The NYT on John McCain's health care speech:
"Mr. McCain’s health care plan would shift the emphasis from insurance provided by employers to insurance bought by individuals, to foster competition and drive down prices. To do so he is calling for eliminating the tax breaks that currently encourage employers to provide health insurance for their workers, and replacing them with $5,000 tax credits for families to buy their own insurance. (...)
Some health care experts question whether those tax credits would offer enough money to pay for new health insurance plans. The average cost of an employer-funded insurance plan is $12,106 for a family, according to the Kaiser Family Foundation, a health policy group. Paul B. Ginsburg, the president of the Center for Studying Health System Change, a nonpartisan research organization financed by foundations and government agencies, said, “For a lot of people, the tax credits he’s talking about would not be enough to afford coverage.”"
Not everyone has an extra $7,106 just lying around, waiting to be spent on health insurance premiums. What, I wonder, would happen to them? And wouldn't you think that eliminating tax breaks for employers who offer health insurance might make some of those employers decide to stop offering it altogether? I would, and I'm not even a member of the party whose entire economic platform is designed around the thought that people are so exquisitely sensitive to tax rates that even a relatively small cut in the capital gains tax will unleash great raging torrents of entrepreneurial energy. McCain is; and yet, curiously enough, he doesn't consider this possibility. Here's what he says about employer-based health insurance: "Many workers are perfectly content with this arrangement, and under my reform plan they would be able to keep that coverage. Their employer-provided health plans would be largely untouched and unchanged." Except for the ones whose employers stopped offering health insurance, ha ha ha.
Besides, you might be thinking ...
Don't people with pre-existing conditions have trouble buying health insurance on the individual market? Well, yes, they do. Fortunately, McCain has thought about them. Unfortunately, his thoughts are pretty stupid. "I will work tirelessly to address the problem", he says. "But I won't create another entitlement program that Washington will let get out of control." (Heaven forfend!) Instead, he proposes to build on something states have already tried: insurance pools for high-risk people. Guess what? They're very expensive, even with subsidies.
Jonathan Cohn is one of the best writers on health policy around, so I'm glad he's decided to take a look at this part of McCain's plan:
"In a speech at a Florida cancer hospital, McCain acknowledged that people with pre-existing conditions can't always buy insurance on their own. But, he says, that doesn't mean these people will be left to twist in the wind.
Instead, McCain is offering people like Edwards what he calls a "Guaranteed Access Plan." But unlike all those awful big-government entitlements the Democrats are promising--you know, the ones that (supposedly) make you wait in long lines and cut off access to high-technology treatments--McCain says his plan will let the states handle the problem by working hand-in-hand with private insurers to offer insurance for people with pre-existing conditions.
It will be the best of both worlds, McCain promises: Affordable, available insurance, but through private carriers and without the heavy hand of Washington.
It all sounds very lovely--unless you know something about health care policy, in which case it sounds absolutely preposterous. "
To illustrate, Jonathan Cohn asked an health policy expert to figure out what coverage Elizabeth Edwards might get:
"It turns out that North Carolina, where Edwards lives, doesn't actually have a high-risk pool in operation right now. (It hopes to launch one next year.) But neighboring South Carolina does. Pollitz was able to track down published figures with the rates the South Carolina pool would charge a 50-year-old man. (Edwards, a 57-year-old woman, would actually pay more.) And according to those figures, Edwards' most cost-effective option would be to choose a plan that had monthly premiums of $867 for six months, followed by $693 every month thereafter.
That plan comes with a $1,500 deductible; in other words, every year Edwards would have to pay $1,500 in medical bills before the insurance kicked in. After that, she'd have to deal with the cost-sharing until she had spent another $3,500 out of her pocket.
If you do the math, you'll see that means Edwards would end up paying more than $14,000 a year in insurance and out-of-pocket medical expenses. (At least for now. The rates go up in July.)
But wait--there's the small matter of her cancer treatment during those first six months, which South Carolina's pool, like the rest, wouldn't cover at all. (And, no, those expenses wouldn't count towards the deductible or out-of-pocket limits, either.) Given the high cost of cancer care--some drugs cost $10,000 a month--Pollitz says that her expenses could easily reach $100,000, although it'd be less if Edwards is no longer getting intensive, cutting-edge treatment.
Edwards, who is wealthy, can afford to pay those bills. But most cancer patients can't, and as Pollitz notes, "If you have cancer, if you have a tumor growing in you, you can't just let it grow for six to twelve months while you wait for the pre-existing waiting period to run out."
The result is that a lot of people with medical problems will end up deciding to forgo insurance altogether, figuring that the insurance will make it harder--not easier--to pay their bills. And those people will almost certainly do what most people without insurance do: Pay out of pocket until they're broke or cut back on their own medical care to save money, even though it could mean worse medical problems (and even higher bills) down the road."
So, in a nutshell: McCain plans to eliminate tax breaks for employers who offer health insurance. In exchange, he will offer employees less than half the cost of the plans they now have. If their employers eliminate care, they will have to swallow the difference. But those employees are the lucky ones. They will only have to cough up $7,000 or so. People with preexisting conditions or serious health risks will have to pay $100,000 as a down payment, and $14,000 a year thereafter.
But hey: at least he's going to cut the gas tax!
Plus, you'll be thrilled to know that you can avoid diseases like diabetes and heart disease all by yourselves:
"Diabetes and heart disease rates are also increasing today with rise of obesity in the United States, even among children and teenagers. We need to create a "next generation" of chronic disease prevention, early intervention, new treatment models and public health infrastructure. We need to use technology to share information on "best practices" in health care so every physician is up-to-date. We need to adopt new treatment programs and financial incentives to adopt "health habits" for those with the most common conditions such as diabetes and obesity that will improve their quality of life and reduce the costs of their treatment.
Watch your diet, walk thirty or so minutes a day, and take a few other simple precautions, and you won't have to worry about these afflictions."
Really? We don't need to worry about diabetes and heart disease at all so long as we eat right and exercise? Who knew?
It's easy to make health policy when you don't allow little things like facts to constrain you: when you can wish away chronic diseases, pretend that corporations are completely unresponsive to changes in the tax structure, and describe programs that leave people with hundreds of thousands of dollars in health care costs as "making sure that they get the high-quality coverage they need." It's just not particularly helpful. Plus, it would be even better with ponies.