It’s been quite a while since I pointed out the sheer awfulness of John McCain’s health care plan. And while I’ve always regarded Clinton’sas the most through-out alternative, Obama’s (even though it relies too much on private insurance companies for my liking) is simply light years ahead. But don’t take my word for it: listen to David Cutler, Brad deLong, and Ann Marie Marciarille (David Cutler in particular is one of the leading experts in the health care debate– he knows what he is talking about).
They regard the following advantages of Obama’s plan:
“Learning. One-third of medical costs go for services at best ineffective and at worst harmful. Fifty billion dollars will jump-start the long-overdue information revolution in health care to identify the best providers, treatments and patient management strategies.
– Rewarding. Doctors and hospitals today are paid for performing procedures, not for helping patients. Insurers make money by dumping sick patients, not by keeping people healthy. Mr. Obama proposes to base Medicare and Medicaid reimbursements to hospitals and doctors on patient outcomes (lower cholesterol readings, made and kept follow-up appointments) in a coordinated effort to focus the entire payment system around better health, not just more care.
– Pooling. The Obama plan would give individuals and small firms the option of joining large insurance pools. With large patient pools, a few people incurring high medical costs will not topple the entire system, so insurers would no longer need to waste time, money and resources weeding out the healthy from the sick, and businesses and individuals would no longer have to subject themselves to that costly and stressful process.
– Preventing. In today’s health-care market, less than one dollar in 25 goes for prevention, even though preventive services — regular screenings and healthy lifestyle information — are among the most cost-effective medical services around. Guaranteeing access to preventive services will improve health and in many cases save money.
– Covering. Controlling long-run health-care costs requires removing the hidden expenses of the uninsured. The reforms described above will lower premiums by $2,500 for the typical family, allowing millions previously priced out of the market to afford insurance.”
They then spell out the benefits from the recent research. The typical family will save $2,500 a year in health care costs. Annual business sector costs will fall by $140 billion a year, allowing 10 million previously-uninsured people to access employer-sponsored health insurance. Lower costs will create 90,000 low-wage jobs, and push 1.5 million currently workers from low-wage low-benefit jobs to high-wage high-benefit jobs.And what about McCain’s plan? Well, not so good. His plan aims at raising taxes on workers who receive employer-sponsored health benefits, to encourage employers to drop coverage and thus boost the private insurance market. This could force employers to drop coverage for over 20 million Americans (according to recent research). Of course, McCain would give these people a tax credit ($5,000 for a family and $2,500 for an individual) and send them out on their own to navigate the shark-infested waters of the private insurance market. These credits are quite simply paltry: less than half the cost of policies today ($12,000 on average for a family), and far below the 75% that most employers offering coverage contribute. There is no protection for people with pre-existing conditions, so it you are sick, you are out of luck. And if you are lucky enough to get private coverage, you are still out of luck, as the “screening, marketing and individual underwriting that insurers do to separate healthy from sick boosts premiums by 17% relative to employer-provided insurance, well beyond the help offered by the McCain tax credit.”
McCain’s approach seems to be based on the purported gains from “competition”from deregulation. Haven’t we heard that before? Indeed, and Paul Krugman draws the obvious connection, when he quotes McCain’s own words: “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.” In his own words!
Of course, in their desperate attempts to back-pedal, the McCain campaign is claiming that he was referring to a proposal that would allow cross-state purchasing of health insurance. There are a couple of responses to this. First, he is still mouthing an utterly-discredited mantra, willing to let free market take responsibility for health care (and you can be sure there will be no bailouts for those bankrupted by health care costs). Second, even the narrow proposal in question is seriously flawed. Please read this story by Jon Cohn about a woman defrauded by dishonest insurers who were not regulated by her home state. Enforcing regulations is difficult; it would become exponentially more so with McCain’s proposal, leading the individual with little protection. Moreover, cross-state purchasing would cause a race-to-the-bottom as insurers flock to the state with the lowest regulation (just like Delaware for the credit card industry), and coverage will suffer. But then again, McCain seems to believe that market solutions are always more preferable.