In my last post, I looked at Barack Obama's ideas about health care. Now it's time to shift the spotlight to the health care plan offered by John McCain, the presumptive Republican presidential nominee. It could not be more different than Obama's.
Bob Laszewski, president of Health Policy and Strategy Associates, a health care policy and marketplace consulting firm, gives a good synopsis of McCain's health care prescription:
....change the health insurance focus from relying on the employer to relying on individual responsibility and a structure that enables the individual to build their own health care security, often with an increase in wages to replace the health insurance benefit, and not having to rely upon the generosity of one employer or another to provide a fixed and comprehensive plan....
Republicans are frequently called "conservative" -- whatever that overused and abused label means -- but McCain's plan is anything but conservative, cautious or deferential to the status quo. Shifting responsibility from the employer to the individual is, indeed, a sea change in the way the U.S. health care system generally operates, although some elements of this approach already exist on a more limited basis, including Health Savings Accounts (HSAs).
McCain's focus is on reducing costs that make health insurance so expensive that it is often out of the reach of individuals and employers, not to mention the government, which remains responsible for providing benefits for seniors and a safety net for the poor. In McCain's own words:
We are approaching a 'perfect storm' of problems that if not addressed by the next president will cause our health care system to implode.
So how would McCain do this? According to Laszewski:
....McCain would.... attempt to do away with many of the state benefit mandates that are often pointed to as a cause of higher health insurance costs by giving consumers a federal policy option. Some states are estimated to add as much as 30% to the cost of a policy by loading on the mandates.
McCain would create one national health insurance policy form, an innovation that would save insurance providers the necessity of complying with insurance regulations in 50 states and make the non-medical expense (overhead) portions of health insurance policies more efficient.
In addition to the state rules, there would be an optional federal health insurance regime. McCain would thus create a market where existing state products would compete with national health insurance products. Thus the individual insurance market, which has seriously declined in recent years, would find itself re-energized.
An important part of [McCain's] plan is to use competition to improve the quality of health insurance with greater variety to match people's needs, lower prices, and portability. Families should be able to purchase health insurance nationwide, across state lines.
....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. Those obtaining innovative insurance that costs less than the credit can deposit the remainder in expanded Health Savings Accounts.
Additionally, McCain would push for greater insurance portability for people who change jobs, and would encourage and expand the benefits of HSAs.
Economist John Goodman gives the McCain plan a rave review for several reasons, including the fact that all Americans -- regardless of income or job status -- would receive equal treatment under the plan. In addition, he praises the plan's end to discrimination against people who must buy their own health insurance and its cost cutting potential. Quoting Goodman:
The McCain plan encourages all Americans to control costs. The McCain tax credit subsidizes the core insurance that everyone should have. It does not subsidize all the bells and whistles, as the current system does. Since employees and their employers will be paying for additional coverage with after-tax dollars, everyone will have an incentive to compare the value of extra health benefits to the value of other things money can buy.
Without a doubt, this is an interesting approach to health care. Although we would like to see greater details before the November election, McCain's plan does represent creative, out-of-the-box thinking on some of the most vexing problems in the U.S. health care system. Still the question remains: Will the voting public be willing to accept the plan's groundbreaking shift from employer-based health insurance to a revitalized individual market a chance?
Stay tuned.
