This is the third article in our “issues week” series being written in conjunction with Dave Schuler’s series at The Glittering Eye. The first article in the series, on Foreign Affairs, can be found here. The second article, on Fiscal Policy, can be found here. The third article, on Economic Policy, can be found here.
Before the war in Iraq, the rising costs of oil, and the financial crisis, health care used to be a big topic in American politics. There are many people who think it will be important to have good health insurance while we are battling in the streets for scraps of food because of the collapse of the global economy, rising ocean levels have flooded coastal cities and caused massive crop failures, and the bowels of the Earth have opened to release the minions of Hell.
Here is how each candidate would provide Americans with health insurance so they can get regular check-ups as the world falls apart.
Obama’s Plan
The main component of Obama’s plan is allowing individuals to purchase health insurance from the federal government. People who were self-employed, worked for a small business or for a company that didn’t provide health care could buy a plan similar to the one offered to federal employees. No one would be denied due to pre-existing conditions, and premiums, deductibles and co-pays would be standardized. The coverage would be portable, so enrollees could change jobs without losing coverage.
Obama’s second idea is to create a National Health Insurance Exchange to monitor private insurance companies to make sure they provide fair rates to buyers. Insurance companies would not be required to join, but those that did would submit to increased regulation in exchange for a governmental stamp of approval.
Those people who are satisfied with their current insurance would not be forced to change. Employers who did not provide health insurance would be charged a premium, and small business would receive a tax credit to defray costs. The government would assist in covering the costs of catastrophic care. Individual adults would not be required to purchase insurance, but there would be a mandate to cover children.
The Obama plan is fairly long. Where the site only had a three page pdf on fiscal policy, the health care plan is fifteen. The advantage of the plan is that it would provide an outlet for those who do not qualify for Medicare or Medicaid yet still cannot get insurance through their employer or purchase it on their own, to buy into a large risk pool in the government plan without risk of being denied for pre-existing conditions. It increased government involvement, but it does not force consumers into a government plan if they prefer a private one.
There are two disadvantages of this plan. First, the creation of the National Health Insurance Exchange adds another layer of government bureaucracy to an already red-tape laden system. Secondly, the cost of subsidizing the additional insurance has been estimated between $50-65 billion a year. Obama planned to pay for this with the tax increase on the rich, but given the recent economic crisis, that money is going to be hard to come by.
McCain’s Plan
McCain’s plan focuses on using tax credits to shift the onus of buying health insurance from employers onto individuals. He would change the regulations to allow insurance companies to operate nationwide, where now they are constrained by the varied regulations of individual states. The goal is to increase competition, which would lower prices and increase efficiency.
There is a catch, however. Many states have passed laws protecting consumers in poor health or with pre-existing conditions. States also have mandates that require insurance companies to cover certain procedures. By allowing the insurance companies to operate nationally, there is the potential that they would be able to circumvent state regulations, and deny care to those with pre-existing conditions.
McCain plans to give a tax credit that every American can use to buy their own health insurance: $2,500 for individuals, and $5,000 for families. To pay for this, he would end the employer tax exemption for health insurance. In other words, “if an employer spends the average $12,000 a year on family health insurance, the worker would now have a tax bill on the portion of the $12,000 of benefits paid for by the employer.”
The danger in this is that the $5,000 tax credit will not be enough to cover the medical expenses for a family in one year, considering that the average family policy costs over $12,000 a year. In addition, the family would now be paying taxes on the money that their employer uses to buy health insurance in the first place!
Since employers would no longer receive a tax break, they could be more likely to stop offering health insurance to their employees. For lower-income workers, people in poor health, and retirees, it will be very difficult to cover medical expenses using only the government credit.
To cover the uninsured, McCain recommends using Guaranteed Access Plans, which state-based risk pools for those who cannot find or afford insurance elsewhere. This places the burden of expensive medical care on the states, who are struggling with their own budgets in the current economy.
Conclusion
There is a clear difference between the two approaches. There are certainly problems with government controlled health insurance, but, as mentioned in my previous article, the free market also has trouble in dealing with health issues. McCain’s plan uses the free market to deliver health services, and in doing so strongly favors the young, the healthy, and the upper class. Those who don’t need care will have no problem affording insurance on the $2,500 tax credit, and might even have some left over. For those who are older, less healthy, or have lower incomes, the McCain plan is likely to drive them into the ranks of the uninsured. The suggestion of state risk pools is simply inadequate to deal with such a problem.
