McCain's Health Plan: Costs More, Covers Less

10-08-08, 2:25 pm

John McCain is losing the health care debate. It is not just that his plan is a boondoggle for insurance companies or that it aims to demolish the employment-based health insurance system and force tens of millions of working families onto the individual insurance market. It is also that McCain doesn't seem able to explain what his plan is all about.

During the second presidential debate, Oct. 7th, McCain said, 'I want to give every American a $5,000 refundable tax credit. They can take anywhere across state lines. Why not? Don't we go across state lines when we purchase other things in America? Of course it is okay to go across state lines because in Arizona they may offer a better plan that suits you best than it does here in Tennessee, and if you do the math, those people who have employer-based health benefits, if you put the tax on it and you have what's left over, and you add $5,000 that you are going to get as a refundable tax credit.'

Got it? Exactly. Essentially the $5,000 tax credit McCain referred to would come only after workers pay a new health care tax on the benefits they get through their jobs. Employers would lose tax incentives to provide benefits under McCain's plan, according to two separate studies, one published in the health policy journal Health Affairs, and one by the non-partisan Economic Policy Institute. Up to 27 million workers could lose their health benefits through their jobs, if McCain wins the election and his plan is implemented.

The upshot of McCain's plan is that massive amounts of federal taxpayer dollars would be handed over to insurance companies. Millions of working families would be forced to seek benefits on the individual insurance market where premiums are much higher than in shared-risk pools created by the employment-based system.

The Obama campaign seized on both McCain's confusing health care plan and its general aim to put more taxpayer dollars into the accounts of health insurance corporations. In a new ad, titled 'Taketh,' the Obama camp put McCain's plan in a nutshell, using a clip from the latest presidential debate. In the clip, a moment that many debate pundits described as one of his strongest points in the debate, Obama stated, 'He says that he’s going to give you a $5,000 tax credit. What he doesn’t tell you is that he’s going to tax your employer based health care benefits, for the first time ever…so what one hand giveth, the other hand taketh away.'

But McCain's plan does not end with just his new health care tax. He has called for deregulating the health insurance market much like the banking industry. In a recent article he authored for Contingencies magazine, McCain wrote: “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.”

There are a couple of ways to interpret these unfortunate comments. First, they were probably written prior to the worst aspects of the financial collapse on Wall Street in mid-September, but after it became clear that deregulation had allowed predatory practices and irresponsible investments by lenders that caused the recent banking disasters. McCain's argument suggests that even when it became clear to most Americans that there were serious problems on Wall Street, he continued to believe that deregulation had been a good thing. Similar to his repeated mantra that the 'fundamentals of the economy are strong.'

Second, the comments in that article fly in the face of what McCain is now trying to say on the campaign trail: that he knew the financial crisis was coming and that he wanted tougher oversight of the banks. If that were the case, it is doubtful that McCain would have published an article praising banking deregulation.

If his goal to deregulate the health insurance industry were to succeed, what McCain has proposed would have additional harmful consequences for working families. As the Washington Post reported, McCain's proposal would not require insurance companies to provide coverage for people with pre-existing conditions after they were booted off their employment-based plans as a result of the tax portion of McCain's plan.

In other words, while employers do not charge workers with pre-existing conditions or expensive medical problems higher premiums, insurance companies could refuse to provide coverage or demand huge premiums, under the McCain plan.

In addition, deregulation potentially puts patients at risk of scofflaw providers. The Wall Street Journal stated in its own report that McCain’s health care plan would “allow health-insurance companies to escape state regulations they don't like, such as rules allowing for appeals when companies deny coverage and rules requiring insurers to cover people with various conditions or to cover particular types of treatments.”

Pushing a health care plan that provides less coverage, costs more, and allows insurance companies to do what they want is what has put McCain on the losing side of the health care debate.

See the Obama campaign ad here: