What McCain Is Not Telling You About His Free Market Health Care Plan

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Republican presidential candidate John McCain and his friends on The Wall Street Journal editorial board tout that McCain’s health care plan will save people money and allow them to choose the level of coverage they want, as his plan will allow them to shop the “free market.”

As the saying goes, “the devil is in the details” and there are a few major points McCain and the Journal have left out that makes McCain’s health care plan unworkable. McCain and his “free market” friends cite all kinds of statistics that his plan would be cheaper to enact than Democratic presidential candidate Barack Obama’s plan.

For all McCain’s talk about cost savings, McCain’s health care tax credit is a fiscally irresponsible government giveaway to people who have employer-sponsored health insurance while doing nothing to get more people who do not have insurance covered. Why? Let’s say an employee has an employer sponsored family plan valued at $12,000 a year. Even in the top tax bracket (35%), the employee would receive $800 under McCain’s plan as McCain would give a $5,000 tax credit for a family policy. ($12,000 valued policy in 35% tax bracket = $4,200 in taxes paid on the plan’s value, minus McCain’s $5,000 credit = $800 employee profit.) For people lucky enough to have retained employer sponsored health care, the lower the tax bracket, the more money these employees receive from the federal government. That’s money paid by other taxpayers who are struggling with high medical costs because they don’t have insurance and must pay the full retail rates medical care providers charge which are much higher than rates negotiated by the insurance companies.

If employers begin dropping health care coverage, most of these employees will be in for an eye opener. Most large employers self-insure and pay insurance companies to act as the plan’s administrator. They are able to negotiate better coverage for lower costs than most individuals could obtain in the “free market.” Additionally, group coverage offers far more consumer protections than individual policies do.

McCain is misleading when he says that under his plan, individuals could buy a health insurance policy from another jurisdiction by going across state lines. If an insurer doesn’t do business in your geographic location, you are not going to be able to buy that insurer’s plan. Currently there are only five states (Maine, Massachusetts, New Jersey, New York, Vermont) that require insurance companies to offer individual policies that are guaranteed issue. This means the insurer must issue a policy to an individual without requiring the individual pass medical underwriting (but they can exclude covering pre-existing conditions for a certain amount of time). Under McCain’s plan, it is the insurance companies, not consumers, who will be given more choice as insurers currently doing business in these states will choose to be regulated by states offering the least consumer protections.

If you think only people who have been medically diagnosed with a “pre-existing condition” are the only people insurance companies exclude, think again. Allergies are considered grounds for rejection. High cholesterol? Forget it! Past drug use? Denied! “Female problems”? Denied! Participate in extreme sports? Likely denied. In addition to having a “clean” medical history (i.e. virtually no health problems), the results of the insurance company required physical exam, blood work, and urinalysis better come back nothing less than perfect (without any potential problems) to be offered an insurance policy. Additionally, many insurers offering individual policies will not even allow you to apply if your household income is under $50,000 a year. If you get a policy and put a claim in, that will likely trigger the insurance company to even further scrutinize your medical history to see if there was something you did not reveal on your application in order to deny your claim or drop your policy.

When occasionally asked by the media what he would do about the people who are unable to obtain health insurance in the “free market,” McCain has said these people will have to get covered through their state’s high risk pool. The media should ask McCain or Florida governor and McCain supporter Charlie Crist about his state’s high risk pool which has been closed to new applicants since 1990. If you live in a state with an open high risk pool, be prepared for a long wait.

Barack Obama’s health care plan offers the most health care choice and would cover millions more people than McCain’s plan. Obama’s plan will not force people who have employer-sponsored insurance to drop it, and most importantly, Obama will federally prohibit insurance companies from rejecting applicants for health reasons. Obama would also allow individuals to purchase health insurance from the Federal employee plan - the “government run” plan administered by insurance companies that Obama and McCain get their health care coverage from. Medicare is “government run” healthcare, yet I have yet to hear a senior citizen clamoring for its demise.

McCain has said that “Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.” John McCain claims he has the superior experience and leadership abilities to be President over Barack Obama. When it comes to healthcare and economic issues, John McCain’s experience and campaign rhetoric reflect that he is totally out of touch concerning the needs of most Americans. John McCain’s health care plan will waste a lot of money while providing less coverage. Ironically, if McCain is elected president the fallout from enacting his health care plan will likely result in public outcry for a single payer system.

Disclosure: I am voting for Barack Obama.

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