As a Paul Krugman recently noted in the New York Times:
In short, the McCain plan makes no sense at all, unless you have faith that the magic of the marketplace can solve all problems. And Mr. McCain does: a much-quoted article published under his name declares that “Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.”I agree: the McCain plan would do for health care what deregulation has done for banking. And I’m terrified.
The Obama plan is far from perfect; to my knowledge, no one has yet devised a perfect way to deliver health care. It increases regulation and bureaucracy, and it will result in increased costs and a potential additional burden on the taxpayers. However, it avoids some of the pitfalls of socialized medicine by allowing consumers to choose between insurance through their employer, private insurance under the Insurance Exchange, private insurance outside the Exchange, and insurance through the federal system.
McCain’s plan, on the other hand, would hurt the people who need help the most. Just like his tax plan, it favors the wealthy over the middle class.
To quote Dr. Ezekiel Emanuel, “[i]f you don’t like health insurance companies, Mr. McCain’s plan is not for you.”
Bottom line? Out of the two candidates, the best health care policy to go with as the world collapses into chaos is clearly Barack Obama’s.
As a person not under the healty or rich category, McCain’s plan would be absolutely disastrous. Under at least the state’s plan, the premiums for single coverage was something around $1,000/month and a huge deductible. This was hardly a viable alternative. And $2500 would be slim to say the least. And a few years ago I was completely inelligible for an individual plan through any insurance company due to pre-existing condition. Now, because of high demand, that may have changed in the ensuing years. But I know those with individual plans and the plans themselves are much more exclusive. Sort of defeats the whole purpose. Obama’s is much more reasonable it seems but far from perfect.
As you might imagine, the look for the consumer does not end with the price for care. The cost to the provider will increase dramatically as well. The daily operational costs are going through the roof as a major percentage of our population is reaching retirement. With the cuts inposed already to Medicare, and the new draws defined by all Republicans, not just McCain, the cost to doctors to treat the elderly will simply not be worth it. Health care for the next 20 years will be focused on those over 60, with little help being given the second most vulnerable age group of Americans by their government.
One important tidbit about the Obama plan is that he wants to standardize the claims process by funded mandate. That alone should dramatically reduce the number of (immensely infuriating) gotchas in insurance coverage.
[...] Jon Stonger has posted a comparison of the candidates’ proposals and a rather gloomy assessment of the sitution at Heretical Ideas. [...]
I guess Mr. Stonger is not an economist. Actually, I’m not, either, but I do know better than to try to do arithmetic with only half the numbers. My employer (like all others) figures my “total compensation.” It’s a startlingly large number because of all the benefits I get in addition to cash. Chief among these benefits is the employer’s contribution to the health care plan.
Please consider what happens when (if!) the employer no longer helps me pay for health insurance. The average employer will want to keep that money and add it to his net profits. (Ha!) But market forces are still at work — the same market forces that pushed my total compensation to its current level. Employer will not be able to keep that money (esp. since all the employees will know about it!)
The net result is that I get more disposable income. More choices for me added to more competition in the insurance market nets a big improvement in overall value.
Contrast this with the impure socialism of the Obama plan. Clear winner: McCain. Clear loser: Blog where there has not been a heretical idea in a long while.
Nope, I’m not an economist. And you are correct; if you are healthy enuff to afford good insurance at a low price, the McCain plan does leave you with more disposable income. But for those people who are priced out of buying insurance by their age or health, or those who are denied a policy because of a pre-existing condition, the McCain plan not only will not help them, but it will hurt them by allowing insurance companies to register nationally in any state they want, and thereby avoid the protections that various states have passed for the consumer.
Obama’s plan is perfect. Since he is not requiring adults to get coverage, I will not enroll in any insurance and pay out of pocket for any routine services. These out -of -pocket rare expenses will be much cheaper than the monthly fees Since all insurance companies are requried to accept new customers despite any pre-existing conditions, I will only enroll once I get seriously ill. I save lots of money . If we all do this, we can bankrupt insurance companies and even the government plan. I believe Obama is aware this is what most Americans will do , and he will achieve his ulitmate goal of Socialized Medicine. All young and healthy people do not sign up for any insruance until you get seriously ill. Three cheers for leftist socialist Obama . He tries to act like he supports competition, but his policies will only eventually lead to big governement run health care.
