Wednesday, April 30, 2008

John McCain's Health Care Plan and the Uninsurable--There Are Better Fixes Than the Ones He's Proposed

John McCain spoke about health care in Tampa on Tuesday and tried to answer many of the questions that have been raised about his health care reform plan.

The most pressing question is how would people with preexisting conditions get health care coverage in his plan? The worry is that his plan emphasizes tax incentives for consumers to purchase coverage in the individual health insurance market that relies so heavily on upfront medical underwriting.

Here is how his website explained his answer to that question:
John McCain Will Work With States To Establish A Guaranteed Access Plan. As President, John McCain will work with governors to develop a best practice model that states can follow - a Guaranteed Access Plan or GAP - that would reflect the best experience of the states to ensure these patients have access to health coverage. One approach would establish a nonprofit corporation that would contract with insurers to cover patients who have been denied insurance and could join with other state plans to enlarge pools and lower overhead costs. There would be reasonable limits on premiums, and assistance would be available for Americans below a certain income level.
I am frankly amazed he offered this as a "solution."

First, he is simply shunting the problem off to the states.

Second, he implies that one or more states have figured out what to do with people who can't get health insurance because of preexisting conditions. Just which state is that? I don't know of a single state that has been able to provide widely available access to health insurance for people who cannot get it.

Third, just who would finance this pool? States have tried so called high risk pools before. Time and again they are swamped by people trying to get in and there is never enough money. Since they have never worked before, how would they work this time? There were vague references to coming up with $7 billion in federal money here. Is that their proposal?

At the risk of taking sides here, what I find most frustrating is that I think this problem is solvable for McCain.

As consumers left an existing employer or individual plan for any reason they could be guaranteed access into their new individual plan within a certain time limit--just as we have "creditable coverage" provisions today under HIPAA when people move between employer plans.

For those who are not insured today and want to purchase an individual policy in the new McCain health plan, I think he can guarantee access by telling people that his plan would be "guarantee issue" at a first open enrollment. The high cost people could then be carved out by the insurers and put into a risk pool that was reinsured across all market players. This would be a structure that consumers would never see--it would only be a behind the scenes risk transfer system between insurers.

There are a number of different mechanisms for the insurers to identify and pool these "high risks" and spread their cost across the entire individual market. The program would also be self-financing because the high risk costs would be spread across the entire pool. To the extent McCain wanted to fund his GAP program with federal money he could instead be subsidizing the private insurance pool in order to get people into mainstream insurance as opposed to state pools I doubt anyone would be looking forward to.

With this structure, Senator McCain could simply look everyone in the eye and say his plan will guarantee access to everyone--even those with a pre-existing condition.

But he didn't propose anything like this. McCain simply took one of the biggest problems his plan has--and one of the most legitimate criticisms Democrats can levy against his plan--and said there really isn't a problem. From his own website:


MYTH: Some Claim That Under John McCain's Plan, Those With Pre-Existing Conditions Would Be Denied Insurance.

  • FACT: John McCain Supported The Health Insurance Portability And Accountability Act In 1996 That Took The Important Step Of Providing Some Protection Against Exclusion Of Pre-Existing Conditions.

  • FACT: Nothing In John McCain's Plan Changes The Fact That If You Are Employed And Insured You Will Build Protection Against The Cost Of Any Pre-Existing Condition.

  • FACT: As President, John McCain Would Work With Governors To Find The Solutions Necessary To Ensure Those With Pre-Existing Conditions Are Able To Easily Access Care.
So people would not be denied insurance just as soon as he and the governors find a solution?

Senator, health care plans are supposed to be about your telling us how you are going to do it before you are elected.

McCain also vaguely talked about premium assistance for those who cannot afford coverage even after his $2,500 individual/$5,000 family tax credit but he also gave no details on how much would be available and who would pay for it. I would suggest he means test his tax credit just has he recently proposed doing for seniors in the Medicare Part D program and use that money to help subsidize low income folks. In his own terms, why is he giving a tax credit to Bill Gates and Warren Buffet when there are people who legitimately can't afford health insurance coverage?

Senator McCain, you had better get your health care act together before the Dems make their choice. At this rate, they're going to cut you to ribbons on this issue.

Earlier posts:
An Analysis of Senator John McCain's Health Care Reform Plan

Elizabeth Edwards Criticizes John McCain's Health Plan--He Needs to Fill in Some Important Gaps

McCain Would Increase Medicare Part D Premiums for High Income Seniors--A Small Step in the Right Direction
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