Tuesday, September 16, 2008


There are a lot of politicians talking about change lately. However, there ARE stark differences between the changes that each party is offering in the upcoming election.

John McCain and Sarah Palin are planning radical changes for the nation’s health insurance system. An independent study to be released on Tuesday by scholars at Columbia, Harvard, Purdue and Michigan projects that 20 million Americans who have employment-based health insurance would lose it under the McCain-Palin plan.

The McCain-Palin health plan would treat employer-paid health benefits as income that employees would have to pay taxes on. Your employer will estimate the value of the benefits that you currently receive and this will be reported as income on each paycheck and you will have payroll taxes withheld.

Senator McCain says that he will offset this missing income by offering all taxpayers a refundable tax credit of $2,500 for a single worker and $5,000 per family. (Of course, for those who are barely scraping by already, no tax credit will make up for missing money from a paycheck. And for some, the $2500 will not compensate for the value of the health insurance they will be taxed on.)

The philosophy behind the McCain-Palin plan is that, if families opt out of employer-paid health coverage and enter into the health insurance marketplace, free market forces will fix the problems we are currently facing in healthcare. This free market philosophy underscores all republican platforms and the economic policies that have been in place for the past eight to ten years have all been based on it. Unfortunately, we are seeing (and feeling) the ill-effects of the free-market philosophy in the current mortgage/banking/financial markets crisis.

Some foreseeable results of this plan are that younger, healthier workers will opt out of the employer-based plans — either to buy cheaper insurance on their own or to go without coverage; some older, wealthier workers will opt out for financial reasons; leaving employers with a pool of older, (and poorer) less-healthy workers to cover. Their coverage will then be more expensive, which will encourage more and more employers to give up on the idea of providing coverage at all. This will also force those who can least afford it to pay more or drop their coverage completely, worsening the crisis of the uninsured.

These changes will leave millions more Americans on their own in the bewildering and often treacherous health insurance marketplace, because Senator McCain states that “the key to real reform is to restore control over our health care system to the patients themselves.” Meanwhile the plan also undermines state regulation of the insurance industry because McCain says he is committed to ridding the market of these “needless and costly” insurance regulations.

The McCain-Palin campaign says that by allowing consumers to buy insurance from sellers anywhere in the country, they are offering patients more “choices.” However, current requirements in your state that force insurers to cover vaccinations, annual physicals, regular testing, breast examinations, or prostate examinations would essentially be meaningless. Their offer of "choice" effectively destroys local control and supervision of insurance company policies by state insurance commissioners without replacing it with any kind of control or supervision, leaving us to trust the insurance companies to do the right thing.

The findings of the study being released on Tuesday (9-17-08) are being published on the Web site of the policy journal, Health Affairs. I urge you to read this and decide for yourself.


Alternatively, the Obama-Biden plan moves in a different direction. Their plan aims to modernize and increase the efficiency of our current system of employer- and government-provided health care by use of technological advances that will identify the best providers, treatments and patient management strategies.

The Obama-Biden plan retains the current income-tax exclusion on benefits for those currently receiving employer-paid benefits and offers households (including those still unable to afford private coverage) a refundable tax credit.

Employers not offering coverage or making ‘meaningful’ contribution to the cost of insurance for their employees would be required to pay a 4 percent payroll tax to help subsidize coverage for low- and moderate-income families. However, the plan would also give small firms the option of joining large insurance pools, decreasing the cost for them to provide coverage. Larger patient pools spread risk over a larger group, keeping premiums can be kept down and controlling cost volatility.

The Obama-Biden plan would offer individuals the option to buy in to the federal government's benefits system, ensuring that all individuals have access to an affordable, portable alternative at a price they can afford. SCHIP and Medicaid would be expanded and insurance coverage would be mandated for children.

Medicare and Medicaid reimbursements to hospitals and doctors will be based on patient outcomes (lower cholesterol readings, made and kept follow-up appointments) in order to focus the entire payment system around better health, not just more care. Their plan will also guarantee patient access to preventive services, improving overall health and in turn saving money.

The reforms included in the Obama-Biden plan are intended to lower premiums by $2,500 for the typical family, allowing millions previously priced out of the market to afford insurance, motivate employers to provide affordable coverage, extend coverage to the working poor, alleviate the current cost burden on employers, and eliminate the crisis of uninsured and underinsured patients in the current system.

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