McCain Runs Into Trouble On Health Care Reform

You gotta love this headline (unless you're a Republican).

McCain camp working out healthcare details
Aides struggle to sort out his promises

Aides struggle to sort out his promises? Oy. See, he's got a problem. His proposals don't make much sense.

When Senator John McCain unveiled his healthcare proposal last fall, a journalist asked whether the Arizona senator's battle against skin cancer would make him sympathetic to the idea of requiring that insurance companies provide coverage to people with preexisting conditions.

McCain flatly rejected the idea. "That would be mandating what the free enterprise system does," McCain said.

McCain's response highlights the challenge he faces as he prepares to try to sell his healthcare plan in the fall campaign. He says the country must provide access to healthcare for all our citizens, and that "we need to help people who need it." But McCain also wants to shrink government's role in healthcare and doesn't want to impose regulations on insurance companies.

As a result, McCain's aides have been scrambling to come up with ways to satisfy those who want more coverage without violating what they call McCain's conservative principles on the issue.

And therein lies McCain's problem. You can't move toward more coverage without violating McCain's conservative principles.

McCain, for example, has spoken in general terms about how he might help people with preexisting conditions. He has said he favors what he calls a "special provision including additional trust funds for Medicaid payments." The comment left even some of his aides unsure of his meaning. Medicaid funds are generally used to help lower-income Americans.

Lately, some of McCain's aides have said he might try to divert some Medicaid funds into a program that would help people with preexisting conditions, but his advisers can't yet say how such a program would work or how many people would be covered.

"These are real questions, and I think there will be answers, and there better be, but they are not there yet," said McCain adviser Thomas P. Miller, a resident fellow at the American Enterprise Institute. "A lot more remains to be hammered out."

See, McCain doesn't really know a lot about complicated things like Sunni vs Shi'a or condoms and HIV, and he sure as hell doesn't understand his own health care proposals. Interestingly, in this case, neither does his aides.

In a nutshell, the McCain plan focuses much more on cost than access. Similar to Bush, McCain wants to move the burden of insurance from employers to individuals, and let the market work it out. This analysis comes from the Health Care Policy and Marketplace Review, where Bob Laszewski has asked tough questions of all the candidate plans:

However, the real question is, will McCain's plan give people enough to be able to afford health insurance? With the average cost of employer-provided family health insurance at $12,000 a year, a $5,000 tax credit will often come up way short—especially for higher age people and those who don't have the benefit of an employer contribution. High deductibles and HSA plans will help but families who don't have employer contributions should be prepared to pay at least a few thousand extra dollars.

And to further expand the part about the McCain tax credit:

If McCain were to be successful in moving the system from the employer to the individual with his individual tax credit proposals, the employer arguably would have a smaller incentive to continue providing these benefits. Many employers might simply say, "Here's the money I was paying—go find your own coverage." It may just be easier for the employer to drop the coverage and give the employee the cash value of the health benefits.

The employer would also have the new advantage of having the difference in wages go up each year by the wage rate while the employee saw his health care costs rise at the rate of health care inflation—which has averaged two to three times more.

McCain does not have a mandate to buy insurance for individuals or employers. So, people can still opt to go without coverage.

Again, the big question is how does McCain see his individual health insurance market working. How will he deal with age rating, medical underwriting, and pre-existing conditions? If McCain does not develop an individual health insurance market everyone can access, no matter how old or how sick they are, his plan will fall way short. He needs to detail his "risk adjustment bonus" scheme for older and higher cost families.

One of the intriguing things about the McCain proposal is that it gets more points for cost containment (or, if you prefer, cost-shifting) than for availability (no way is it universal), thus the reviewer correctly assumes

Senator McCain's health care proposal is one that will appeal to conservative Republican voters as well as centrists.

That's because health care costs are just as important to voters as access – if you're a Republican. Of course, there's not as many of those these days, so that puts McCain at a disadvantage.

In any case, we're brought back to McCain's stumbling on pre-existing conditions, and as this Kaiser summary notes, also brings us to Ron Wyden's S. 334 Healthy Americans Act , which mandates enrollment (a few exemptions for religious reasons or "has insurance already") in a state private plan that entices people away from employer-based coverage. This Oregonian editorial discusses the relationship between Wyden's plan and the Democratic candidate's position, emphasizing the appeal of expanded coverage (which McCain's lacks).

If we can duck the Bosnian sniper fire at Hillary Clinton, and dodge the wayward bowling balls Barack Obama let loose in Pennsylvania, there were some things this campaign was supposed to be about. Actually, one in particular.

And as the race approaches Oregon, it's reaching a good place to discuss it.

Turn your head, cough and say, "health care."

And a reminder from here in CT as to the "whys" of health care reform:

Three Connecticut residents die every week because they don't have health insurance and cannot afford to see doctors for regular checkups, screenings and other preventive care, according to a new report released Thursday.

The study by Families USA, a nonprofit health care consumers group, says such care is important for catching diseases at an early stage and greatly increases the chances for survival.

In 2006, about 209,000 of the 1.9 million people in Connecticut between the ages of 25 and 64 didn't have health insurance, and about 150 of them died that year because they lacked coverage, the report says.

Connecticut Democratic U.S. Reps. Rosa DeLauro, Joe Courtney and Chris Murphy say the study is more evidence that Congress needs to stop dragging its feet on health insurance issues and make coverage more accessible and affordable.

So, in the end, McCain stumbles on the pre-existing condition/access piece (there are other bills pending to address that from Steve Kagen and Joe Courtney), while Clinton and Obama will be pushed to discuss mandates (or lack of same) and cost containment. The Presidential candidates aren't promising affordable, increased access reform because it's tough to have both. But according to the numbers (graph from Kaiser.edu), the 'more accessible' is going to need to be at least as prominent as the 'more affordable', and therefore McCain's position on pre-existing conditions is not tenable and will not last, regardless of how his aides try to dig him out of the hole he's in.

graph from kaiseredu.org