The Flawed Health Care Reform Plans of McCain and Obama

Both Republican Senator John McCain and Democratic Senator Barack Obama have put forward substantial healthcare reform plans. They both seek substantial changes in the current system. That they take starkly different approaches reveals a great deal about how their view of the current system and what they perceive the role of government to be in overcoming them. That both health care reform plans are dramatically flawed would seem to be of great concern, but probably isn’t. After all, these are just starting points and whatever new health care system emerges from Washington in the next few years is likely to be significantly different than either of these plans regardless of which candidate is elected.

As I’ve noted previously, the two plans are campaign promises, meaning they are more an expression of the candidates’ attitudes towards reforms than a blue print for legislation. That both starting points are flawed should be of concern, but is neither fatal nor devastating. They are, after all, just starting points.

Interestingly, the biggest flaw in each plan is the mirror image of the other. Senator McCain would encourage consumers to buy coverage in the individual market, assuming their employer isn’t providing health insurance, by offering tax credits — $2,500 for an individual and $5,000 for a family. While this would help many Americans buy coverage, there’s no requirement imposed on health plans to accept them for coverage (although there might be high risk pools under his plan for those turned down by carriers). Senator Obama, on the other hand, requires health plans to accept all applicants, but he fails to require everyone to purchase medical insurance. As has been demonstrated time and again, this is a sure path to higher premiums. Just look at New York and New Jersey where carriers must sell, but consumers need not buy, coverage. The premiums there are twice that in California.

Each health plan has other problems. Senator McCain would allow carriers to shop for the most lenient jurisdiction in which to file their plans, then impose this lack of regulation on other states. It’s competition without representation that is sure to result in consumer distress, political shenanigans that would embarrass an earmark addict, and undermine the credibility of the system.

Senator Obama, on the other hand, wants to create a government-run health care program to compete with private plans. The idea is to increase fair competition, but the result will be anything but fair. When the umpire picks up a bat, he’s rarely called out on strikes. Similarly, when the government competes in a market it regulates, the playing field is invariably tilted in favor of the government. The danger inherent in Senator Obama’s approach is that the government program, given unfair advantages, will squeeze out the private sector. The result will be a government-run system imposed on the nation without the accompanying debate such a policy shift warrants.

At Tuesday’s presidential debate in Tennessee expect to hear a great deal about their health plans. They’ll both be eager to dive into specifics about their own program — and to describe the failings of the other side’s plans. There will be heated exchanges concerning taxes and government takeovers. There will be fierce arguments over regulation versus goverment getting out of the way. As you watch, keep one thing in mind: none of it matters all that much.

Come November 4th one of these candidates will win. Come January 20, 2009 the winner will be sworn in as President of the United States. Unless there’s a miracle, the economic situation will push back meaningful efforts on healthcare reform for at least a few months. Yes, there will be a team put in place with orders to produce a meaningful plan within, let’s say, 100 days. But the real work of shaping the reforms could be delayed several months or a couple of years depending on the nation’s economic health.

Most importantly, once the plan is put forward, it will be changed profoundly by Congress and the new Administration as they respond to the public policy advice and political pressure of the nation. Some form of health care reform is likely to emerge before the next presidential election. Hopefully the major flaws in what’s currently on the table will be addressed — ideally without introducing new and bigger problems.

One thought on “The Flawed Health Care Reform Plans of McCain and Obama

  1. Alan, in addition to all the flaws in the two systems that you point out, one can add that of favorable outcomes. Neither candidate’s plan specifically incorporates any reasonable way to improve longevity, infant or maternal mortality, outcome measures that the US is in the bottom third among industrialized countries. Obama’s plan is more likely to achieve near universal coverage, which may help improve these statistics better than McCain’s, but as you point out it will cause greater inherent competition between public and private insurance and does not have a clear “mission”.

    Our group, Healthcare Providers for Healthcare Reform-HPfHR (www.healthcare-reform.org)recently completed a comprehensive plan to reform the entire healthcare system, not just the way insurance covers it. The group, which is composed of physicians, nurses, public health experts, healthcare economists, health information technologists, business leaders, hospital administrators and politicians proposes a 3 Tiered system that would provide universal life sustaining and health promoting “basic” healthcare, with the ability to obtain higher levels of coverage for those desiring expanded healthcare choices. The plan is designed to make healthcare delivery more effective and efficient, while maintaining many of the user-friendly aspects of the current system.

    The base level of coverage (Tier 1) would cover the entire population “from cradle to grave”. Based on best evidence, it would include all medical, surgical, obstetric/gynecologic and psychiatric therapies considered life saving, life sustaining and/or preventative. Tier 2 would cover all therapies considered to help with quality of life and functional impairment and Tier 3 would apply to all items considered as luxury or cosmetic.

    The Tier system would be overseen by a panel of healthcare specialists known as “The Board”. This Board’s mission would be to promote the health of Americans in a socially responsible and economically sound way. It would be a quasi-governmental, mostly independent organization resembling the Federal Reserve.

    To address the excessive overhead involved in claim submission by providers and insurance companies, a universal reimbursement form (URF) would be created by the Board and would be implemented electronically using a web based tool available to hospitals and physician offices.
    Funding would be tier-specific and separate: Funds for Tier 1 would be provided through a government subsidized account similar to Medicare (with elimination of all other public insurance). Private insurance carriers would administer Tier 2 services through a limited number of plans that would be developed by the Board (similar to the Medigap Plans A to L now stipulated by CMS). Although each insurance carrier does not have to offer all the plans, the plans that are offered must cover all the services stipulated by the Board. This in turn assures that consumers (either employers or individuals) can compare the price of the plans and can be confident of their coverage. Tier 3 services would not be covered.

    There are many advantages to our system including:
    Assures universal coverage for essential health care
    -Reduces mortality and morbidity
    -Encourages preventive care
    More efficient
    -Saves costs
    -Allows hospitals to reallocate funds to inpatient services
    -Allows for more clinical time
    Allows Private insurance more profit
    -Less overhead
    -Less risk
    Less burden to employers
    -No Need to pay for Tier 1 coverage
    -Private insurance is optional
    -Private insurance should be cheaper
    Portable
    -Tier 1 and Tier 2 will be fully portable

    So as the new President and new Congress take over next year, we do have a new, effective and politically viable proposal that can achieve what this country needs.

    Please visit our website (www.healthcare-reform.org) or blog (hpfhr.blogspot.com)to find out more and/or join.

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