Is McCain's health care plan actually better?

[ZenFountain]

McCain proposes to end the tax break employers receive for providing health care benefits to their employees and instead give families a $5,000 tax credit ($2,500 for individuals) to buy their own health care. Obama phrases this as saying your health care benefits will be taxed by McCain for the first time ever, which I suppose is technically true but it's really just the end of a tax break, not a new tax. There's plenty of other details with his plan but this is that is the heart of it, de-linking health care and employment. Jeff Jacoby (a conservative) wrote a an op-ed today in the Boston Globe on the merits to end employer based health care that I found compelling when thinking only of myself:

THE CHOICE you'll have," said Barack Obama during last week's debate, as he told voters what to expect if John McCain's health-insurance proposal becomes law, "is having your employer no longer provide you healthcare.

"Don't take my word for it," he added. "The US Chamber of Commerce, which generally doesn't support a lot of Democrats, said that this plan could lead to the unraveling of the employer-based healthcare system."

If only.

An end to employer-based health insurance is exactly what the American healthcare market needs. Far from being a calamity, it would represent a giant step toward ending the current system's worst distortions: skyrocketing premiums, lack of insurance portability, widespread ignorance of medical prices, and overconsumption of health services.

With more than 90 percent of private healthcare plans in the United States obtained through employers, it might seem unnatural to get health insurance any other way. But what's unnatural is the link between healthcare and employment. After all, we don't rely on employers for auto, homeowners, or life insurance. Those policies we buy in an open market, where numerous insurers and agents compete for our business. Health insurance is different only because of an idiosyncrasy in the tax code dating back 60 years - a good example, to quote Milton Friedman, of how one bad government policy leads to another.

During World War II, federal wage controls barred employers from raising their workers' salaries, but said nothing about fringe benefits. So firms competing for employees at government-restricted wages began offering medical insurance to sweeten employment offers. Even sweeter was that employers could deduct those benefits as business expenses, yet employees didn't have to report them as taxable income. For a while the IRS resisted that interpretation, but Congress eventually enshrined the tax-exempt status of employer-based medical insurance in law.

Result: a radical shift in the way Americans paid for medical care. With health benefits tax-free if they were employer-supplied, tens of millions of Americans were soon signing up for medical insurance through work. As tax rates rose, so did the incentive to keep expanding health benefits. No longer was medical insurance reserved for major expenditures like surgery or hospitalization. Americans who would never think of using auto insurance to cover tune-ups and oil changes grew accustomed to having their medical insurer pay for yearly physicals, prescriptions, and other routine expenses.

We thus ended up with a healthcare system in which the vast majority of bills are covered by a third party. With someone else picking up the tab, Americans got used to consuming medical care without regard to price or value. After all, if it was covered by insurance, why not go to the emergency room for a simple sore throat? Why not get the name-brand drug instead of a generic?

Unconstrained by consumer cost-consciousness, healthcare spending has soared, even as overall inflation has remained fairly low. Nevertheless, Americans know almost nothing about the costs of their medical care. (Quick quiz: What does your local hospital charge for an MRI scan? To deliver a baby? To set a broken arm?) When patients think someone else is paying most of their healthcare costs, they feel little pressure to learn what those costs actually are - and providers feel little pressure to compete on price. So prices keep rising, which makes insurance more expensive, which makes Americans ever-more worried about losing their insurance - and ever-more dependent on the benefits provided by their employer.

De-linking medical insurance from employment is the key to reforming healthcare in the United States. McCain proposes to accomplish that by taking the tax deduction away from employers and giving it to employees. With a $5,000 refundable healthcare tax credit, Americans would have a strong inducement to buy their own, more affordable, insurance, rather than relying on their employer's plan. As millions of empowered consumers began focusing on price, price competition would flourish. And as employers' healthcare costs declined, most of the savings would return to employees as higher wages.

For 60-plus years, a misguided tax preference for employer-sponsored health insurance has distorted America's healthcare market. The price of that distortion has been paid in higher costs, fewer choices, and mounting anxiety. The solution is to restore market forces by fixing the tax code, and liberating Americans from an employer-based system that has made everything worse.

