Rasmussen Reports recently published a poll of American's thoughts about health care. Among the findings:
- 31% rate the U.S. health care system as good or excellent
- 63% favor requiring employers to provide health care coverage to their employees
- 29% favor a national health care plan overseen by the U.S. government
- The health care issue is considered "very important" by 60% and "somewhat important" by 26%
Given all that it's not a surprise the three candidates still running for the presidency have plans for health care insurance reform. Senators Obama and Clinton provided detailed plans, available for review on their websites, six months ago.
Senator John McCain presented his plan for health care yesterday in Florida. Summary points:
- McCain's proposal shifts burden of insurance from employers to individuals.
- Eliminate tax credit given to employers offering health insurance for their employers
- Provide $2500 individual and $5000 family tax credit for purchase of private health insurance
- Federal funding to states to offer "high risk pools", providing coverage to individuals with pre-existing conditions
- The tax credits are a refundable credit, i.e., provided to low income people paying no taxes
This is truly a radical approach to the supply of health care insurance in America. Whereas the Democratic candidate stress the continued use of employer based insurance, Senator McCain chooses to abandon it altogether and encourage individuals to shop for and choose their own insurance. The tax incentives given to employers to provide their employees health insurance would be taken away. The number of employers that would continue to offer health insurance without those tax credits is unknown.
The reason 46 million Americans go without health insurance is the cost of that insurance and the rate at which it's increased over the last several years. Since 2000, average premium cost has increased by 30%, while wages have only gone up 3%. Mr. McCain said that his plan would foster increased competition that would in turn lead to lower costs. “Insurance companies could no longer take your business for granted, offering narrow plans with escalating costs,” he said. That sounds great, but the Senator needs to provide some detail on why and by how much the cost of insurance provided by the carriers will decrease.
McCain's argument for decreasing cost is predicated on very large numbers of Americans willing to purchase private insurance and, in turn, driving down the premium cost. However, the NY Times reports:
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.”
Senator McCain will need to explain where American families will find that additional $7,106 to pay for health care premiums.
Another criticism of the McCain plan is the lack of thought given to those that are considered risky by the insurance companies or who are attempting to buy a policy and have a pre-existing medical condition. Insurance companies, obviously, prefer all their policy holders be very healthy, reducing expenditures. Considerably less attractive are those potential policy holders who will incur additional, sometimes quite large, medical bills.
People with pre-existing conditions now find it difficult and, in some cases impossible, to purchase individual policies. When they are able to find a policy, it comes with high premiums, high deductables and, in some cases, a waiting period before the provider begins to cover expenses related to the pre-existing condition. A Commonwealth Fund study found high risk policies two thirds more expensive than standard policies, in some states 2x.
From The National Review:
To put this in more practical terms, I contacted Karen Pollitz, a research professor at the Georgetown University Health Policy Institute who has done some of the most detailed studies anywhere on high-risk pools and the individual market. Specifically, I asked her to consider what McCain's plan would--hypothetically--do for the person who has given him the most political grief lately: Elizabeth Edwards.
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.
Senator McCain needs to address how his plan will address these very real issues. His tendency, with economic policy and now health care policy, has been vague and completely lacking in detail. Given his lack of seriousness with respect to a McCain presidency fiscal policy, some skepticism regarding the seriousness of this health care plan should be considered.
Health care coverage is a very real, very serious problem for Americans. Senator McCain's plan, as explained yesterday, does not address the major issues with enough detail to be taken seriously at this point.
It seems John McCain does, in fact, believe Americans are spending too much on health insurance. Based on the plan he unveiled yesterday, he will guarantee that millions of Americans will, indeed, pay nothing.
