid is already exploding, even without Mr. Obama's new plan. Over the past three decades, national health spending has more than doubled as a share of GDP, and, according to the Congressional Budget Office, it will double again by 2035. Medicare and Medicaid, which account for 4% of GDP today, are expected to rise to 9% in the same year.

Both candidates support such cost-control reforms as electronic recordkeeping and more coordinated and preventative care. But these are not likely to have a significant effect. Mr. Obama's wager is that savings can be realized by increasing the size of the government insurance pool, thus promoting "efficiency." The reality would probably be cost controls on providers and services, which is what Medicare began to impose in the 1980s as its costs soared.

Mr. McCain's bet is that costs can be brought down by giving people more control over their health-care dollars, thus restoring price signals to the health-care marketplace. Mr. Obama's approach is the going favorite with Democratic majorities in Congress.

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bump

I thought health care was a BIG issue? Here is a good analysis of the two plans...

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There are a couple issues for that $.3 billion difference...
For one thing...
Obama's plan actually addresses the problem of getting more uninsured people insured, particularly those that are currently uninsurable...
McCain's has more to do with the conservative ideological battle of divorcing healthcare from employers, which will allow for about 1 million (as opposed to around 30 million) uninsured people in certain circumstances having an easier time getting insurance... and most people paying more for worse insurance as their employers phase out the group-negotiated plans.

Meanwhile... guess how McCain's campaign wants to take care of the people who are "uninsurable"? Not by regulating insurance companies and subsidizing their added risk... By creating "high risk pools" run by the government.
Now the problem is... state-led "high risk pools" have come to be... pure money pits. The nature of insurance is that it works best when the providing org has a mix of risk-levels. High risk pools are pure losers.
And they either don't cover anyone... or they cost a lot.
So if McCain's going to keep the costs at the point he's claiming, I highly doubt he's figuring in the high risk pools.

But of course the WSJ editorial page is going to side with that "wonderful" idea of reforming healthcare to satisfy conservative ideological concerns rather than actually... fixing the problem. What else would I expect?

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"Conservatives say if you don't give the rich more money, they will lose their incentive to invest. As for the poor, they tell us they've lost all incentive because we've given them too much money."

-George Carlin

Obama's plan to make insurance companies take on people with existing conditions, will cause insurance to increase in price.

This is such a no brainer, I dont know how it can be complicated. I think people make it complicated to make them seem more self-imortant.

Obama's plan gets government to take partial control of our health, so that down the road they fully take it over. It will cause mass exodus from the private sector to the government plan. This will destroy the budget set out for it, causing the government to throw more money into it to keep it liquid.

Of course, nobody has said anything concerning Medicaid & Medicare. Will they still be needed once government takes over your health? They will be redundant programs, milking us for all were worth, like they already are.

McCain at least gives people the initiative to do what they want with their health. And not the government.

It is the fundamental difference b/w the nanny state socialists and the self-reliant capitalist.

Choose wisely. Your kids and grankids future freedoms in life depend on it.

The fundamental difference across the board of issues is that Obama want people to look to the Government for their needs, while Mccain wants people to stand on their own two feet. I like Mccain's ideas better!

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McCAIN’S HEALTH CARE PROPOSAL Will Increase Costs and Reduce Benefits
John McCain’s health care proposal is similar to President Bush’s failed plan. Like Bush’s, McCain’s plan undermines existing employer-based health care and pushes workers into the private market to fight big insurance companies on their own. It will reduce benefits, increase costs and leave many with no health care at all.

A New Tax on Working Families. McCain wants to shift the burden from employers to workers. He will make health care premiums part of taxable income, essentially creating a new tax for working families.

Increases Costs to Workers. The modest tax credit McCain wants to give people to cover his new tax would cover less than half the average health premium, leaving workers to pick up the difference. Also, by promoting high-deductible Health Savings Account (HSA) plans, which provide fewer benefits at higher costs, he will make the high costs of individual insurance even worse.

Leaves Workers at the Mercy of Big Insurance Companies.McCain’s efforts to “eliminate the bias” toward employer-based health care will encourage employers to stop offering health care, pushing workers into an unregulated private insurance market to fend for themselves. Big insurance companies will be free to weed out people with health care needs, charge excessive premiums and limit benefits.

Makes Health Care Harder to Get. Pushing workers into the private health care market and promoting HSAs will encourage insurance companies to attract only the healthiest people, driving costs up overall. Insurance companies can decide to refuse to cover people with preexisting conditions, such as cancer survivors. Retirees will have a particularly hard time getting health care.

Lowers the Quality of Available Health Care Plans. Many states have laws regulating health care quality by requiring basic services to be included in health care coverage. McCain’s proposal would circumvent these laws, resulting in lower quality coverage without consumer protections.

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“The definition of stupidity is doing the same thing over and over again and expecting different results.” — Albert Einstein ...

That's not what the Wall Street Journal says!

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Sources: The Commonwealth Fund, Envisioning the Future, 1/08; Los Angeles Times, 11/20/07; Center on Budget and Policy Priorities (CBPP), Administration’s Proposed Tax Deduction for Health Insurance Seriously Flawed, 7/31/07; CBPP, GAO Study Confirms Health Savings Accounts Primarily Benefit High-Income Individuals, 9/20/06; CBPP, A Brief Overview of the Major Flaws with Health Savings Accounts, 4/5/06; The Commonwealth Fund, Paying More for Less, 6/05; McCain’s campaign website, accessed 2/21/08; Health 08.org (Kaiser Family Foundation) Presidential Candidate Forum: John McCain, 10/31/07; Kaiser Family Foundation and HRET, Employer Health Benefits 2007 Annual Survey.< P>

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“The definition of stupidity is doing the same thing over and over again and expecting different results.” — Albert Einstein ...

According to the Tax Policy Center, the McCain plan will cost $1.3 trillion over the next decade (vs. $1.6 trillion for Mr. Obama's), while the average household will be better off by $1,241 in 2009.

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.3 trillion over 10 years, and the problem is? What happen to being the greatest and richest country on Earth!

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