John McCain and Barack Obama each outlines his health care plan in the current issue of Contingencies, a publication of the American Academy of Actuaries. McCain, who has spent the latter half of this week playing Jeremiah, promising to drive greed out of Wall Street, has the solution to all health care problems: make the health care sector more like the financial-services sector.
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. Consumer-friendly insurance policies will be more available and affordable when there is greater competition among insurers on a level playing field. You should be able to buy your insurance from any willing provider—the state bureaucracies are no better than national ones. Nationwide insurance markets that ensure broad and vigorous competition will wring out excess costs, overhead, and bloated executive compensation.
Got that? If we provide deregulation and national markets, competition will eliminate “bloated executive compensation.” And of course the greed and dishonesty that McCain denounces in financial services, and which has just forced the Treasury into what could be a trillion-dollar bailout, could never penetrate the health-care and health-care-finance sectors.
Moreover, having denounced a “big-government takeover of health care,” McCain goes on to explain how he would “incentivize” a complete revolution in the way health care is delivered, measured, and paid for. With a magic wand, I guess.
Then we get a riff on personal responsibility including this little gem:
Parents who don’t impart to their children a sense of personal responsibility for their health, nutrition, and exercise—vital quality-of-life information that political correctness has expelled from our schools—have failed their responsibility.
Huh? Was it political correctness that killed phys. ed. and health instruction? I thought it was No Child Left Behind.
And of course McCain thinks it would be nice if the states helped people uninsurable due to pre-existing conditions get health insurance. “No American, just because of a pre-existing condition, should be denied access to quality and affordable care.”
But equally of course it would be wrong to mandate coverage, and it’s essential to leave people vulnerable to the whims of state legislatures, so McCain doesn’t promise that no American will be denied access based on pre-existing conditions. Instead of having a national guaranteed access program (GAP), “the Federal government will commit necessary federal resources to ensure that states finance GAP coverage more generously.”
This is not a serious candidate for President.
I spent last weekend with a group including a brilliant conservative health policy wonk, who argued that the virtue of the McCain plan was that it would so wreck the existing system as to create the crisis required for a move toward single-payer. I can understand why confronting the current mess could generate a Leninist worse-is-better mindset, but, I repeat, this is not a serious candidate for President.
[Obama tells the story we’ve all heard: choice of public or private programs, some sort of standard-setting process for private insurance, community rating, portability, pay-or-play but no individual mandate, subsidies for health insurance purchase by those with low incomes, expansion of S-CHIP. I think that adverse selection will tend to make the private sector shrink and the public plans grow, but that’s not made explicit. On that basis, he then proposes some cost-saving mandates that might or might not work, but at least they aren’t just wishes that costs should fall and the system become more transparent. You can like the plan or dislike it, and it might or might not work as designed, but at least it’s a coherent idea. Two other things the Obama article has that the McCain article lacks: footnotes, and a reference to public health and infectious disease. Neither, alas, mentions that NIH now has only enough money to fund the top 6% of its grant applications.]
Footnote: There seems to be another basic problem with the McCain plan. McCain promises a refundable tax credit of $2500 per person, $5000 per family, to anyone who has health insurance. That’s the centerpiece of his plan. (He neglects to mention, except by implication, that any health benefit received from an employer would count as taxable income, but I guess that’s what he means by “spreading the subsidy more equitably.”) But McCain also denounces both regulation and “coercion and the use of state power to mandate care, coverage, or costs.” If there’s no coverage mandate, why can’t I buy (for about a dime) a health insurance policy with a 90% co-pay and a $100,000 annual deductible, collect my tax credit, and stick the health care system with the costs of my unpaid care if I get expensively sick? McCain says he wants to encourage insurance, but what’s the point of that if anything at all — including virtually nothing — counts as insurance?