Polls of voters show a strong desire to change the U.S. health system, according to an article in the New England Journal of Medicine. The article is based on polling by the Harvard School of Public Health and the Kaiser Family Foundation.
“A large majority of voters favor major changes in health care,” the article says. About seven in ten voters graded the U.S. health system as “fair” or “poor,” while only three in ten rated the system “excellent” or “good.”
Health care as an issue is essentially tied for second in importance (with Iraq and energy/gas prices). That’s the highest it has ranked in any national election since 1992. The economy, of course, is first by a large margin, being listed as the most important issue by 48 percent of voters.
And health and the economy are intertwined. “Health care is a part of the economic anxieties of the public,” comments Drew Altman, president and CEO of the Kaiser Foundation. “People are having major problems getting and paying for health care and, if this trend continues, addressing health care as part of the nation’s economic turmoil may be a priority for the nation’s next president.”
While desire for change is high, the authors of the article wrote, Obama supporters and McCain supporters “differ greatly when it comes to their views on the direction and magnitude of such change.” While voters on both sides listed controlling costs as the top priority in health, Obama voters also considered expanding coverage for the uninsured to be important. McCain voters were more likely to focus on improving the quality of care and on reducing government spending on Medicare and Medicaid.
John McCain’s key advisor on health and the economy made a surprising admission – that coverage under the McCain plan wouldn’t be a good as people now get from employer-provided health insurance. In fact, he conceded, what people have now is “way better.”
The McCain health plan is based on discouraging employer-provided health coverage and encouraging individuals and families to buy directly from insurance companies. They’d get a tax credit to buy insurance, but employer-provided health benefits would be taxed as income.
Critics have pointed out – quite correctly – the problems with this philosophy. So-called “non-group” policies tend to cost more and cover less. And insurers can deny non-group coverage for any reason or no reason in most states, leaving people with no insurance at all. The McCain people, however, have argued – until now – that buying individual insurance would mean more choice of plans and stimulate a competitive market that would hold down premiums.
Yesterday, however, a McCain advisor said that people – even young and healthy people, who get the best deal on individual coverage – wouldn’t do as well under McCain’s plan.
“Younger, healthier workers likely wouldn't abandon their company-sponsored plans, said Douglas Holtz-Eakin, McCain's senior economic policy adviser, CNN reported. “ ‘Why would they leave?’ said Holtz-Eakin. ‘What they are getting from their employer is way better than what they could get with the credit.’ ”
Barack Obama immediately jumped on the comment. At a campaign appearance, he said, according to the New Republic blog “The Stump,” “Senator McCain doesn't like to talk about this plan all that much. But this morning, we were offered a stunning bit of straight talk – an October surprise – from his top economic advisor, who actually said that the health insurance people currently get from their employer is – and I quote – “way better” than the health care they would get if John McCain becomes President.”
As pointed out in the recent presidential candidate debates, John McCain proposes to give a $5,000 tax credit to families who buy health insurance or get it from their employers. On the other hand, he wants to tax the benefits we receive now as income.
So, a new tax credit sounds good, but a new tax on benefits sounds bad. Would we come out ahead or behind?
The answer, for most of us is clear: Behind. And we’d get further and further behind as time goes on.
For example, an AT&T employee in Michigan making $65,000, with a working spouse and two children, would lose a total of $12,601 over ten years, according to a study by Tony Daley, a CWA research economist. A Verizon employee in Maryland, making $64,000 with a working spouse and two children, would pay a total of $48,146 in extra taxes over ten years. If the spouse wasn’t working, the impact would be less (because taxable income would be less), but would still be considerable – a ten-year total loss of $28,441.
The McCain plan “is pretty revolutionary – in a bad sense,” Daley said. “The design really is to destroy employer-based health care.”
“It is designed to penalize people who have generous employer-based benefits,” Daley added, “and it does it effectively.”
And the impact gets worse as time goes on, because the tax credit is linked to inflation, but health benefits (which would now be taxed) grow at a much faster rate. That Verizon employee in Maryland would break even in the first year of the McCain plan – a net loss of a buck – but would pay an extra $6,352 in taxes by 2018, year ten of the plan.
Not all CWA employees would be worse off. The impact varies with the value of the benefits (the better benefits you have, the more the McCain plan hurts you), family income level (the higher the income, the worst the impact) and with state income tax rates. For example, take an AT&T Mobility worker in the state of Washington, where there is no state income tax. Making $27,000, with a working spouse and two children, that worker would actually save $14,312 in taxes over ten years.
But whether the McCain plan helps you or hurts you, it gets worse over time. That AT&T Mobility worker would save $1,929 in the first year, but only $674 – about a third as much – by year ten.
McCain’s plan would also hit hard at retirees who are below the Medicare age of 65. For example, a pre-65 Verizon retiree in Maryland, with a working spouse and no kids at home, would be out $16,758 over ten years. Add in two kids at home, and the negative impact is $30,729.