Also here's a little video Nick Gillespie of Reason Magazine made advocating his health care plan that would cover at least half of the uninsured:

http://reason.tv/video/show/560.html

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So I'm curious what everyone's thoughts are on employer based health care. My employer would deduct $100 a month for a very rudimentary plan so I bought my own from Blue Cross that cost $88 a month that offers a lower deductible and co-insurance, more network choices and has better overall benefits for less money. I'm 24 and healthy, one of those "cheap" people to insure I suppose. As I understand with McCain's plan I would get a $2,500 tax credit to buy my own insurance, which I already do.

On the other end of the scale I think about my father who is a physician nearing retirement and living with Parkinson's Disease. If he was dumped off his extremely generous employer provided insurance there is simply no chance he could get comparable insurance, possibly any insurance at all on his own until he qualifies for Medicare. What does John McCain's plan offer to people who really want to keep their employer based health care?

Just a thought, I'm still voting for Obama but in the long term I really do wonder if employer based health care is the direction we should keep going if lowering cost and raising "health consumer awareness" is our goal.

 

[Upchurch]

For what it's worth, Diane Rehm had a show comparing and contrasting the two health care plans a while back: 10:00 show

As I remember it, they outlined what scenarios McCain's would be better and what scenario that Obama's would be better. Of course, there was some disagreement amongst the panel.

Just another source.

 

[Magyar]

In theory MAYBE - from what I understand part of the problem is the source of the numbers.


McCain is using a set of numbers from the national health care institute that says the average insurance policy is about $5800. BUT the range is HUGE Some states, MA for example, the average is over $16000.

Obama is using numbers that are coming from employee plans and how much employees pay in large pools.

I think that these are more realistic numbers because in the pools everyone is included, while in McCains numbers you are talking state to state and cherry picked policies where the low cost could be in very low expense states with cherry piced people - young non-smoking healthy people without any pre existing conditions. So that average is most likely not a realistic representation of costs.

So, McCain wants to give a $5K tax credit. That's great if you live in South Dakota, your under 30 healthy and fit. Not so great if you are the same person living in MA.
And down right sucks if you are 40+ and have had some health issues.

The biggest issue is that he does nothing to address;
1) what if you have a pre existing or get one
2) prevent the companies from now raising the prices with the - since you got a $5K tax credit your actual out of pocket still goes down and you'll get "better" service- meme.
3) nothing to prevent them from kicking you out if you get sick.

McCain plays the typical republican cannard that he wants to enpower the people to make their own decisions.

The trouble with that claim is that GIANT corporations like GE, Ford, GM and the lsit goes on with 10s of thousands of workers in their insurance pools have not been able to accomplish this.

One of the reasons there has been a fairly large change from the corp world about universal health care is because they see how disadvantaged they are compared to other corps. I am going by memory here, but I remember Ford saying something like there is an extra $2000 in every car that competitors like Toyota and Honda don't have.

Does McCain ACTAULLY REALLY believe that the average "Joe the plumber" will have the time and resources to call all over the country to compare policises and beable call ACME Health care company and get ANYTHING other than the standard sales guy who will be on commission and pressured by his sales manager to get the most bucks out of every policy!? What about all the local doctors. They're going to have to spend untold amounts of money figuring out if that insurance company is legit. Will it pay claims in this state, at what rate. Taxes and whole HOST of nightmare issues for small business!?

For the consumer it will be just like buysing a car EXCEPT that there will be no comparisons and no information what so ever about "dealer invoice".

The doctors will also simply say that they will not submit insurance forms and jsut make you pay cash and have YOU deal with ACME Insurance to get you money back.

Can you say, fraud, ripoff artist and consumer nightmare!

 

[maxfrost]

Stupid computer!

 

[maxfrost]

And as employers' healthcare costs declined, most of the savings would return to employees as higher wages.

Oh, if that ain't wishful thinking--or else an out and out con.

