McCain and Obama on healthcare
CNN, which was hotly denying the rumors of Clinton’s concession until as late as last night, has an article up about the policy differences between the Obama and McCain. The article they link to for a critical analysis of the candidates plans is entitled, “Why McCain has the best health-care plan”. Way to be impartial, CNN. Nonetheless, it’s a good article with lots of great detailed information on exactly how the two proposed policies would work, even if the conclusion presented in the title seems a little forced.
I’ll summarize the information from the article, and you can see if you come up with my conclusions, or the conclusions of the author.
McCain’s plan would eliminate the employer-paid healthcare plans in favor of a tax credit for buying insurance. He’s not abolishing the employer-paid plans, just making the cost of the plan be considered as taxable income, and offering a credit to offset the extra taxes you’d end up paying. This is thought to lead to via the free market to employers dropping the plans entirely in favor of simply paying employees more, which they can then spend on individual or family plans. It’s also assumed that people would contribute income to an HSA, so combining the increase in income + plus the tax credit would allow people to afford high-deductible, low-premium plans and pay out of pocket for anything else. To apply a little more free-market action to the health insurance industry, he’s going to allow health insurance to be sold across state lines, so a person in Mississippi could buy insurance from a Pennsylvania insurer, subject to Pennsylvania laws. This allows healthy, young people to find cheaper plans which cover less, but would result in increases in the cost of the more comprehensive plans, as they become increasingly composed of the expensive to care for old folks. The overall idea is that insurers will have to compete to get business, and this will make insurers pressure hospitals to reduce costs.
Obama’s plan has two components: a private and a public part. The public part is essentially Medicare as we have it today, and the private part is an employer-provided healthcare plan similiar to the federal employee healthcare plan. Employers can choose whether to offer the private plan or pay a tax to fund the public plan. The plans have a wide range of benefits, more than young people need, so the deductible isn’t as low as it could be under a free market system, but it will keep the comprehensive coverage plans from spiking in cost. Supposedly employers will all drop their plans and pay the tax to fund the public program. Under this system, the individual isn’t making much choice about which plan to get, rather it’s the insurance companies that have to figure out a way to lower costs if they want to increase profits.
Would it be too cute to say McCain’s plan would make health insurance like the airline industry, whereas Obama’s plan would make it like the public school system?