Wednesday, July 16, 2008

Obama's and McCain's health care proposals

Here's some reasonably balanced information about the two proposals.

A comparison of McCain’s and Obama’s healthcare plans (by Catherine Lucey of the Philadelphia Daily News), preceded by my summary (Source: )

[My summary: Independent estimates indicate both plans would be expensive, McCain’s $1.3 trillion over 10 years, Obama’s $1.6 trillion over 10 years. McCain’s would be paid for by reducing Medicare and Medicaid plus taxing employers’ contributions to health plans—i.e., those contributions would be taxed as part of the employees' income. The article says it’s unclear how Obama’s plan would be paid for; Obama’s web site says it would be paid for by eliminating the Bush tax cuts for the wealthiest Americans and returning their rates to something closer to, but still less than, where they were under Clinton. Also, the emphasis on preventive care would save money in the long run.

McCain would give a tax credit of $5000 to everyone to be used for buying insurance coverage. He estimates that half of those now not covered could obtain coverage. Some experts believe the number covered would be about the same since the McCain plan might lead many employers to drop or reduce health care benefits, requiring many workers to use their tax credit to obtain a plan much inferior to their current one or upgrade a reduced plan to meet their needs. The McCain plan would deregulate insurance purchasing so that a plan could be obtained from any state, thus increasing portability and available options. The plan also includes various initiatives to lower drug costs, reduce frivolous lawsuits against physicians, explore ways to enable those with pre-existing conditions to get coverage, and provide information to help people in making health care choices.

Obama would provide affordable options for those currently uninsured through a “national health-care exchange” that includes private options and the option of choosing a national health-care plan. Those who now have an employer provided plan would simply keep it, but possibly with reduced premiums. Businesses (with the exception of some small businesses) would be required to provide health insurance to employees. Insurers would be prohibited from denying coverage or setting prices based on health status or pre-existing conditions. Preventive care would be emphasized, and coverage of children would be mandated. Government would pay for a portion of catastrophic care coverage. A tax credit would be provided to help small businesses provide health care coverage. There are also provisions (which would have no tax consequences) to reduce drug costs and the cost of malpractice insurance for physicians.

For the campaigns’ own explanations see and]

The McCain plan

McCain's plan would dramatically change how many Americans get health insurance. He proposes ending tax breaks on employer-provided benefits and instead giving a tax credit - $5,000 per family or $2,500 per individual - to people to buy their own coverage.

Obama has slammed the plan, saying during the debate that the new tax credit counted for little since employer benefits would be taxed.

"So what one hand giveth, the other hand taketh away," Obama said.

Experts said that the $5,000 may not cover the cost of a comprehensive plan. And they argue that the proposal would reduce the incentive for employers to offer health insurance, pushing many people into the private sector for benefits.

"If you take the tax subsidy off, a lot of employers are going to decide it's not in their best interest to provide benefits," said Thomas Buchmueller, a health economist at the University of Michigan, who co-authored an analysis of McCain's plan for the journal Health Affairs.

McCain argues that his free market approach will create more competition among insurers and give people more options. But experts said that older people and those with pre-existing conditions could have difficulty getting coverage.

"We estimate that it will be more or less a wash in how many people end up being uninsured," said Buchmueller.

Asked about the criticism that McCain would not have much impact on the number of people with insurance, McCain spokesman Peter Feldman pointed to a recent study by the Minnesota-based HSI Network LLC, which said that McCain's plan would cover half of the currently uninsured.

But that study has raised eyebrows because it differs wildly from other academic analysis - and because one of the HSI researchers helped write the McCain health plan.

McCain's plan would cost about $1.3 trillion over 10 years, according to the non-partisan Tax Policy Center.

McCain's campaign said last week that he would pay for the plan with reductions to Medicare and Medicaid, the government health plans that cover seniors, the poor and the physically challenged.

Here are the details of his plan:

* Offers a tax credit of $2,500 per person and $5,000 per family for insurance.

* Taxes benefits that people get through their employer. So if an employer provides $12,000 in benefits per worker, each worker would pay taxes on that money as income.

* Cuts Medicare and Medicaid to pay for the plan.

* Encourages the promotion of private insurance plans.

* Deregulates insurance markets so that people could buy insurance from any state.

* Would cost $1.3 trillion over 10 years, according to the non-partisan Tax Policy Center.

The Obama plan

Obama's plan takes a different approach, basically building on to the current system where most people get insurance through their employers and enhancing the options for those who lack coverage.

Buchmueller said that the Democrat approach is:

"Let's take what works and keep it and replicate it for people who don't have it."

Obama proposes creating a new National Health Insurance Exchange where the uninsured would buy coverage, as well as boosting subsidies for low-income people who lack health insurance.

In addition, Obama would prohibit insurers from denying coverage for pre-existing conditions.

He also would require employers to provide health insurance, although there would be an opt-out for small business.

Blumberg said that 96 percent of Americans would likely have coverage under Obama's plan, compared with about 83 percent today. She did question how Obama would pay for his proposals, noting that many details on how to cover the estimated $1.6 trillion cost aren't fleshed out.

McCain has attacked Obama's proposals, saying he would create government-run health care.

"If you're a small business person and you don't insure your employees, Sen. Obama will fine you," McCain said. "Will fine you. That's remarkable."

Details of Obama's plan:

* Sets up a national health-insurance exchange that offers private insurance options.

* Offers a national health-care plan for uninsured.

* Mandates that employers must offer insurance or pay a fine, with the exception of small businesses.

* Prevents insurance companies from setting prices or denying coverage due to health status.

* Mandates that all children must have coverage.

* Would cost $1.6 trillion over 10 years, according to the nonpartisan Tax Policy Center.

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