McCain's Health care plan

Great Debates
1

In another thread Sam Stone brought forward Obama’s health care proposals for critical review promising to do the same for McCain’s proposals. I am sure he intends to do so, but impatient as I am, let’s not wait for him to get around to it.

I hope to summarize fairly:

The key feature of McCain’s proposal is to disassociate health care insurance from the employer model and make it more of an individual responsibility.

  1. Insurance plans would be able to be bought across state lines, thus increasing competition.

  2. "While still having the option of employer-based coverage, every family will receive a direct refundable tax credit - effectively cash - of $2,500 for individuals and $5,000 for families to offset the cost of insurance. Families will be able to choose the insurance provider that suits them best and the money would be sent directly to the insurance provider. "

  3. His approach to covering the high risk, currently uninsurable, is to “work with governors to develop a best practice model that states can follow - a Guaranteed Access Plan or GAP - that would reflect the best experience of the states to ensure these patients have access to health coverage. One approach would establish a nonprofit corporation that would contract with insurers to cover patients who have been denied insurance and could join with other state plans to enlarge pools and lower overhead costs. There would be reasonable limits on premiums, and assistance would be available for Americans below a certain income level.”

There is more - allowing for drug reimportation, reforming Medicaid and Medicare (including that they “should not pay for preventable medical errors or mismanagement”), supporting better medical information technology, and so on, but those three seem to be the crux of it.

Here’s one analysis of his plan. That author has concerns that McCain’s plan would apparently eliminate state mandates, some of which are very commonsense sorts of things, and create a situation in which

The author also sees the advantage of a robust individual insurance market but doesn’t see enough in the plan as “he would have to make huge strides with individual market reforms to make individual policies more expense competitive. Individual health insurance tends to have expense factors of 25% to 30% of premium–leaving only 70% to 75% of premiums for medical costs. Group policies allocate more like 12% for expense overhead. The notion that he can even make up this huge difference by streamlining the individual health insurance market is hard to see”

As far as the tax credit and the access for the uninsurable

How much would those state-run pools cost and who would pay for them with what?
My take: I like the attempt to disassociate health care coverage from employment. A $5000 tax credit for a family can go a long way. If one assumes that the employer no longer offers health insurance, and passes on that savings as higher salary, then many families will overall come out ahead. And a tax credit as opposed to a tax deduction is fair as the latter helps the higher income level more.

But he is woefully lacking in providing the means for individuals to buy insurance at an affordable rate and shifts the need to cover the difficult to insure to what seems to be an unfunded state mandate.

2

Thanks for starting this. I kept planning to do it, but was just too burned out last week after responding to all the other posts.

I think it goes without saying that I prefer McCain’s system to Obama’s, even though both have some pretty big flaws. McCain’s is pretty short on specifics - really right now it’s little more than a broad philosophical outline of the direction he wants to go in, not a detailed plan.

Rather than re-engineer the health care system and introduce a new public insurance system and all the mandates and regulations Obama wants, McCain’s plan seems to be targeting the worst of the current problems while leaving as small a governmental footprint as possible.

As I see it, the biggest problems with U.S. health care today are:

  1. Spiralling costs, in part because of the paperwork complexity of dealing with insurers, in part because of the practice of large numbers of diagnostic tests and other procedures that have cover the doctor’s ass from malpractice lawsuits, and in part because of the cost of malpractice insuranec. Among other factors, such as increased demand for health services (the population is getting older, and more treatments are available), and the cost of drugs.

  2. People with pre-existing conditions not being able to find health insurance.

  3. The Working Poor not being able to afford health insurance.

  4. Insurance being tied to a job.

**Spiralling costs **- attack them at the source. Tort reform to make it harder to file specious malpractice suts. Simplify paperwork by setting up some common standards. Open up the insurance market to more competition, allowing larger providers to bring larger risk pools and more efficient pricing into the mix.

I’d go further by eliminating the ‘efficacy’ requirement of FDA testing, and test for drug safety only. This would dramatically lower certification costs and get drugs on the market sooner. One of the major reasons drugs cost so much money is because they can take more than a decade to be approved - a process that can cost hundreds of millions of dollars, and then have only a few years to recoup their costs before the patent expires and generics flood the market.

McCain goes very wrong (as does Obama) with his plan to allow drug re-importation. This will not have the effect they think it does - it will just drive up the price of the drugs in foreign markets, and maybe even at home.

**Pre-existing conditions **- McCain has a fairly sensible plan here - he wants to take the state high-risk pools that already exist, expand them to all states, add in some federal subsidies to encourage states to expand them, and then provide tax credits to people to buy insurance - indexing the tax credit to people’s health (if you have pre-existing conditions you get a bigger tax credit).

Tying insurance to work - McCain will remove this requirement by setting up conditions and tax credits whereby employees can buy their own insurance outside of work in a way that’s portable.

This isn’t a panacea - some estimate it would cut the number of uninsured people in half, but would not eliminate it - but it’s a nice incremental approach which can be revisited and tweaked and which won’t require massive changes to the way health care is delivered.

3

Spiralling costs. Certainly frivolous lawsuits, jackpot awards, and defensive medicine contribute to medical costs and I wholeheartedly endorse tort reform … but they are not responsible for the bulk of medical expenses. Complex redundant paperwork adds expenses, but only a little. Competition is good but it does not address the actual costs. The simple truth is that medical care costs a lot because it has a lot to offer and no one is in a position to say no to interventions, no matter what the cost. America instead irrations health care and neither plan is going to address that.

And you think allowing drugs to market that have not proven efficacy will decrease costs?!?

Drug reimportation … it’s just letting someone else do your hard negotiating for you because you don’t have the spine to do it yourself.

Pre-existing conditions. Again who pays? Until the cost of that is laid out and it is clearly explained who pays this is sweeping the issue under the rug. Are states mandated to pay for it? Do the insured pay (not affordable then)? Do the insurance companies all get taxed to fund it and pass that on in their low risk pools (that’s where much of the money comes from in many of the current woefully underfunded state sponsored high risk pools)? Is it a new federal tax?

Cut the cord tieing insurance to work. Agreed a good idea but without a way to prevent each individual from becoming a group policy of one, without a “robust individual market”, the tax revisions alone cannot work. It merely encourages more insurance industry resources to go to better and better cherry picking and attempting to select the lowest possible risk individuals.

4

[QUOTE=DSeid]

Pre-existing conditions. Again who pays? Until the cost of that is laid out and it is clearly explained who pays this is sweeping the issue under the rug. Are states mandated to pay for it? Do the insured pay (not affordable then)? Do the insurance companies all get taxed to fund it and pass that on in their low risk pools (that’s where much of the money comes from in many of the current woefully underfunded state sponsored high risk pools)? Is it a new federal tax?

[/QUOTE]

You act like this is some impossible task. The fact is, some states already have very comprehensive programs in place. In Maryland, for example, a person up to age 60, regardless of their current health condition, can get an insurance plan that covers them for all medical and prescription costs, with a yearly out of pocket maximum of $4600, for under $200/month. Even over 60 it’s just slightly above $200/month. Extending this program to all states would mean that the problem finding coverage because of pre-existing conditions would be a thing of the past. Toss in a $2500 tax credit and that would mean to the individual, let’s do the math on a 58 year old with severe heart problems…$193/mo premium X 12 months = $2316, plus the $4600 OOP max, that’s $6916, minus the $2500 tax credit, leave us with a total annual medical cost of $4416 or $368/month. That’s not dirt cheap, but it’s certainly doable for a large majority of the population, about the same as a car payment, and a bargain if these people are using tens or hundreds of thousands of dollars a year in medical treatment.

5

I hate all these plans that require consumers to guess how sick they will be in the coming year and choose an insurance plan accordingly. What about all the people who guess wrong, and choose a cheap insurance plan that leaves them vulnerable to a catastrophic illness?

