Health care Rx: Mix up McCain's and Obama's plans

by Lesley Politi on October 29, 2008

Health care Rx: Mix up McCain’s and Obama’s plans

To hear the ads approved by John McCain and Barack Obama, each other’s health care plans would unleash the bubonic plague on America. Or, if not that, they would inflict some form of dreaded financial malady on an already suffering populace.

Obama asserts that McCain’s plan would impose crushing taxes on the middle class and drain Medicare. McCain claims Obama’s would involve socialized medicine managed by bureaucrats that would lead to economic ruin.

In truth, their attacks are loaded with hyperbole and falsehoods, according to the non-partisan Neither of the starkly different plans is as bad as the attack ads make it out to be, nor as good as its authors contend. While both include worthy ideas, they read too much like summations of party orthodoxy. What’s needed is some bipartisan mixing and matching.

Both plans seek to address today’s wildly inefficient health care system, which consumes 16 cents of every dollar in the U.S. economy but leaves 47 million people uninsured. Even those with insurance face escalating costs, cascading paperwork, and the ever-present threat that they, too, might be left without coverage.

Republicans have a long history of thinking that virtually any public policy issue can be addressed through the tax code, while Democrats tend to favor mandates. Not surprisingly, then, the McCain plan would make tax changes to encourage a consumer-driven alternative to employer-sponsored health insurance. The Obama plan would keep the employer-sponsored system and try to expand it through requirements and subsidies.

McCain’s plan would level the playing field between those who have subsidized plans from employers and those who buy insurance on their own. But it fails to make a serious stab at universal coverage. According to the non-partisan Tax Policy Center, it would cover only about 5 million of the uninsured.

Obama’s plan would go much further to cover the uninsured, reaching about 34 million people, according to the center. But it lacks sufficient cost-containment provisions.

McCain’s plan is built around a deceptively simple concept. He would replace the unlimited tax deduction for employer-sponsored health insurance with a tax credit of $2,500 for an individual and $5,000 for a family.

This approach is expected to have two profound effects. First, as families figure out that the government is paying for the first $5,000 of their coverage and they are paying for everything above that, they would become more informed consumers, helping to spur competition that would drive down costs.

Second, as people realize that they are taxed on their employer-provided benefits, and then get a tax break not tied to their employer, they might want to go out and buy insurance on the open market. Projections are that about 20 million people with employer-sponsored plans would migrate to outside plans in the next decade. This, too, is designed to increase competition.

Obama would maintain the status quo for employer-provided plans and come at the problem of the uninsured from a number of directions. For low-income people, he would expand government programs such as Medicaid and SCHIP, the State Children’s Health Insurance Program. He would require that medium and large companies provide health insurance for their workers or pay an unspecified tax to fund alternatives. He would require insurance companies to take patients with pre-existing conditions. And he would require families to buy insurance for their children (though not for all adults as well, as Sen. Hillary Clinton had proposed during their primary campaign).

These are interesting ideas, but Obama’s only efforts at cost containment are small bore — eliminating paperwork and redundancy through electronic records and promoting competition through national insurance pools. The Tax Policy Center estimates its cost at $1.6 trillion over 10 years, compared with $1.3 trillion for McCain’s. Given that Obama’s is similar to a plan in Massachusetts, which has cost more than anticipated, the estimate might be on the low end.

Ultimately, the best health care plan might combine elements of both McCain’s market-based reforms with mandates to make sure that everyone has access to coverage. Given how contentious the campaign has been, that might seem far-fetched. But Sen. Ron Wyden, D-Ore., has a plan to do just that.

Even if Democrats pad their congressional majorities on Nov. 4, many of the tough issues that this nation faces won’t be solved without bipartisanship. Health care reform is no exception.

Compare proposals

John McCain and Barack Obama have markedly different health care reform proposals. Some key details:


• Would replace deductibility of employer-sponsored plans with a tax credit of $2,500 for individuals and $5,000 for families.

• Would allow insurance companies to offer nationwide plans not regulated by states.

• Would require pharmaceutical companies to reveal the cost of their drugs, allow reimportation of medicines and encourage generics.

• Would call for providers to publish information about costs, prices, quality of care and the likelihood of successful outcomes.


• Would require business to provide “meaningful” health coverage or pay a fee to support a public plan. Small businesses would be exempt.

• Would expand Medicaid and the State Children’s Health Insurance Program, and create a national insurance exchange with a public plan similar to those offered federal employees as well as more elaborate private ones. Would subsidize coverage for low-income families.

• Would bar insurance companies from withholding coverage based on pre-existing conditions.

• Would require all children to have insurance.

Source: Kaiser Family Foundation

Questions call Politi Insurance Agents & Brokers


Leave a Comment

    Previous post:

    Next post: