HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Wednesday, March 5, 2008

Jonathan Cohn on McCain's Health Care Plan

Well, since John McCain has the Republican Presidential nomination, it seems like a good time to look at this health care plan.  At least one commentator is not too excited.  Jonathan Cohn, the New Republic's health care writer, states,

So the question is: What type of reform would he be willing to swallow in this much more ambitious moment? Probably the best clue comes from the reform plan he unveiled back in October, but has gotten little attention since. That proposal suggests he'd act less like TR than William Howard Taft--and even a little like George W. Bush.

McCain, of all people, should be sensitive to the way America's health care system fails some of its most vulnerable citizens. He is a three-time survivor of melanoma, the potentially deadly skin cancer. Although he was last treated for cancer six years ago--and although he takes all the right precautions, dutifully donning sunscreen whenever he's outside--he's still at a higher-than-normal risk of getting cancer again.

This sort of history doesn't seriously affect people who get their insurance from big-time employers. In any large organization of relatively random people--say, the employees of the federal government, of which McCain happens to be one--insurers know that most of the people will be healthy, which means premiums from those folks will be sufficient to cover the relatively few with serious medical problems.

But if McCain were, hypothetically, to shop for insurance on his own, he would discover that insurers were far less accommodating. Cancer, even one in remission, would qualify as one of those infamous "preexisting conditions." The insurers might offer him an exorbitantly priced policy or exclude coverage of anything related to cancer. Or they simply might refuse him coverage outright.  Either way, the very last thing McCain should want is to expose even more people to this sort of scrutiny--since, almost certainly, it'd leave even more of them uninsured. But it's entirely possible--some would say likely--that's what McCain's reforms would do.

The main thrust of his plan is to change the tax treatment of health benefits, which sounds arcane but could actually have far-reaching effects. At the moment, if you get your insurance through your employer, you can pay for the premiums with pre-tax dollars. In effect, a dollar your employer gives you for health insurance is worth more to you than a dollar in regular wages. If you buy insurance on your own, directly from a carrier, you get no such benefit. This distinction, which the federal government created back in the 1940s, goes a long way to explaining why, today, most working people with health insurance get it from their jobs. . . .

McCain, to his credit, understands that simply equalizing the tax deduction wouldn't help a lot of low-income people, since they don't pay much--if anything--in income taxes. So, in the one key (and laudible) break with conservative orthodoxy, McCain has said he would offer his new tax break as a refundable credit. Credits, by definition, are available to everybody. Better still, their value doesn't change depending on the tax bracket. Somebody making $100,000 could claim it, but so could somebody making just $30,000--for the very same value.

The McCain campaign says this will help a lot of people. And they are probably right. The trouble is that McCain's tax break--worth $5,000 to a family--still won't be enough for many others. In areas of the country where the cost of living is high, it would be less than half the cost of the average policy. As campaign officials freely admit, this means the plan won't come even close to universal coverage. Nor is it clear how serious McCain is about pushing for that amount. Unlike the Democrats, whose campaigns published detailed plans complete with cost projections and financing options, McCain's "plan" is really more a set of principles and talking points. He doesn't even bother to say how much his subsidy would cost in the end.

That's not to say that McCain has no important insights into reform. While McCain mouths all the platitudes about the inherent superiority of U.S. health care, he understands that we waste all sorts of money on care that is either unnecessary or counterproductive. To thwart this, he has embraced an idea known in wonkier precincts as "pay-for-performance" (the McCain campaign doesn't like to use that phrase, but that's how many people refer to it). Today, Medicare pays for outpatient work (doctor visits, many tests, and so on) based on the procedure. With hospital care, it's a little more complicated, but even there the rewards frequently flow to those who provide the most care rather than those who provide the best care. Under McCain's vision, Medicare would start focusing payments more on the patient's overall condition--paying, say, a fixed sum for every patient with certain types of heart disease. It would also reward doctors and hospitals that avoid medical errors.

This might seem like a lot of micromanaging for a self-described conservative. And it is, especially relative to other Republican plans. But, at the same time, it's also micromanaging without the proper information. While the Democrats also have proposed variations on pay-forperformance, they would set up new government-chartered research institutes to develop guidelines for the best medical care. The idea is to first establish the best way of treating disease and then to reward doctors and hospitals when they adhere to those guidelines. Both Democratic candidates would also provide incentives for better care of chronic disease. Whether or not this actually saves a lot of money in the long run--there's a raging debate about that in academia--it would certainly make people healthier.

For McCain, these steps apparently go too far in the direction of government-regulated health care. But perhaps McCain should consider his own experience. After the war, McCain would have been eligible for medical care from the Veterans Administration. As a member of Congress, he can get insurance through the federal employees' plan; when he turned 65, he became eligible for Medicare. It may have escaped McCain's notice, but those are all government programs. And, if that care is good enough for him, then why not everybody else?

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