And “cheap” always means high-deductible, in the case of health insurance. Looking at Weirddave’s example, that $200-a-month health plan he cites has a deductible of nearly five thousand. That involves you the insured in another form of guessing: for a given episode of illness, should you go to the doctor, or not? A lot of people, looking at an out-of-pocket cost, will go with hope and a prayer instead. That pain in your lower leg? Well, maybe it’s a muscle strain, and not a clot that will travel to your lung and kill you. That unusual fatigue you’ve been feeling recently? Maybe it’s overwork, and not the harbinger of a massive heart attack. Those headaches? Eyestrain, and not a tumor. Etc. A Rand study some years ago established that faced with a high deductible, people make bad choices. To save a few bucks, they’ll defer a medical visit, and some end up paying a tragic price.

All plans like McCain’s are just more tinkering, on a system that’s been endlessly tinkered with already. His plan doesn’t even pretend to cover everyone, and would involve every American in an irksome guessing game about how best to get coverage. Health care coverage is not rocket science – it’s simple. Let’s just get insurance for everybody, and have one payer: the government. It’s simple, it’s cost effective, it’s proven to work here and everywhere else in the world. Why can’t we just do it?

6

My biggest issue with the McCain health plan is whether or not he has any real intention of delivering. I can’t know for sure with either candidate but based on the amount of position changes I’ve seen from McCain I have serious doubts about his sincereity. When it comes to trusting the candidate to sincerely try to do what he says he will Obama is way ahead. When it comes to believeing which candidate wil work hardest toward problem solving for the average American,… it’s Obama.

7

[QUOTE=Weirddave]
You act like this is some impossible task. The fact is, some states already have very comprehensive programs in place. In Maryland, for example, a person up to age 60, regardless of their current health condition, can get an insurance plan that covers them for all medical and prescription costs, with a yearly out of pocket maximum of $4600, for under $200/month. Even over 60 it’s just slightly above $200/month. Extending this program to all states would mean that the problem finding coverage because of pre-existing conditions would be a thing of the past. Toss in a $2500 tax credit and that would mean to the individual, let’s do the math on a 58 year old with severe heart problems…$193/mo premium X 12 months = $2316, plus the $4600 OOP max, that’s $6916, minus the $2500 tax credit, leave us with a total annual medical cost of $4416 or $368/month. That’s not dirt cheap, but it’s certainly doable for a large majority of the population, about the same as a car payment, and a bargain if these people are using tens or hundreds of thousands of dollars a year in medical treatment.
[/QUOTE]
No, I do not think that it is impossible, just that one needs to be clear that it isn’t for nothing. They are not self-funding. In the case of Maryland for example

Now that tax on hospitals is of course distributed to all consumers of hospital care. It is probably small now, as they only cover less than 10,000 lives, but the number of covered lives would need to increase in a system that incentivized the private payers to select the lowest risk pools possible. With that increase the tax upon the hospitals would increase as well.

8

[QUOTE=Sal Ammoniac]
I hate all these plans that require consumers to guess how sick they will be in the coming year and choose an insurance plan accordingly. What about all the people who guess wrong, and choose a cheap insurance plan that leaves them vulnerable to a catastrophic illness?
[/quote]

But there is nothing to guess about, and “leaving them vulnerable to a catastrophic illness” is exactly the opposite of what I was talking about. The MHIP HDHP provides excellent protection against a catastrophic illness, it’s the small things that the consumer has to pay for, but I see you do address this.

[QUOTE=Sal Ammoniac]
And “cheap” always means high-deductible, in the case of health insurance. Looking at Weirddave’s example, that $200-a-month health plan he cites has a deductible of nearly five thousand.
[/quote]

Actually it doesn’t, it has a deductable of $2600, with 80/20 coverage after that, the 20% that the patient is responsible for being capped at $2K.

