I don't blog much about Republican nominee John McCain (Not Your Friend) here, for two reasons: 1) Seems like he's self-destructing pretty well on his own; recent predictions have Obama blowing him out in the electoral college with over 300 EVs, maybe as much as 350 (with only 270 needed to win), and 2) For all things McCain (Not Your Friend), I have the John McCain Is NOT Your Friend blog. But his terrible health care "reform" idea perhaps bears some discussion here.
Basically, McCain's idea stems from the following (factually wrong) concepts:
1) The private insurance industry is totally awesome and kicking ass, and we need to just get more people into it.
2) Individual insurance markets are totally problem-free. Really, we promise!
3) The first two concepts may be wrong, but who cares because we love big insurance companies. Right?
So, that being said, the logical thing to do is to try to get as many people on individual, private insurance as possible, such that when they become sick, unregulated insurance companies can kick them out and/or refuse to insure them and/or make them pay exorbitant premiums and out-of-pocket costs.
In April, USA Today gave us a brief look at McCain's plan, the summary of which was that he'd create tax credits a fraction of the actual cost of individual-market private insurance premiums, and then destroy the employer-based insurance system:
Steve Smith, a spokesman for the AFL-CIO, said McCain's plan "would push employers to drop health care coverage they currently provide, put insurance companies in charge, increase costs, and force tens of millions of Americans to fend for coverage on their own with inadequate tax credits."
Today, the NY Times goes deeper, and the details aren't pretty. What follows is an item-by-item breakdown that shows that McCain's plan actually more radically changes the American health system (for the worse).
First,
With the goal of making the insurance marketplace more equitable and competitive, Mr. McCain would end the longstanding exclusion from income taxes of health benefits paid by employers.
Without the income tax exclusion for employer-based health insurance, pretty much all employers will drop coverage for their employees. Result? Everyone will be forced onto the individual market.
Second,
Mr. McCain would replace the exclusion with refundable health care tax credits of $2,500 per person and $5,000 per family in the hope of driving consumers into the individual insurance market.
Well, the plan doesn't really need to "hope [to] drive consumers into the individual market" via these tax credit "incentives," given that employers will all be dropping their coverage and patients won't really have a choice. FYI, in 2005 the nationwide average premium in the individual market for individuals was a national average of $3664, and $5568 for family coverage. So, at first glance, this might seem like a net savings over the employer-based system, where individuals in 2005 were paying $1665 (as compared to the $1164 remainder after subtracting McCain's proposed $2500 individual tax credit). But that's not the end of the story, as you might have guessed, since it only looks at premiums, not all out-of-pocket costs. A Center for Budget Priorities & Policy report shows that nearly half of individual market policyholders pay more than 5% of their income in out-of-pocket costs because of high deductibles and/or high co-payments, due to the fact that individual market insurance covers a much smaller share of medical costs than small business group, employer-based insurance (55% versus 83%, respectively, in one California study). So while the raw numbers of premiums make it look as though tax credits will save you about $500 in actual costs, the truth is that the individual market is much more brutal. As reported by Health Affairs last month:
The average deductible in the individual market was $2,136, more than six times the size of the average small-group-market deductible ($348).
(emphasis added)
Third, McCain then proposes:
To help push down premiums, he would allow the purchase of policies across state lines.
As I've discussed before, this may theoretically seem like a good idea, but is in fact a way to subvert basic consumer protections existing at the state level. You know, minor things, like insurance policies actually being required to provide common, medically-necessary health care.
Fourth,
Currently, those who buy insurance individually often face higher costs because their risks are not spread across broad groups of workers. Though insurers cannot discriminate against participants in group plans, they evaluate consumers seeking individual coverage case by case to determine if they are worth the risk of coverage, and at what price. Insurers contend that if they had to charge the same rates to all comers, many would wait until they were sick to buy policies.
The McCain campaign recognizes that in an invigorated individual market, even larger numbers of chronically ill people would go without the protection afforded by group coverage. High-risk pools would theoretically serve to fill the gaps.
And how would they do that? Not through massive federal government spending... a 'fiscal conservative' would never do that, right?
Mr. McCain’s proposal would represent a huge increase over the $50 million a year that Congress now appropriates in grants to the state pools, in a program that began in 2002. But several analysts questioned whether even $10 billion would be nearly enough, given that the states now spend about $2 billion to insure 207,000 people.
“I do not for a minute think it will cost 7 to 10 billion dollars a year,” [Georgetown professor Karen] Pollitz said. “It may cost 7 to 10 billion dollars a week.”
Okay, one last point in this long analysis. McCain's plan for "high-risk pools" is based on current state models like one in Maryland. Let's see how those are going. First, for the state program itself:
In an admonition for Mr. McCain, Maryland’s five-year-old plan, like others before it, has quickly become a victim of its growth. As enrollment expanded by 30 percent in each of the last two years, actuaries forecast insolvency as soon as 2010 and compelled the plan’s board to apply the brakes.
Over the last two years, it has raised premiums, deductibles and co-payments, increased out-of-pocket maximums, lowered the lifetime cap on payments and added a waiting period for pre-existing conditions, which rose to six months from two months on July 1. It also increased the amount applicants must pay to buy their way out of the waiting period.
Finally, for the uninsured these pools are supposed to help:
If Senator John McCain’s radical plan for remaking American health care is to work, he will have to find a way to cover people like Chaim Benamor, 52, a self-employed renovator in this Baltimore suburb. Mr. Benamor never found it necessary to buy insurance before having a mild heart attack last year and now, 13 years shy of Medicare, has little hope of doing so.
The heart attack left Mr. Benamor with a $17,000 hospital bill, $400 in monthly prescription costs and a desperate need for insurance. After being rejected by a number of commercial carriers, he turned to the Maryland Health Insurance Plan, one of 35 state programs for high-risk applicants whom no private company is willing to insure.
He decided that the annual premium — $4,572 for a plan with heavy deductibles — was more than he could handle on an income of about $35,000. Yet his earnings were too high for him to qualify for state subsidies.
“I’d like to get it, but what do you pay first?” Mr. Benamor asked at his dining room table. “Do you pay the mortgage? Do you pay your child support? Do you pay your car insurance? Do you pay for your medicine?”
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