 

[gdnp]

Employer-based health care is bad for several reasons. Large businesses can self-ensure, but small businesses have to pay high premiums and risk increases if an employee develops an expensive illness. It acts as a barrier to people with illnesses switching jobs, as the change in coverage may make their disease a "pre-existing condition" subject to waiting periods. Businesses who provide health coverage are at a cost disadvantage relative to those who do not. Anyone who loses their job, even if the job loss is illness-related, loses coverage, as documented by one of the speakers at the DNC. That is why I favor a universal coverage system. Businesses can hire and people can switch jobs without having to factor in medical coverage issues. Unfortunately, neither candidate's program reaches this goal

 

[Meadmaker]

It really irks me that General Motors has any say at all in how I choose which doctor I go to. There's no reason for that situation and it ought to be stopped. GM should build cars, and pay the people who help them build cars. They should get out of the health care business.

Of course, a combination of tax law and culture prevents that from happening. Unfortunately, John McCain's concept is a step in the right direction, but because it will end up being a net loss for most people, it's a non-starter.

I wanted to comment on one section that ZF bolded in the OP.

When patients think someone else is paying most of their healthcare costs, they feel little pressure to learn what those costs actually are - and providers feel little pressure to compete on price.

How true that is. I am covered by my employer (who, technically, is no longer General Motors if the truth be told. I got laid off by them a few years back, and would prefer not to name my new, smaller company, employer.) However, this year, one of my options was a plan based around a Health Savings Account. It's much more complicated, but if I did the math right, it's the cheapest plan with the best coverage offered by the company.

If you haven't seen one of these yet, here's how it works. The premiums are a lot lower, but there is a 3000 dollar deductible (in my company's case). On the other hand, the company gives you 1000 dollars just for joining. Meanwhile, you can make tax deductible contributions to the plan, and bills are paid from the account until the deductible is met, and then things work just like a regular plan.

Now, the key feature of the plan is that if you don't use any health care in a year, or not much, you get to keep the money. In other words, there is an incentive for the employee/patient, i.e. me, to control costs. So, I now always ask how much this is going to cost me when the doctor orders a test.

Try it some time. See how difficult it is. Usually, they don't know. The most common answer is, "Doesn't your insurance cover it?" Of course, the answer you get, which is never in writing and is never honored, is usually wrong. I got a charge for 600 dollars just last month, after I had thought I had paid the whole bill. I called the doctor's office.

"You said the test would cost 900 dollars. Why do I have another bill for 600?"

"That's the bill for medical services."

"But you said it would be 900 dollars."

"You need to discuss that with your insurance company"

"No I don't. They aren;t charging me."

"Well sir, if they aren't paying, that's something you'll have to take up with them."

"There's nothing to discuss with them. It's a covered benefit. I still have to pay it though because I have a deductible."

"Well, then, that's part of your plan."

"That's not the point. You said it would be 900 dollars. You charged me 1500 dollars."

"Well, sir, I don't know how the details of your plan."

"You don't need to know the details of my plan. You need to know what you are charging your patients."

"That's something you have to discuss with your insurance company."

etc.

In their mind, patients didn't pay bills. Insurance companies paid bills. Since insurance companies pay the bills, patients didn't need to know the cost.

It's a totally messed up system.

 

[Malerin]

A little off-topic, but somewhat relevant:

I'm the bargaining head of my union (approx. 135 teachers). Over the years, we've bargained health-care benefits alongside salaries. Currently, our district pays $10,800 per member for their comprehensive health plan (Bluecross PPO). This puts us dead last out of the 14 districts in the surrounding area, but only because we've decided to not even touch health-care for the last two years, on the good chance that a Democrat would win, and some kind of national health care system would be enacted. Every dollar that we could have put towards benefits has gone to salaries instead.

I imagine other negotiators are doing the same thing, and herein lies the problem: what is the point of putting money into a health plan when a decent free health plan is coming down the pike? This is national health coverage, so we're getting some resistance from people who don't want govt. involved in their health care at all. Still, the prospect of taking that $10,800 (or 80-90% of it), putting it straight into salaries, and going with the federal plan is very appealing to a lot of people.

I think we're going to end up insuring a lot more than just the 40 million or so people who don't have insurance. I think a lot of people are going to negotiate out of their employer-based health care in exchange for a raise and free govt. health care.

