Saturday, October 25, 2008

Who Will Make Our Nation Healthy?

It's pretty tough to determine how many people currently lack health coverage in the United States. Most estimates that I've seen hover in the 40-45 million range. That number is large enough to place health care front-and-center as a major issue in this presidential race. Both Barack Obama and John McCain have rolled out plans to address this problem. The difficulty is seeing through the negative campaigning and the murk obscuring the issues. And even after we determine where these candidates actually stand on health care, it may be folly to predict that their approaches will yield results come January. What is most likely is that a Democratic Congress will shape the basics of any program next year.

Of course the political makeup of the legislative branch favors Obama's prospective plan, and it's doubtful that anything John McCain suggests will ever see the light of say. Still it's useful to see what he might push for, should he prevail in November. His approach to the issue is to bundle it together with his general tax plan. If McCain's strategy was adopted, for the first time in US history, health benefits would be taxed. This would have an obviously negative effect on any Middle Class workers who get insurance through their jobs. In fact some experts suspect that it would be the beginning of the end of employer-provided health benefits. Nobel Prize-award-winning economist Paul Krugman has written an interesting explanation of how this would happen, and I won't try to summarize his logic here.

McCain expects to "offset" these new taxes with a tax credit of $2500 for any individual (or $5000 per family) purchasing their own health insurance plan. The average cost of a family policy is $12,100 ($4400 for an individual). But when people start being removed (or removing themselves) from employer -based health plans, funding for these credits will have to come from somewhere else. Another problem with this setup is that it is virtually impossible to get insurance if you have a pre-existing medical condition. While McCain's advisers claim that his tax restructuring of health benefits will allow an additional 27.5 million folks to purchase their own health care, independent analysts have determined that his plan will actually make the amount of uninsured citizens grow by 5 million in the first five years.

Additionally McCain seeks to open up the health insurance industry, so that people can purchase out-of-state plans. The problem there is that every state has different consumer protections, and undermining those state laws will lead to the classic deregulatory "race-to-the-bottom". This is something Barack Obama has stood adamantly against. He's calling for the standardization of benefits and premiums, and for requiring insurers to accept all applicants. He would require plans to cover preventive, maternity and mental health care (unlike McCain). He wants to make insurance currently offered to government employees available to the public through a federally sponsored health plan.

In order to preserve the employer-based insurance system, Obama would make it mandatory for employers to contribute "meaningful coverage" or pay into a government fund that would do so for the uninsured. Small businesses would receive a subsidy to cover this expense. Apparently the costs of Obama's plan would be largely financed by the suspension of the current Bush tax breaks for the wealthiest 1% of Americans. The Tax Policy Center reports that Obama's reforms will cost $1.6 trillion over the next ten years, and they estimate that McCain's program will clock in at $1.3 trilion. While the $30 billion/year difference seems substantial, it is significantly less than we are spending in Iraq every three months.

Furthermore the Tax Policy Center estimates that McCain would only reduce the number of the uninsured by 2 million, while Obama's changes would cover an additional 34 million folks that currently lack coverage. It seems to me that if you can benefit 32 million more Americans under Obama's plan for just $30 billion more per year, then it's an easy decision. And if you consider the increased quality assurances of insurance policies regulated under Obama's plan, it seems that everyone will come out ahead.

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Anonymous Anonymous said...

Excellent analysis, well laid out. Basically, McCain's plan that would do little would have little if any chance of passing. Normally, I'd call that good government, but the times are a changin.

12:12 PM  
Anonymous Sam said...

good point..
if you want to see each of the candidates health care plans:



12:38 PM  

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