Republican presidential candidate, Sen. John McCain (Ariz.) recently proposed means-testing the Medicare prescription drug benefit. It’s one more piece of a health policy that seems to be under construction. So far, he has mostly revived failed Bush health care proposals. Although he has some good ideas, like means-testing the drug benefit, he has generally followed a Darwinian approach where Americans with diseases would pay more for their health care coverage if they were lucky enough to get it. Here’s how:

Undermining job-based coverage: In today’s health care system, employees with a health problem pay the same amount for health insurance as their co-workers. Sen. McCain’s proposals would encourage healthy workers to leave their job-based and buy less costly coverage in the individual health insurance market because insurers charge higher premiums to the sick or exclude pre-existing conditions from the coverage. The inducement to workers to leave job-based coverage would be a $2,500 tax credit for individuals ($5,000 for families) as President Bush has proposed. Although such a tax credit would help those whose employer doesn’t offer coverage, it would disrupt current job-based coverage because the tax credit would be worth more than the existing tax-break for job-based health insurance for many Americans. To be sure, job-based coverage has serious drawbacks including job-lock for workers who won’t leave an unhappy job situation out of fear of losing their benefits. But letting job-based coverage “wither on the vine,” as former House Speaker Newt Gingrich once proposed to do to the traditional Medicare program is not a stealth attack on workers’ benefits.

Race-to-the-bottom insurance regulations: Today, states regulate health insurance purchased by individuals and small employers. Under Sen. McCain’s proposal, any individual health insurance policy licensed in one state could be sold in any other state. As a result, any state that tried to stop insurance companies from using pre-existing condition exclusions could be undermined by another state that wanted to attract more insurance companies to operate from their state. That’s fine with free-market health care advocates, but it gives people who are sick no protection.

Preserving the hidden health care tax: Under today’s health care system, when somebody doesn’t have health care coverage and needs expensive care, doctors and hospitals often pay for that care by shifting the costs onto those who have insurance coverage. By not requiring every American to have health insurance, Sen. McCain would maintain this hidden tax.

His proposal isn’t all bad, however. It would accelerate the quality revolution in health care with national standards for “measuring and recording” treatments and outcomes and payment reforms in Medicare to “compensate providers for diagnosis, prevention, and care coordination.” The Democratic presidential candidates have similar proposals, but without the Darwinian health insurance design. Perhaps Sen. McCain will find ways to patch up the shoddy construction of his current proposals before voters start taking a closer look.

This entry was posted on 5.01.2008 at 12:45 pm and is filed under Economic Opportunity, Helping Families. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response.