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Tuesday, September 30, 2008

McCain and Obama Health Care Plans: Some Readings

A curious reader asked over the weekend what I thought of the health care plans being proposed by our two main Presidential candidates.

My short answer: neither McCain nor Obama is proposing universal, single-payer, not-for-profit health coverage, so neither one is right.

But at the moment, wishing for Kucinich-Care is about as fruitful as Lady Rothschild whining that Clinton didn't win the primaries or the conservative faithful wishing McCain had picked Condoleezza Rice (or anyone who could enunciate a coherent policy position). So I thought I'd read up and find out what sort of health care plans McCain and Obama wold bring us.

First, the readings. Here are some resources I've found that you may find useful (readers, feel free to add to the bibliography):
The plans for coverage in a nutshell:

McCain: $5000 refundable tax credit for each family ($2500 for single folks) to help pay for health insurance. "Refundable" means that if you only owe $3000 in income tax, you not only don't pay it, but McCain still hands you the remaining $2000 to put toward health coverage. To pay for those handouts, McCain includes health benefits you receive from your employer to your taxable income. If your current salary calculates out to $40K of taxable income and your employer provides a health policy worth $12K, then under McCain you'll pay taxes on $52K.

Obama: Employers either provide health coverage or pay into a public plan that individuals can buy into. The public plan, open to all individuals, pools all participants for bargaining power and protects policyholders from being dropped. Obama pays for it "through the war dividend, allowing the high-end Bush tax cuts to sunset, and ... Medicare savings" [Bernstein].

Again, that's nutshell. If you want an exhaustive description, start with the bibliography above and keep reading.

Want results? The best summary comparison of the plans I've seen is the following graph from the Tax Policy Center (click for larger image):

What matters: right out of the gate, Obama's plan gets more people on health insurance and keeps them there. Obama doesn't insure everyone, but he reduces the number of uninsured by half (34 million with coverage by 2018 who wouldn't have it otherwise). McCain's plan makes an initial dent in the number of uninsured (1 million new folks with coverage in 2009, 5 million by 2013) but loses ground over the coming decade, until by 2018, we'd have as many uninsured Americans under McCain as we will if we stick with the status quo.

Given that the lack of health insurance has been linked to poorer health outcomes (including, my pro-life friends, at least 18,000 unnecessary deaths nationwide), getting more people covered is a reasonable priority. On that count, Obama's plan beats McCain's.

From the immediate pocketbook perspective, McCain's plan doesn't look too bad. That $5000 tax credit will more than offset the increased tax you'll pay on your health benefits unless your employer gives you a really high-end health policy. The subsidy would definitely help Erin and me pay for our non-group policy (and maybe even buy better coverage than our current $7500-deductible plan). But there are two problems:
  1. McCain's plan won't keep up with costs. He indexes the tax credit to inflation, but health premiums "have consistently risen more than three times faster than overall prices" [Bernstein]. The taxes on increasingly expensive employer benefits will overwhelm the McCain tax credit for more and more taxpayers, and more folks trying to buy their own coverage will find the subsidy isn't enough—that's part of why the uninsured go back up under McCain's plan.
  2. McCain's plan drives people off employer coverage and into the dog-eat-dog "non-group" market. In South Dakota alone, 23,000 to 57,000 workers would find their employers dropping coverage and leaving them to buy their own health insurance on the non-group market [Bivens and Gould]. "Non-group"—that's the individual plans you buy directly from an insurance agent. McCain thinks the free market will work better if more of us buy directly. Problem is, market forces also mean group plans have more leverage, while non-group policyholders are on their own:

    [T]his individual market is characterized by poor information about policies, discriminatory pricing, coverage exclusions, refusal to cover pre-existing conditions, and denials of policy renewal.... Even worse, other planks of the McCain plan actually call for removing many of the (already insufficient) consumer protections that currently exist [Bivens and Gould, p. 5].

    There's one more reason McCain's plan doesn't make a long-term dent in the number of the uninsured.
Obama's plan doesn't have me whooping for joy. Until we catch up with the rest of the civilized world and take care of each other with a single-payer, not-for-profit system, the amazing private insurance bureaucracy will continue to foul up health care with waste and inefficiency (not to mention yachts for CEOs instead of pre-natal care for moms). But given the choices on the table in this election, Obama's plan promises better results for more Americans.


  1. What I like about Obama's plan (since we don't get universal under anyone) is that it's essentially the Congressional health plan.

    I've seen tons of conservative email forwards over the last few years, saying "If it's good enough for Congress, why can't they give that plan to all of us?!?!?!11111

    Apparently, Obama got the message, and that's (mostly) what he's doing. I hope people see that.

  2. The one thing that McCain and the Republicans don't address is the fact that a huge problem lies in the fact that people with pre-exisiting conditions will not be able to get health care coverage; and if they do their premiums will be prohibitive.
    The Obama plan states that all people will be accepted regardless of pre-existing conditions.
    A $ 5000 tax credit is not going to worth much to anyone if they arent going to be covered.
    the health insurance industry has the medical system in a vice like grip , where everything is for profit.
    The Obama plan is the only one that gives us a chance to truly get people covered and start to fix this crumbling health care system.

  3. How many people will say 5000 in free money and drop their medical insurance all together? I have to believe there will be some people really dumb enough to do that. So, under McCain I choose a company with good benefits over pay and now I will be punished. I just so happens to be I work for the federal government and now will go probably go back to the private sector if he gets elected. I make about 10-25% less then my college classmates now make in the private sector but I have decent benefits but McCain appears to be changing all that.

    CAH: Thanks for responding to my email on this subject and thanks for the blog.

    matthew siedschlaw

  4. Thank you for getting me thinking, Matthew! On that "free money," I think I read somewhere that the tax credit goes straight to the insurance company you choose, so you can't spend the money on beer and pickles (although beer and pickles are reputed to have health benefits, too!). I can't find verification on that, though, so I'll keep reading.

  5. Something must be done to hold back the vicious upward spiral of health care costs. We can start by aggressively prosecuting anyone who defrauds the health care system, be they consumers, doctors, hospitals, insurance companies, pharmaceutical companies, or equipment providers.

    I have a hunch that there are some guilty parties in all of the above categories. Along with the CEOs of "failed" banks and Wall Street firms, these people should be put on trial in criminal courts and subjected to class-action lawsuits. If they are convicted or found liable, the penalities should be swift, severe, sustained, and certain.

    The American people are finally starting to get tired of being on the butt end of ripoff schemes courtesy of the Rich and Powerful (that includes politicians, too). I'm even starting to say "Right on!" when I hear guys like Dennis Kucinich or Ralph Nader go off on one of their tirades.

    End of this rant.


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