Overhauling health care: Two divergent visions

McCain plan helps the young and healthy
The McCain proposal primarily benefits the young and the healthy, who almost certainly would be able to use the tax credit to obtain cheaper coverage in the private insurance market, Nichols noted. Older people and those with medical problems would face much higher premiums.

“Me, I’m 54, slightly overweight, with a terrible family history of disasters, I’d have to pay a lot more,” he added.

Even people with mild existing problems such as asthma or allergies could have trouble obtaining affordable insurance, noted Tolbert.

More concerning, analysts said, is the likelihood that many young, healthy people would choose the cheaper private options, leaving older, sicker people to be covered by the employee plans, said Paul Fronstin, director of health research programs for the nonprofit, non-partisan Employee Benefit Research Institute, or EBRI.

“At some point, employers will reevaluate why they’re still offering benefits,” he said. “We could see the end of employer-sponsored health care.”

That could shift more people into the ranks of the uninsured, though the numbers aren’t clear. 

At the same time, the plan to allow cross-state insurance sales essentially would deregulate the private insurance market, Oberlander said. While the McCain camp emphasizes the virtues of competition, the move likely would prompt healthy people to buy cheaper, accessible policies in states with less regulation, leaving states with coverage mandates and other restrictions to serve sicker people.

Uninsured may stay the same
“If New York loses the healthy people to Pennsylvania, that can’t work,” he said.

The move to create guaranteed access plans to cover uninsurable people likely would face the hurdles already experienced by more than 30 states that have high-risk pools. And it almost certainly would cost more than the estimated $7 billion to $10 billion, Nichols said.

“When you get down to it, it probably would cost 10 times that,” he said.

Overall, the McCain plan offers a more flexible, portable insurance system that makes consumers more mindful of skyrocketing costs and provides a realistic funding source by repealing the tax exclusion. But it likely would do little to solve the crisis of the uninsured.

“Most people who are uninsured would remain uninsured,” Oberlander said.

The Brookings Institution estimates that the McCain plan would trim the uninsured by 1 million in 2009 and nearly 5 million by 2013. After that, the numbers would rise as the tax credit failed to keep pace with premiums. Obama would reduce the uninsured by 18 million in 2009 and 34 million by 2018, the center notes. Even under the Obama plan, however, 34 million Americans would still lack insurance in 2018.

McCain likely would face an uphill battle convincing Congress to accept his plan, analysts said.

"Is a Democratically-controlled Congress going to vote to tax people's health care benefits?" Oberlander said. "I don't think so."

Obama offers more coverage, but at what cost?
Cost is the key detail missing from the Obama health reform plan, critics say.

The campaign has not said how large the tax would be for businesses that opt not to offer insurance, or how small a business would have to be to be excluded from the requirement. If the payroll tax is too low, say 6 percent, many businesses will opt to pay it instead of offering insurance, sending their employees into the public program and boosting federal costs, he noted.

And although Obama repeatedly has said that he’ll offer Americans health benefits similar to those provided to members of Congress, the kind of comprehensive coverage provided by the most popular federal program has a price tag of more than $1,000 a month, according to an article in a just-released issue of the journal Health Affairs.

“I think the potential downside of the plan is the cost and the affordability,” said Tolbert.

The Obama plan would provide access to insurance to all, which would be “a revolution,” Oberlander said.

But the cost of covering the uninsured is likely $120 billion, far higher than the estimated $50 billion to $65 billion the campaign expects to spend, he noted. The taxes Obama hopes to gain by raising rates for people who make more than $250,000 a year were set to be absorbed into the nation's budget after 2010, anyway, Oberlander said.

Obama's proposal also could face fierce opposition from industries he hopes to regulate. There is some concern, for instance, that insurance companies facing stricter regulations would simply opt out of certain lines of business, just as property insurers are fleeing Florida and Mississippi after repeated hurricanes, Fronstin said.

However, Obama's plan to shift the some of the costs of catastrophic care to the government would help ease that issue, he added.

In addition, mandated employer coverage has faced fierce opposition in the past and likely will again, Nichols said.

Another issue that the campaign hasn't addressed is whether the nation's costly Medicare program, now topping $450 billion a year, could help pay for covering the poor. Critics contend that if Obama were to accept some degree of means testing for wealthier people enrolled in Medicare, he'd have the money he needs to pay for his new proposals. But cutting benefits for the vocal wealthy could be tough politically.

Overall, analysts said Obama’s plan would provide nearly universal access to health care and necessary regulation of quality, but at a far greater cost than anticipated.

“It depends on political will, my friend,” Nichols said.

Surprises for a new president
Whoever winds up in the Oval Office will not be able to dodge health care as a central issue, Nichols added.

If McCain wins, he will not be able to escape the realities of a confrontational Congress loaded with Democrats. If Obama wins, he'll have to grapple with many of the same issues and the inertia that has confounded health reform for decades.

But Nichols said growing desperation for reform may trump all of those hurdles.

“I just think we’ve waited so long that the middle class angst about cost is so great they can’t ignore it anymore,” Nichols said. “The next president, I believe, has to take it on because the forces that got to this point in the debate are not going away.”

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