Daley said his research is generally consistent with studies of the McCain proposal done by academics and think tanks. The difference is that the other studies are based on hypothetical examples, while Daley could measure the impact on real CWA members by plugging in wage rates and benefit costs from CWA contracts.
Daley’s study assumes that employers keep the same benefits, and that wages and health costs grow at approximately current rates. Other experts who have studied the McCain plan have projected that many employers, losing their current tax deductions for providing health benefits, would cut back coverage or cut it off altogether. A recent study in the journal Health Affairs predicted the McCain plan would cause 20 million people to lose employer-provided health insurance, pushing them into the individual insurance market – where policies generally cost more and cover less, and where insurers don’t have to sell you coverage if they think you’ll get sick. Health benefits for CWA members are generally guaranteed by contract, so employers couldn’t drop coverage unilaterally.
Much of last night’s presidential debate focused on “Joe the Plumber,” in Ohio, who was worried that Barack Obama, if elected, would raise his taxes. (The answer: Obama’s tax plan would only mean higher taxes for Joe the Plumber if, after paying for his employees and deducting for his wrenches and pipes and other business expenses, he makes more than $250,000. He told Diane Sawyer that his current income is “not even close” to that now.)
What about Joe’s health plan? Thanks to Jonathan Cohn at the New Republic for quickly pointing out that “Joe the Plumber would be among the … primary beneficiaries” of Obama’s health plan.
Here’s how Obama’s plan would work for Joe, assuming (we don’t know the details of Joe’s income, tax filing status, etc.) he runs a small business employing several people. If Joe is already providing health insurance to his workers, he can continue the plan he already has.
Chances are, however, Joe isn’t currently offering health insurance. Only half of small businesses do (compared to nearly all large companies). Insurance tends to be more expensive for small businesses than large ones, because there’s more administrative cost in selling and enrolling small groups than large ones. Also, if Joe has an employee with, say, diabetes, the insurance companies would charge him much higher premiums or might refuse to sell him insurance altogether.
Some states have protections that would require insurers to sell to Joe’s plumbing company, and not to charge exorbitant premiums, but John McCain’s plan makes it easier for insurance companies to avoid state regulation. Obama’s plan would require insurance companies to offer Joe a policy – with reasonable premiums and comprehensive benefits. Or, if Joe didn’t like what the insurance companies were offering, he could buy coverage from the government, similar to the plans that now cover members of Congress and other federal workers. And, Obama would provide a tax credit of up to 50% for small businesses to help them meet the cost of insurance.
Despite what McCain said during the debate, it’s not true that the government would tell Joe what health coverage to buy, and it’s not true that Joe would be fined if he didn’t insure his workers. (Only large companies, under Obama’s plan, would pay a penalty, so far unspecified, if they didn’t offer coverage.)
Under McCain’s plan, the insurance companies would be free to offer Joe whatever policies (comprehensive benefits or skinny ones with high out-of-pocket costs for patients) at whatever premium they wanted to charge. They’d also be free to refuse to sell to Joe.
And if Joe did offer coverage, McCain would tax his workers for the value of the benefit. For those workers who were able to get coverage – if the insurers were willing to sell to Joe, or if they bought policies on the individual market – McCain would offer a tax credit of $5,000 for a family or $2,500 for an individual. But the average cost of family coverage is more than $12,000, so the plumbers working for Joe would still be hard-pressed to afford insurance.
Barack Obama’s health plan has “greater potential to move the health care system toward high performance” than John McCain’s proposals, according to a new analysis by the non-partisan Commonwealth Fund, a foundation that studies health issues.
And Jane Bryant Quinn, a financial columnist, says in this Newsweek commentary that McCain’s plan “will raise your costs without changing the game.”
What does the Commonwealth Fund mean by a high-performance health system? One that covers everyone, guarantees adequate benefits, is affordable and simple, allows choice, and improves quality.
The Commonwealth Fund’s definition of a “high performance” system is similar to the goals for health reform set out by CWA. You can check out CWA’s analysis of how Obama’s plan and McCain’s plan line up (or don’t) with our goals.
Obama’s proposal, “mixed private-public group insurance with a shared responsibility for financing,” has a better chance of meeting those goals than “McCain’s proposal to encourage individual market coverage through the use of tax incentives and deregulation,” Commonwealth said.
By limiting state regulation of health insurance, the analysis said, McCain’s plan would “effectively remove consumer protections now in place in some states,” and would therefore “reduce access to insurance for older people and those with health problems.” Under Obama’s plan, insurance companies “would be prevented from rejecting applicants or charging higher premiums because of preexisting conditions.”
Quinn said, “Conservatives love health plans that throw more of the costs on you. When it's hard to pay the bills, you see the doctor less. Through the ‘magic of the marketplace,’ that's supposed to slow the rate of increase in medical costs.
