Let’s talk about issues: Health Care (Updated)

I’ve done a significant update below – I had the tax effect of McCain’s “reform” of the tax code exactly backwards, but now I’m sourced back to McCain’s top economic advisor, Doug Holz-Eakin.

Here’s a comparison of the two plans from the Economic Policy Institute (a nonprofit, nonpartisan think tank that promotes strategies to achieve a prosperous, fair economy):

Senators John McCain and Barack Obama have presented very different plans to reform health care in the United States. Last week, the Urban Institute/Brookings Institution Tax Policy Center (TPC) provided what appears to be the first evaluation of each plan’s effect on costs and coverage outcomes.1  While the TPC findings are preliminary, there is a wealth of information contained in them; some of their implications, however, may not be immediately apparent even to those relatively well-versed in the U.S. health care debates.  The punch lines of the TPC analysis can be stated relatively simply:

* Efficiency. Over the 10-year period analyzed by the TPC, Senator Obama’s plan provides far greater “bang-for-the-buck,” spending far less per capita for its coverage of the uninsured population (see Figure A below).

* Cost. The costs of the plans over the 10-year period are in the same ballpark: the Obama plan costs roughly $1.6 trillion, while the McCain plan costs $1.3 trillion (the Obama plan spends roughly 20% more than McCain’s) (see Figure B).

* Coverage. The Obama plan makes a much bigger dent in covering the uninsured population. On average over the 10-year period, the Obama plan covers over 47% of the forecasted uninsured population, while the McCain plan covers less than 5% (see Figure C).

There’s lots more at the link, please go read the whole thing.  

To my mind, the worst feature of McCain’s plan is that he would make folks who were lucky enough to get health coverage from their employers pay taxes on it, at the same time as giving everyone a tax break to allow the purchase of insurance.  

According to Holtz-Eakin this does NOT mean that the employer will no longer be able to deduct health insurance costs, as I had previously guessed. Rather, it means that the employee will now have to pay taxes on health insurance benefits provided by the employer.

Source:  Don Pedro, Economists for Obama

It’s a disincentive for companies to offer insurance to their employees.  Young people will opt out of plans, which will leave a smaller pool of older folks, so their prices will rise – this in turn will cause more members to drop out, exacerbating the problem.  Eventually everyone will be forced into the private insurance industry – good luck getting a policy you can afford if you have any kind of pre-existing condition!  And I do mean any kind – a good friend of mine broke his hip when he was in his twenties, and he can’t get a policy these days.

Have at it in the comments, folks…