Given the plodding nature of government bureaucracy, anyone who decided to wait until they were seriously ill to enter the plan would likely be dead or bankrupt before the govt got around to processing their insurance.
[...] I was under the assumption that small business aren’t going to be forced to provide health care. Obama v. McCain: Health Care Policy | Heretical Ideas Magazine Health care reform is key fighting ground for Obama/McCain - Sep. 16, 2008 Barack Obama on Health [...]
I am from Arizona and live in John McCain’s neighborhood. How did anyone think that John McCain wrote his own policies? The guy doesn’t show up to vote. Another Senator had a brain operation and was absent 2 years and he had a better voting record than John McCain. Did anyone see what happened when that woman in the audience said Barack Obama was an Arab and a Muslim? He took the mike away from her and walked away. The first concious sign from him that he actually knew the venomous manure that his “campaign experts” who were liars like Karl Rove were acting beyond his knowledge. What took him so long? He has faith that the liars he has been working with are good people. How misguided do you have to be? Now, his wife Cindy is mostly responsible for him even attempting to run for president. He personally has stated for decades that he didn’t want the job. It might even be considered HER bid for control. She “helps” him on decisions. Do you think the rich contemptuous media hogs like her care about what is good for the public? She or he will never have to become subject to any of the laws designed to make the rich richer and the rest of us financial scapegoats. John McCain knows as much about health care as he does about the economy. Could anything be scarier? Maybe not to you now, but, think about this scenario: You are aged and sick, lying in bed in your home that is being forclosed on, you have no job much less a health care plan because the whole country has been sunk into bankruptcy by supply side idiocy. Those idiotic financial policies are are spouted by people who repeat blindly like Stepford wives the rhetoric that they have been taught to say. They who like Sarah Palin, when asked what the heck the statement she just made actually meant, they don’t have an answer because they never studied what the facts actually are. Do you want someone like that in charge of your medical future and the future of your family? Sometimes comedians say things that are considered highly controversial at the time but end up being extremely astute. Chris Rock once stated that if you have good health care coverage that means that when you die you will do it in a bed. That is where we are today. Part of what caused the credit crisis is the amount of people who couldn’t afford their house payments because their medical bills overwhelmed them. Now someone wants to TAX our healthcare benefits that our unions fought so hard for us to receive and our employers are obligated morally (and in some states, legally) to pay. If you like that, I have only one question for you. Are you high????
Oh, just one more comment to Piper Tom. You spout all the “catch phrase” Republican comments that don’t mean anything quite liberally like you know what you are talking about. Like John McCain and George W. Bush you provided your own disclaimer with comment. To say you know nothing about the economy is not enough. Did you realize that you must be living under a rock also? Do you see what the insurance companies make off of health care in this country? You are worried that will be able to bankrupt the healthcare industry? Do you mean health care providers who already are making more money than insurance companies or the health care insurance people who already have more money than the banks?
You stated, “I guess Mr. Stonger is not an economist. Actually, I’m not, either, but I do know better than to try to do arithmetic with only half the numbers. My employer (like all others) figures my “total compensation.” It’s a startlingly large number because of all the benefits I get in addition to cash. Chief among these benefits is the employer’s contribution to the health care plan.”
No, you use your health care situation in comparison to the rest of the country and assume that yours is common instead the exception. You are out of touch with the rest of us.
Also, you stated: “Please consider what happens when (if!) the employer no longer helps me pay for health insurance. The average employer will want to keep that money and add it to his net profits. (Ha!) But market forces are still at work — the same market forces that pushed my total compensation to its current level. Employer will not be able to keep that money (esp. since all the employees will know about it!)
The net result is that I get more disposable income. More choices for me added to more competition in the insurance market nets a big improvement in overall value.”
How do you presume that YOU get more disposable income and that your boss can’t keep the money. If the recent Wall Street crisis taught us anything is that when bosses and CEOs want to take all the money out of a company, they do, they keep most of it. It is called UNLIMITED GREED. Welcome to the party! The rest of us have been predicting that all this was happening for SEVEN YEARS NOW and have been arguing with people like you who see things from a Pollyanna Perspective since it hasn’t affected you yet. You are like the guy who fell from the top of a 110 story building and while passing the 90th floor someone yelled out the window, “Are you alright?” Smiling, he replied quickly, “I’m OK so far!”
Like my aged Grandmother used to say, “Your time’s comming!”
Well Obama has won! It is time now for all the hype to cease and for the action to begin!