“Friends,” Quinn concluded, “there's zero evidence that that works.”
John McCain would make “major reductions to Medicare and Medicaid” to save enough money to finance tax credits for people who buy health insurance, the Wall Street Journal reported.
That would mean up to $1.3 trillion in cuts to the health programs over ten years, according to independent analysts quoted by the Journal.
McCain has proposed giving tax credits -- $2,500 to individuals, $5,000 to families – to help offset the cost of buying insurance. To pay for this he would require individuals who get employer-provided insurance to pay income tax on the value of that benefit – something they get tax free now. For example, a CWA member who gets a family policy worth $12,000 a year as part of contractual benefits would be taxed as if she had an extra $12,000 in income. Those with the best benefits would end up paying more in taxes, those with thinner or no benefits would see a tax reduction.
Even imposing income tax on benefits, however, isn’t enough to pay for McCain’s proposed credits. A nonpartisan analysis found McCain’s plan is short $1.3 trillion over 10 years. Some have assumed he would pay for them by adding to payroll (Social Security and Medicare) taxes. But his top economic advisor told the Journal he wouldn’t do that. Instead, the advisor said, he would get the money by “eliminating Medicare fraud and by reforming payment policies to lower the overall cost of care.”
So, you don’t have to worry about McCain increasing your payroll taxes, and you don’t have to worry about McCain increasing the deficit with his health plan. You merely have to worry about him cutting more than a trillion dollars from Medicare and Medicaid, the programs that protect the elderly and the poor.
And you still have to worry about income taxes on your benefits. And you still have to worry that – as many experts predict – employers will drop health benefits when the tax preference is taken away.
Even business groups haven’t been supporting McCain’s plan. “Officials, with organizations like the U.S. Chamber of Commerce, the Business Roundtable and the National Federation of Independent Business, predicted in recent interviews that the McCain plan, which eliminates the exclusion of health benefits from income taxes, would accelerate the erosion of employer-sponsored health insurance and do little to reduce the number of uninsured from 45 million,” the New York Times reported.
Plans for health reform offered by Barack Obama and John McCain offer “a clear choice between two very different approaches,” according to an analysis by the AFL-CIO.
From McCain, the labor federation says, “the ‘on your own’ approach substitutes individual insurance for group coverage,” including employer and union plans, “leaving individuals to deal with insurance companies by themselves” and “giving insurers and health plans even more power than they enjoy today, even greater license to make arbitrary decisions and even greater range on what they can charge.”
Obama, in contrast, offers “a ‘shared responsibility’ approach” which would “outlaw current insurer abuses such as denying coverage to people with pre-existing conditions,” requires employers to offer good health coverage or pay toward a national plan and “ensures quality benefits – a comprehensive benefit package to cover the full range of services, including preventive care.”
As we reported here, a non-partisan study projects the Obama plan would cover about 34 million of the uninsured, while the McCain plan is unlikely to cover any more people.
There’s something we’ve been wanting to ask John McCain: You criticize “government-run health care,” using a misleading label to mischaracterize the proposals of candidates and organizations such as CWA that propose providing all Americans with quality, affordable health care. Senator Barack Obama, CWA and others are not proposing a government take-over of the heath care system.
But, ironically, as a member of a military family, as a Naval officer and as a Senator, you’ve pretty much always had either government-run health care provided by the military or government-financed health care (with a choice of private insurers) as a member of Congress. You’re now eligible for VA health (run by the government) and Medicare (financed by the government, with a free choice of the doctor and hospital you want to go to). And you seem to be doing fine. Has it been so bad?
Well, somehow we’ve never gotten the chance for that conversation. But the editorial board of the Des Moines Register did. You can see McCain’s answer in the video clip, but he essentially said that, although he has little or no experience with the private health care market, you don’t have to have been an astronaut to understand the space program.
Maybe you don’t have to be an astronaut to understand the space program. Maybe you don’t have to have been a welfare recipient to have an opinion about welfare reform. But since John McCain wants to replace employer-provided health coverage with families shopping for insurance on their own, there are some things John McCain appears not to understand about the private health insurance market. Here are some things we’d like him to know:
If you’ve had health problems – such as your history of cancer, Senator – you probably can’t buy private health insurance at any price. You say state “high-risk pools” can cover those people, but most of the existing pools are small (some have waiting lists), charge high premiums and exclude coverage of pre-existing conditions, at least for a period. (Barack Obama would require insurers to sell policies to everyone, regardless of health status or history.)
Private “non-group” policies cost as much as $2,000 a year more than employer-provided policies, according to a recent article in the journal Health Affairs. At least in part, that’s because there’s much higher administrative costs when insurers are dealing with one family at a time, rather than large employer groups.
Those “non-group” policies provide a lot less coverage. According to a 2006 study by the Kaiser Family Foundation, “non-group” policyholders paid, on average, 43% of health costs out-of-pocket, compared to 22% for those covered by employer plans.
