McCain's Health Care Plan: HEALTH INSURANCE YOU CAN'T BELIEVE IN, OR RELY ON.

[Bread and Circus]

MCCAIN'S HEALTH CARE PLAN: HEALTH INSURANCE YOU CAN'T BELIEVE IN, OR RELY ON.

(sorry about all caps, it's this way in the original article).

http://www.prospect.org/csnc/blogs/ezraklein_archive?month=09&year=2008&base_name=mccains_health_care_plan_a_ful

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The big mover here is is the tax increase on employer-based health care, which is achieved by ending its deductability. There are two things worth knowing about the way the exclusion works now: First, it makes health care much cheaper for employers. Second, to qualify for the tax exclusion, you can't discriminate among sick and healthy workers, nor among young and old workers. In general, you might expect this to drive out the young and healthy. But it doesn't, because the savings from deductability still make employer-based insurance cheaper and more comprehensive than what they could purchase on the individual market.

"Eliminating the tax exclusion would greatly reduce the number of people who obtain health insurance through their employers," write the authors. "This decline would be driven by three factors: the effective price of employer-sponsored coverage would increase, the nondiscrimination rules would no longer apply, and low-risk employees would have less incentive to remain in employer-sponsored groups...the elimination of the income tax preference for employer-sponsored insurance would cause twenty million Americans to lose such coverage."

Italics, as you might imagine, are mine. But this is the main fact worth knowing, and repeating, about John McCain's health care plan: Its first-order effect would be to take employer health insurance away from 20 million Americans who currently have it. And this estimate is on the low-end. The authors write that it only looks at what employers would do in response to the new tax rules. It does not examine "the number of low-wage workers who might lose employer-sponsored insurance when employers are no longer bound by the nondiscrimination rules, nor do they capture the impact of breaking up existing risk pools." In other words, 20 million plus will lose their employer-based health insurance.

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And this is examining healthy applicants. The ill are simply denied coverage outright. "A recent survey looks at the experience of people who are less healthy in nongroup markets.21 One-third of such people buying or looking into nongroup coverage were denied coverage or charged more because of a pre-existing condition. Nearly half found it difficult or impossible to find the coverage they needed, and more than two-thirds found it difficult or impossible to find affordable coverage."

Bottom line: Even if you pay exactly as much as your employer did, your plan will still be worse. The authors estimate that most people will choose health care plans that are far less comprehensive than what their employers offered, and also feature premiums that are about a 1/3rd cheaper. In comparison to what they had before, this will barely count as health insurance. But for about 21 million people, it will be exactly what they can afford.

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Then there's McCain's plan to bulldoze state regulations and create a truly national market. "The main effect of establishing a national market would be to undo state laws designed to establish minimum levels of coverage and protect consumers. In a national market where state licenses are not required, insurers will charter in places where regulations are scarce--much like credit card companies do today. As a result, people guaranteed basic benefits today would find those benefits eliminated under the McCain plan...People also would lose access to many benefit protections. For example, forty-seven states now require mental health parity, forty-nine states require coverage of breast cancer reconstructive surgery, and twenty-nine require coverage of cervical cancer screening. All of these requirements--as well as regulations in several states that limit the rates that can be charged to higher-cost consumers and that limit who can be excluded from a health plan--would be eliminated under the McCain plan."