Tuesday, August 26, 2008

McCain Healthcare Plan Underinsure Overinsured Americans

At a time when more and more Americans are having trouble paying for health insurance, and insurance coverage has deteriorated over the past six years, with moderate-income families showing the most severe declines in coverage, according to the Commonwealth Fund,
McCain's plan is to underinsure Americans and get rid of employer based insurance coverage altogether.

"As result, more families are experiencing medical bill problems or cost-related delays in getting needed care. In 2007, nearly two-thirds of U.S. adults, or an estimated 116 million people, struggled to pay medical bills, went without needed care because of cost, were uninsured for a time, or were underinsured (i.e., were insured but not adequately protected from high medical expenses)."

McCain’s healthcare plan embraces market forces, and promotes individual purchase of insurance. He bases it on the premise that more competition in the market will keep costs down so individuals can buy their own policy. Keep in mind that insurers will not offer the same deal to an individual that it offers to an institution whose purchasing power is much greater.

Now, the young and healthy might be able to find a better deal on the “street”, however employers will be left financing the sick, the old and the bad risks, in other words, the all too expensive uninsurables, which will speed up the demise of employer provided coverage.

How does McCain's plan work? It doesn't...not for us, anyway, however, it will work just fine for the insurance companies. In a nutshell:

Firstly, workers will be required to pay taxes on the value of the health insurance their employer currently pays. The employer, of course, can deduct the costs for providing that coverage. Eliminating the tax exclusion for employees will generate approximately $3.6 trillion over a ten year period, which, in turn will pay for the refundable tax credits issued to individuals to buy healthcare in the private market.

$2500/ individual
$5,000/family

That's great, but when you consider employers pay approximately $5,000 per individual and $12,500 per family for each policy, currently, it's hard to imagine how Americans are going to pay for healthcare with the meager amount allotted by the McCain plan. Those insurance costs are based on what companies pay now, and the cost is already much lower than it will be for the individual. How is the average guy going to get comprehensive medical insurance?

Despite what the numbers show, according to McCain and some health economists, Americans are overinsured. MeCain’s plan will force us into buying high deductible insurance products covering very little, rather than the comprehensive insurance we are accustomed. Our lack of coverage will ensure that we will not take advantage of health insurance like a school kid, might, let's say, an unlimited hall pass.

In addition, the tax credits will only lessen in value because healthcare costs increase much more rapidly than the general inflation rate, that healthcare costs will likely be indexed. Ten-years from now, the credits will be useless.

Than there is the issue of insuring the uninsurable…those individuals who are considered bad risks or who have pre-existing conditions. Under McCain’s Guaranteed Access Plan (GAP), or state high risk health insurance pools, where each state would create its own high-risk pool for those people, with the same entry and exclusion rules that exist now (34 states currently have high risk pools). GAP does not eliminate medical underwriting (a practice considered unethical prior to the 1960s), therefore the people who need insurance the most will continue to be weeded out and the uninsurable will remain uninsurable.

How is it OK to determine health insurance eligibility by evaluating the “health” of the patient?
What is the point of private insurance if it doesn’t insure people who need it most? The young and healthy may benefit, that is, until they get too old, too sick or too whatever to insure.

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