 

[geni]

I think we're going to end up insuring a lot more than just the 40 million or so people who don't have insurance. I think a lot of people are going to negotiate out of their employer-based health care in exchange for a raise and free govt. health care.

Have you ever tried useing goverment funded healthcare?

 

[Malerin]

Have you ever tried useing goverment funded healthcare?

Nope, always had a private health care plan. Had to go to arbitration once with them, but it was over a billing issue with a doctor and the insurance company backed me up. I HAVE heard horror stories about VA care. As I said, we're catching some resistance from our members about govt. funded health care. But the idea of getting a $10,000 raise is very persuasive. My mother was an army brat and can't stand the idea of govt. getting involved in health care.

As to the larger point, other countries that have govt. funded health care beat us on almost every measure- longevity, infant mortality, doctor mistakes, etc. France has one of the highest longevity rates in the world and one of the lowest infant mortality rates. http://www.indexmundi.com/g/r.aspx?c=fr&v=29

UK also beats us on infant mortality and life expectancy. We're currently ranked 45th in the world in LE and 41st in infant mortality.

http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2091rank.html

 

[leftysergeant]

Have you ever tried useing goverment funded healthcare?

I have. Never paid a medical bill in my life. I figure that ,starting in 1970, with a series of diagnostic procedures to determine what it was I brought home from Libya, up through my artificial shoulder joint, my cataract surgery, a custom-fitted knee brace, my wife's three hospitalizations, including a very strange complicated pregnancy and thyroid problems, and a few other medical emergencies, I have benefitted from close to a million in medical services.

I'm not complaining.

The VA even insists that I take a fasting glucose test at intervals because of the family medical history.

My brother, by contrast, got on Group Health after he was laid off from Boeing, and only found out he was diabetic after his foot nearly necrosed off.

Meh. I'll stay with government health care, thank you. Tricare could use some improvements to make it cheaper and less complicated, though.

Thje problem with McCain's plan is first that it will reduce the pool of insured persons under each of the private palns. Great for the healthy who could really give a rat's, total bummer for the disabled person with a family who needs it.

Great for the bottom line of the parasites like Bill Frist, too.

 

[Magyar]

It really irks me that General Motors has any say at all in how I choose which doctor I go to. There's no reason for that situation and it ought to be stopped. GM should build cars, and pay the people who help them build cars. They should get out of the health care business.

Of course, a combination of tax law and culture prevents that from happening. Unfortunately, John McCain's concept is a step in the right direction, but because it will end up being a net loss for most people, it's a non-starter.

I wanted to comment on one section that ZF bolded in the OP.


Quote:
When patients think someone else is paying most of their healthcare costs, they feel little pressure to learn what those costs actually are - and providers feel little pressure to compete on price.
How true that is.

I agree with you BUT and I can't make this large enough.

Have you TRIED to actually find out what the true costs of health care are?
Try walking into a doctors office and asking how much they'll charge for a sore throat or a twisted ankle diddo hospitals and insurance companies.

The industry has been fighting ANY and EVERY effort to disclose anything of the kind.
Again - the facts are that while the meme of own your own sounds great, if you have half a brain you can figure out that in reality it will just be another cash cow for corp.

It's very much along the same line and will have the same results as the switch that the republicans pushed through with regards to "own your own retirement" 401Ks.

Corps were ALL for it, they wouldn't have to manage pensions anymore and could raid the funds for bucks. It's worked out REAL well for all the folks counting on investments in the stock market lately ha, and look at all the regulations covering that against abuse, fraud. The short and long of McCain's plan is he wants to through you to the wolves with one of those little plastic knives you get at MCD's to fight the battle and no reserves or support. It's your health care deal with it. David beat Goliath after all, you can do it too and just like Pilot he washes his hands of you. Good luck

 

[geni]

UK also beats us on infant mortality and life expectancy. We're currently ranked 45th in the world in LE and 41st in infant mortality.

On the other hand UK also has a sucessful private healthcare industy. The NHS will try and make you better but it isn't going to waste money on any little luxuries while doing so.