OPINION: McCain's Health Plan Belongs in a Bedpan

The biggest flaw among many:
Insurance companies will not be required to accept those with
pre-existing conditions.

------------------------------------
McCain's Health Plan Belongs in a Bedpan
by John Fout
http://www.thestreet.com/

On Tuesday, Sen. John McCain (R., Ariz.) added some clarification to his
health care proposals, mostly making an effort to cover individuals with
pre-existing conditions such as the melanoma McCain had removed several
years ago.

McCain mostly touts freedom of choice in his proposal. Unfortunately,
health care choice may mean fewer people can afford health care and
could end up not being covered at all. This could be a disaster for
businesses and individuals.

McCain's plan presents a stark contrast to the Democrats'. Both Sen.
Hillary Clinton (D., N.Y.) and Sen. Barack Obama (D., Ill.) have
proposed plans coming close to universal coverage, and they plan to pay
for them with tax hikes on those in the highest tax brackets. The
Democrats would augment the present system by creating government
programs. McCain, on the other hand, proposes a "free market" plan,
which would bring drastic change of another kind.

The present health care system is far from perfect. Most people
automatically enroll in health care and receive coverage from their
employer. Employer-based tax subsidies make this possible.

McCain's plan puts an end to this subsidy in favor of a $2,500
individual rebate and $5,000 per family. According to estimates by the
McCain campaign, this would save taxpayers $3.6 trillion over the next
decade. Consumers could choose any plan in the open market.

The plan creates two problems. First, everyone would be responsible for
finding their own health care. No longer would you simply fill out forms
with your firm; rather, you would have to search out health care plans.
This means consumers would have to spend more time researching plans.

Severing this relationship between employer/employee also strains health
care firms, increasing a need for more customer service. We learned from
recent quarterly reports from health care companies like Wellpoint
(WLP - Cramer's Take - Stockpickr) and Humana (HUM - Cramer's Take -
Stockpickr) that they're struggling in a competitive environment with
rising health care costs, while United Health Care (UNH - Cramer's
Take - Stockpickr) suffered because of poor customer service.

Second, individuals would find they pay more for health care insurance.
The Kaiser Family Foundation released of study of health care costs for
2007 showing premiums for individuals are $4,479 per person and $12,106
per family of four. Consumers would have to make up the difference.

Worse, big questions need to be answered. When would you get a rebate?
Would you have to wait a year, until you file your income taxes? What if
you can't afford the premiums because you live paycheck to paycheck? A
cash crunch could force many not to purchase health care. This could add
to the 47 million Americans who lack health care coverage, many of whom
burden taxpayers by reneging on emergency-room bills.

The McCain campaign did not respond to emails asking for additional
information. His plan has some similarities to a proposal made by
President Bush, which died without much discussion in Congress.

Fewer people buying insurance puts pressure on insurance companies. How
would health care companies make a profit? It is possible they would
become more selective in their coverage and decide not to cover people
with pre-existing conditions. McCain deals with this by creating a small
subsidy to help them. The total expenditure would be approximately $7
billion, which might cover 5 million to 7 million people at best,
according to McCain's campaign.

Elizabeth Edwards attacked McCain's health care plan in the media. She
said that McCain's plan grossly underfunds those with access issues, and
she continued: "We're talking about the most radical plan ever suggested
by a presidential candidate." Edwards had previously panned McCain
because neither he nor she could get coverage with cancer under his
plan.

Much of McCain's plan rests on driving down costs through competition.
It might work. But as I outlined here, it could prove painful for both
consumers and insurers in the process. His campaign will have to provide
a clearer picture of the benefits for Americans to take it seriously.

--
Juba
www.masterjuba.com


.

Quantcast