Health Affairs released a comprehensive study of the short and long term effects of John McCain's health care plan.
Here's the abstract of the study:
Senator John McCain's (R-AZ) health plan would eliminate the current tax exclusion of employer payments for health coverage, replace the exclusion with a refundable tax credit for those who purchase coverage, and encourage Americans to move to a national market for nongroup insurance. Middle-range estimates suggest that initially this change will have little impact on the number of uninsured people, although within five years this number will likely grow as the value of the tax credit falls relative to rising health care costs. Moving toward a relatively unregulated nongroup market will tend to raise costs, reduce the generosity of benefits, and leave people with fewer consumer protections.
(emphasis added)
This is a study performed for a very respected journal by a group of highly respected academics:
1 Tom Buchmueller is the Waldo O. Hildebrand Professor of Risk Management and Insurance in the Ross School of Business, University of Michigan, in Ann Arbor.
2 Sherry Glied is a professor and chair of the Department of Health Policy and Management, Mailman School of Public Health, Columbia University, in New York City.
3 Anne Royalty is an associate professor of economics, Indiana University--Purdue University at Indianapolis (IUPUI).
4 Katherine Swartz is a professor of health economics and policy in the Department of Health Policy and Management, Harvard School of Public Health, in Boston, Massachusetts.
McCain's campaign has claimed blatantly lied by stating that his health care plan would decrease the number of uninsured in America by 25-30 million people.
What does Health Affairs think of this claim?
Weighing this increase in nongroup coverage against the twenty million people we assume would lose employer-based coverage results in an increase in insurance coverage of one million people. Because of the tremendous uncertainty in the estimates of employer and family behavior, we view this analysis as suggesting that initially there would be no real change in the number of people covered as a result of the McCain plan. However, people are likely to have far less generous policies than those they have today.
So why would McCain's plan worsen rather than help the current health care system--particularly the 50 million uninsured Americans?
Because it's modeled on kicking people out of employer sponsored coverage by eliminating the tax break for group coverage. The people who lose coverage through their employers will be forced to fend for themselves in the deregulated, non-group market for private insurance.
For our analysis, we took a middle-range estimate from these studies and assumed that the elimination of the income tax preference for employer-sponsored insurance would cause twenty million Americans to lose such coverage. We note, however, that the effect could be much larger. Studies suggest that many employers would be quick to drop health benefits in response to a major policy change, such as the McCain plan, that greatly altered the business case for offering benefits.
But McCain has a magic bullet to help these people, right? Yes, he proposes refundable tax credits for the uninsured, an idea that has been shown to be worthless time and time again, in the absence of greater subsidies and increased industry regulation.
Not only does McCain's plan not help the current situation at all, it will worsen it:
What is clear from these estimates is that the McCain plan will not enable many more Americans to obtain health insurance--and it certainly will not achieve universal coverage. By our calculations, upward of forty million Americans would be uninsured--and that number would likely grow over time. The estimates described above focus on the initial impact of the plan. Over time, a refundable tax credit would not automatically adjust as health care costs increase--which is quite different from the current tax exclusion of employer premium payments. Thus, the effectiveness of the tax credit in inducing people to buy coverage would inevitably decline over time. Even if the tax credit were indexed to the Consumer Price Index (CPI), if the annual growth in premiums exceeded CPI-measured inflation by 6 percent--as was the case between 1999 and 2007--the value of the credit would be eroded so much that in just five years, five million more people would be uninsured.
(emphasis added)
And how much will this destructive plan cost us, might I ask?
It is difficult to estimate the cost to the federal government of Senator McCain's health plan, since critical details of his plan have not yet been provided. The Brookings Institution and Urban Institute's Tax Policy Center estimate that the tax-related provisions in the McCain plan would cost about $1.3 trillion over ten years starting in 2009.29 In addition, the Guaranteed Access Plans, or high-risk pools, envisioned in the plan would cost about $70-$100 billion over this period. Current estimates of the costs of the plan have focused only on government costs, but the plan also would lead to shifts in spending within the private sector. The McCain plan would shift coverage toward the nongroup market, lead to reductions in the comprehensiveness of coverage in that market through deregulation, and encourage employer-based coverage to become less generous as well. These changes would have the effect of shifting costs from insurance premiums toward out-of-pocket payments, and people with chronic or acute illnesses would likely incur much higher out-of-pocket health care costs than they do now.
So McCain's plan will increase the number of uninsured Americans, increase health care prices, reduce consumer protections, shift costs from those who are less in need to those who are most in need, and reduce benefits. In other words, John McCain's plan would just hasten what the Bush Administration has done to destroy our health care system over the past 8 years.
Bush has proposed these tax credits every year of his presidency. Luckily, Congress hasn't been stupid enough to pass them. John McCain, on the other hand, is dusting off the same old policies, putting a little lip gloss on them, and calling them reform. Pathetic.