[QUOTE=Sal Ammoniac]
That involves you the insured in another form of guessing: for a given episode of illness, should you go to the doctor, or not? A lot of people, looking at an out-of-pocket cost, will go with hope and a prayer instead. That pain in your lower leg? Well, maybe it’s a muscle strain, and not a clot that will travel to your lung and kill you. That unusual fatigue you’ve been feeling recently? Maybe it’s overwork, and not the harbinger of a massive heart attack. Those headaches? Eyestrain, and not a tumor. Etc. A Rand study some years ago established that faced with a high deductible, people make bad choices. To save a few bucks, they’ll defer a medical visit, and some end up paying a tragic price.
[/quote]

Are we to be responsible for every bad decision that anyone makes now? The fact of the matter is that you are no longer talking about insurance, you are talking about an entitlement program on a massive scale. Within 5 years, $4 trillion dollars will be spent annually on medical treatment in the US(source: U.S. Dept of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey 2001-2004). Insurance is supposed to manage risk, and protect an individual from major loss. The plan that I’m discussing does just that, even for high risk individuals. What you are proposing is the equivalent of car insurance that pays for oil changes, new tires and gas. Is that next? I know of no right to health insurance. I know of no right to housing either. Nonetheless, we as a society decided that we can’t have people living on the street, so we provide housing assistance to the poorest segment of society, but at some income level we expect people to pay for their own housing. Why is/should medical coverage be any different? We provide medical coverage (Medicade) to the same bunch of people. Plans like the MHIP extend that coverage to those who are dealing with circumstances that make it financially prohibitive or impossible to get traditional medical coverage. That is a proper function of a compassionate state. You can argue that with increased medical costs that Medicade should be expanded, because the “tweeners” (people who make too much to qualify for Medicade but not enough to work insurance premiums into their budget anymore because of increased costs.) are left without options. Fine. I’ve said as much myself, many times. What I have a real problem with is this idea that government should just pay for everybody, regardless of their means. I don’t buy that, not at all, not one little bit (in spite of the fact that if it happens it will probably make me personally very rich)

[QUOTE=Sal Ammoniac]
All plans like McCain’s are just more tinkering, on a system that’s been endlessly tinkered with already. His plan doesn’t even pretend to cover everyone, and would involve every American in an irksome guessing game about how best to get coverage. Health care coverage is not rocket science – it’s simple. Let’s just get insurance for everybody, and have one payer: the government. It’s simple, it’s cost effective, it’s proven to work here and everywhere else in the world. Why can’t we just do it?
[/QUOTE]

But it’s not simple (let’s speak honestly here, all bullshit aside, put whatever your political philosophy is in your pocket for just a moment, and answer honestly: Can you point to one single government agency, state or national, that’s simple to deal with? Why would health care be the exception to the rule?), it isn’t proven to be cost effective (again, very, very few things run by a government burerocracy are, and those don’t stay that way for long. Renob linked to a report in the companion Obama thread that demonstrates that the supposed governmental efficency in Medicare is a myth), and while it’s proven to “work” elsewhere in the world, it doesn’t work the same way elsewhere that it works here. Medical services, particularly for routine, non-emergency care, are not available with the same ease and promptness that insured Americans expect. That’s a simple fact. You can argue that it’s worth it to extend coverage to everyone, and that’s a legitimate argument, but if you’re arguing honestly you can’t pretend that rationing of care does not happen in countries with socialized medicine. Finally, the thing that bothers me most about UHC, is that it’s an extremely excessive response to the actual problem. Proponents of UHC will point to the 47 million people in America who don’t have medical coverage and claim that that’s the problem that needs to be fixed. They are right, 47 million people don’t have health coverage. That number is based upon reports from the US Census Bureau. Here’s the report. If you read the report, however, some interesting figures emerge. Of that 47 million, 33% are already eligible for government sponsored coverage (Medicade), and don’t currently take advantage of it. How are you going to force them to take advantage of whatever UHC you want to implement? 20% are illegal immigrants. Even if you want to make the argument that health coverage is the right of every American, these people are not Americans, they are not legal resident aliens, they don’t belong here at all. They don’t have the right to anything. Finally, 19% are in households that make more than $75,000 per year (37% make in excess of $50K/year, if I wasn’t feeling magnanimous I’d include them, not just the $75K+ers). I’m sorry, but if you make more than $75K/year, you can pay for your own coverage. Once you remove those people from the 47 million, you’re left with 13 million people (or just under 5 million if you use the $50k/year threshold) without medical coverage. This is a problem. It NEEDS to be addressed. But 13 million people are only roughly 4% of the population(under 2% using the more restrictive people making more than $50K can pay their own way calculation). To improve the health care situation of 4% of the population, UHC advocates propose worsening it for everybody else. It’s been said that when the only tool you have at hand is a hammer, every problem looks like a nail. Assuming that government sponsored UHC is the only solution to the problem of these 13 million uninsured problem means that a lot of people are going to get nailed. I don’t think it’s an appropriate response. Correcting the problems that plague the current system is a much better answer, and it can be done using free market principles, leavened with increased government support in certain selected areas, without changing everything for everybody by fiat. UHC is kinda like noticing termites in your basement and responding by tossing a hand grenade at them. Sure you blow the hell out of the termites, but what shape is your house in afterwards?

