More on the Health Plans

The Los Angeles Times (LA Times) has an article comparing the Obama and McCain healthcare plans. This article uses plainer English than the WSJ article did! So I think I have a better idea of what the candidates have to offer.

“McCain would rely on market forces to expand coverage. Obama would widen public safety-net programs, subsidize coverage for the poor and make public insurance similar to that offered to federal employees (including members of Congress) available to all.”

The McCain plan relies on deregulation of the healthcare industry to stimulate these “market forces” to expand and improve healthcare coverage. Seeing how well deregulation has served the banking industry, I am not sure I feel comfortable with less regulation!!

The second major difference between the two plans is that the McCain plan will remove the tax exclusion for healthcare costs paid by employers. For example – if it costs your employer $12,000 for health insurance for your family, under the McCain plan, that amount would no longer be a tax exclusion for the employer. If the employer continues to provide you with health insurance, presumably your employer would make you pay the additional tax – say $3000. McCain’s plan would turn around and give you $5000. So your family would come out ahead, provided your employer continues to provide you with health insurance. If the $5000 in McCain’s plan is indexed to the rising costs of healthcare, then your family will continue to benefit under the McCain plan. On the other hand, if the $5000 is kept constant, or even indexed to inflation, your advantage under the McCain plan will erode with time, because increase in healthcare costs outpaces inflation.

If your employer chooses to eliminate your healthcare insurance, then your family is in big trouble under McCain’s plan!! An average health insurance policy for your family costs about $12,000 to $15,000. So the $5000 that you get under McCain’s plan will not come close to offsetting your new insurance cost! Under Obama’s plan, if you like your current health insurance, and if your employer continues to provide you with coverage, then you can keep your existing coverage, and nothing changes for you or for your employer. On the other hand, if your employer drops your coverage, then you fall back upon government-sponsored coverage, and your employer pays a tax that helps offset the cost of the government-sponsored coverage. Obama’s plan will mandate minimum insurance coverage standards, and insurance companies will not be allowed to deny coverage based on pre-existing or other conditions.

In keeping with McCain’s commitment to deregulation, his healthcare plan places no constraints or minimum requirements on healthcare insurance providers. Under this plan, healthy, young individuals can buy policies with high deductibles and minimal coverage, and save money. High risk individuals, especially those with pre-existing conditions will likely have to pay exorbitant premiums, if they can get coverage at all! McCain plans to address this by developing insurance for “high risk pools” and providing assistance to States to cover healthcare costs for these high risk pools.
The LA times concludes:

“The Tax Policy Center projected that by 2018 the uninsured would number 66.8 million without any reform. The McCain plan would reduce that figure by 2 million, while Obama's would cut the number by nearly 34 million, the center said.The analysis concluded that the costs of both plans over 10 years were similar: $1.6 trillion for Obama's and $1.3 trillion for McCain's. But the benefits were distributed differently. The center found that Obama's plan would provide relatively greater benefits to low- and middle-income families, while McCain's would deliver larger financial incentives to high-income families, at least in its early years.”

If what the LA Times writes, and my interpretation of the two plans is incorrect, then the McCain campaign better get on the stick and explain their plan with greater clarity and detail, because right now their plan does not look particularly enticing!


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