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Do IT this week: Layering
Both candidates want to change system. McCain relies on deregulation, tax credits; Obama calls for new insurance programs
By Tracy Wheeler
Beacon Journal medical writer
Published on Thursday, Sep 11, 2008
When it comes to health care, John McCain and Barack Obama can agree on this much — the system needs to be fixed.
Too many Americans — 45.7 million — are uninsured. And too much money — 16 percent of our gross domestic product — is being spent on health care.
Beyond that, though, the two presidential candidates agree on little else.
In fact, the candidates' ''ambitious reform agendas . . . would take the U.S. health-care system in very different directions,'' according to a recent article in the New England Journal of Medicine.
While McCain's plan relies on free-market forces, tax credits, deregulation, and rescinding the tax-exempt status of employer-sponsored benefits, Obama's plan centers on new public and private insurance programs, regulation of the insurance market, and a mandate that employers either provide health insurance or pay a tax to help cover the uninsured.
McCain's proposal
''The key to real reform is to restore control over our health-care system to the patients themselves,'' the Arizona Republican said during a visit to the Cleveland Clinic earlier this year. ''The health plan you choose would be as good as any that an employer could choose for you. It would be yours and your family's health-care plan, and yours to keep.''
At the heart of his plan is a tax credit — $2,500 for individuals, $5,000 for families — that anyone could use to buy their own insurance. Workers could use the tax credit to pay the premiums of their employer's plan, or they could use it to pay for another insurance plan of their choice.
The cost of the tax credits — estimated at $3.6 trillion over 10 years — would be off-set by taxing employer-sponsored benefits, which currently are tax-exempt.
This is an ''interesting wrinkle'' of McCain's proposal, because this new tax would disproportionately affect more well-to-do Americans who have jobs that offer benefits, said J.B. Silvers, director of research at Case Western Reserve University's Health Systems Management Center in Cleveland. ''It's more egalitarian. It would hurt high-income people more than low-income people.''
Critics of McCain's plan argue that by taxing employer benefits, fewer employers will offer insurance to workers, which would only add to the number of uninsured Americans.
Even with the tax preference in place, more than 8,000 Ohio companies stopped providing health coverage between 2001 and 2005, affecting more than 515,000 workers, according to a report by the Robert Wood Johnson Foundation.
''[McCain's] underlying philosophy is, the market will [improve] only if we get out of the way and make things level; and the system is biased because it's done through employers and we want to correct that and get employers out of the deal,'' Silvers said.
If employers stop offering health insurance, McCain says workers would have the tax credits at their disposal to buy the insurance of their choosing.
But critics see a problem there, too.
The tax credits ''would give you about half as much as you need, on average, to buy a policy,'' Silvers said.
Affordability would be especially difficult for those with health problems, such as diabetes, a past bout with cancer, a past heart attack, or high-blood pressure, among many conditions.
''Young, healthy people would not face difficulties in finding affordable insurance,'' said Jennifer Tolbert, a policy analyst at the Kaiser Family Foundation. ''However, people with any sort of health condition and those who are older may have some difficulties.''
That's because McCain's proposal contains no requirement that insurers cover everyone. Under his plan, insurers could continue to charge people more — or turn them away completely — based on their health.
''If they backed it up with real heavy-duty regulation to make sure there was no discrimination and open enrollment — no matter what — then you could say, 'OK, why not?' '' Silvers said. ''But unless you're willing to do that, you're going to have people who don't get insurance. It won't deal with the uninsured problem.''
In his New England Journal of Medicine article, Jonathan Oberlander, an associate professor at the University of North Carolina, agreed: ''Most uninsured Americans would probably remain uninsured under the McCain plan. Given the high price of health insurance, even with the new tax credits, many lower-income people would still not be able to afford coverage.''
Obama's proposal
''My plan begins by covering every American,'' the Illinois Democrat said last year during a campaign stop in Iowa. ''If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less. If you don't have health insurance, you will have it after this plan becomes law. No one will be turned away because of a pre-existing condition or illness.''
At the center of Obama's plan is a mandate that employers either provide insurance to their workers or pay a tax to help cover the uninsured. Small businesses would be exempt and could receive a tax credit to help reduce their health-care costs.
For those who don't have insurance through their jobs, Obama's proposal creates two new options — a new government plan patterned after the health insurance available to members of Congress, and a National Health Insurance Exchange, which would help people buy private health insurance, while also acting as a ''watchdog group'' to reform the insurance industry.
''Rather than deciding whether public or private insurance is a better model, the plan would allow people to choose between them,'' Oberlander wrote.
However, he said, ''Since the plan lacks an individual mandate for adults (coverage is mandated for children), it would not cover all the uninsured and therefore would provide universal access to insurance rather than universal coverage.''
Still, ''most Americans without insurance would gain coverage through the new public and private insurance options,'' he said.
Under Obama's plan, no one would be denied any insurance plan because of illness or pre-existing conditions. Income-based subsidies would be available for the poor.
Though the proposal relies on both private and public coverage, critics claim that Obama's plan is a back-door attempt at single-payer, government-run insurance.
''It's a Rorschach blot,'' Silvers said. ''You can look at it and see what you want to see. Those who support a single-payer system might say, 'Ah, that's it. This is so much better than everything else out there. It will be able to take over the market through the backdoor because everybody will want to choose it.'
''Other people might say, 'It will create more competition, we'll have everything we have right now and no one will be forced into a plan.' ''
Some critics are turned off by the government mandate that employers provide insurance or face a tax penalty, Tolbert said.
The biggest criticism of Obama's plan is the price tag, which has ranged from $50 billion to $100 billion. Obama has said he would pay for the program by letting the Bush tax cuts for those making more than $250,000 expire after 2010, which is estimated to bring in $100 billion a year in tax revenue.
Summary
While Obama and McCain have very different ideas on how to reform health care in America, Oberlander suggests that voters look at their platforms ''as sketches rather than finished portraits.''
The plans being offered now will look ''different in key respects from the plan that a newly elected president takes to Congress, to say nothing of any legislation that Congress actually passes,'' he said. ''Still, the 2008 presidential election clearly offers voters dramatically different alternatives. The candidates' opposing visions of health-care reform reflect fundamentally different assumptions about the virtues and vices of markets and government.''
Tracy Wheeler can be reached at 330-996-3721 or tawheeler@thebeaconjournal.com.
When it comes to health care, John McCain and Barack Obama can agree on this much — the system needs to be fixed.
Get the full article here.
Comments
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Tallmadge, OH
Posted 07:19 AM, 09/11/2008
McCain's proposal is more of the same Bush's approach to healthcare which hasn't worked. Obama has better ideas though he too falls short of UHC for every USA citizen.
Posted 01:30 PM, 09/11/2008
Without true Open Enrollment and "community based" rates any plan for reducing the uninsured will fail.
Posted 05:10 PM, 09/11/2008
Bush-McCain health policies leave the middle class out in the Cold. Fighting with Insurance Companies while getting Cancer treatment is plain WRONG. McCain just does NOT get it!
Cuyahoga Falls, OH
Posted 06:58 AM, 09/12/2008
The real chasm is experience. Obama is not ready to lead anyone anywhere.
Posted 01:51 PM, 09/12/2008
I'm not ready to risk the Health of this country on a guy who voted with Bush over 90% of the time.
m, m
Posted 06:39 PM, 09/12/2008
Our politicians have done a crappy job of allowing citizens tax breaks to buy insurance. If I want a tax break for my insurance, I have to buy my company plan. Since the plan is crappy and I bought my own plan, I cannot get a Health Savings Account. No tax break for me. Government boondoggle at its finest.