9

[QUOTE=Weirddave]
UHC is kinda like noticing termites in your basement and responding by tossing a hand grenade at them. Sure you blow the hell out of the termites, but what shape is your house in afterwards?
[/QUOTE]
Of all the analogies I might select about UHC, this one comes in somewhere near dead last.

The fact is, there are multiple problems with health care in this country, and the uninsured are only one component. The real issue, to me, is that we spend so much more than other countries to get poorer results. The reason we spend so much more is multivariate, but at least part of the reason is the crazy patchwork of payers that drives the administrative costs through the roof. McCain’s plan would just add new players, and do nothing to simplify this problem.

And to me this isn’t really about ideology. It’s about what I want as a consumer. These individual-mandate plans make me think of the gyrations I go through every year with my healthcare savings account, where I put aside pretax dollars to pay for health expenses during the upcoming year. It’s a use-it-or-lose situation that imposes a penalty for guessing wrong or for not jumping the right way through the various bureaucratic hoops. So here I am, in open-enrollment month, guessing how much healthcare coverage the family will need in the current year. It’s a stupid exercise that’s imposed on me by our bizarre system.

With individual-mandate plans, it’s the same deal: how much insurance do you need? What should you insure against? What’s the proper trade-off of deductible and premium? You might have a pretty good guess, but healthcare expenses are often unpredictable. You guess wrong, and you take a whack – either you spend more on premiums than you want, or more on deductible. And you have to track your spending as you go along, because you might modify your heatlhcare-seeking behavior according to what you’ve already spent. It’s a perverse system that makes people think first of the dollars rather than their need for care. If you feel unwell, you should go to the doctor, not puzzle out what the visit is going to mean in terms of your overall annual spending.

10

[QUOTE=Sal Ammoniac]
With individual-mandate plans, it’s the same deal: how much insurance do you need? What should you insure against? What’s the proper trade-off of deductible and premium? You might have a pretty good guess, but healthcare expenses are often unpredictable. You guess wrong, and you take a whack – either you spend more on premiums than you want, or more on deductible. And you have to track your spending as you go along, because you might modify your heatlhcare-seeking behavior according to what you’ve already spent. It’s a perverse system that makes people think first of the dollars rather than their need for care. If you feel unwell, you should go to the doctor, not puzzle out what the visit is going to mean in terms of your overall annual spending.
[/QUOTE]

How is this different than any other type of insurance? For my home and auto insurance, I have to decide if I want higher premiums or lower deductibles. If I get into a minor wreck, should I pay for it out of pocket or risk higher rates or cancellation by reporting it to the insurance company? Can I afford it? Will my house catch on fire in the next six months? Should I budget for it? How much?

Under your reasoning, shouldn’t I just be able to get my car fixed/rebuild my home without worrying about the cost?

If we are going to talk about full coverage without worrying of cost, or covering high risk people, then we are automatically moving toward a UHC system. That is another debate, but we can’t pretend to be able to solve these problems under the quasi-private system we have now. We need radical change either toward a market system or to UHC..