McCain Health Proposal Relies on Freedom of Choice

While Sen. Barack Obama’s health proposal uses heavy-handed government and higher taxes, his opponent John McCain’s plan relies on empowered consumers and the free market.

Sen. Obama would force all employers either to provide health benefits or else pay a tax (referred to as “play or pay”).  He’d rig the game so private health plans would eventually die out.  

He’d force private plans to “compete” against government-run health care.  A new federal regulator called a national health “exchange” would gradually raise the costs private insurers would bear and choke them with red tape.

The candidates have debated their proposals, and McCain and Obama policy advisors have explained the plans in an online debate the Wall Street Journal moderated.  Sen. McCain unveiled his ideas for health care reform in a speech at the University of South Florida’s Moffitt Cancer Center in April.

For those of us who believe freedom, consumer choice and market competition make the best combination for health care progress, the McCain health plan stands superior.  

The Republican sees two main challenges in American health care.  The biggest problems:  ever-rising health care costs and access to health coverage.

The McCain health plan would curb health care inflation through market forces.  Invigorated competition within the health care system checks costs.  The health inflation rate flattens.

By empowering health care consumers with useful information and more coverage options, both cost containment and expanded access to health coverage will occur.

This competition-oriented approach has worked in Medicare.  The 2003 Medicare Modernization Act fashioned a competition-based prescription benefit and Medicare Advantage private health insurance option.  

Health and Human Services has announced that Part D drug benefit premiums will be less than estimated for the third year in a row.  And seniors are overwhelmingly satisfied with Part D.

Medicare Advantage has given seniors more coverage options with better benefits than standard Medicare.  HHS says MA plans “cover more services and have lower out-of-pocket costs” than conventional Medicare fee-for-service.

Even in rural areas, seniors can pick from more than 10 plans.  In urban areas, 50 or more MA options vie for seniors’ selection.

The McCain program adopts this successful model.

The centerpiece of the McCain plan treats employers and individuals the same taxwise.  That is, Sen. McCain extends to private citizens the tax advantage presently available only to employers who sponsor health insurance benefits.  His plan creates a refundable tax credit of $2,500 for individuals and $5,000 for families.

This tax credit, which is indexed for inflation, keeps money in Americans’ control.  The credit could be applied to employer-based insurance or to another option the consumer may choose:  some variety of private health plan or a health savings account.

The key is this:  The taxpayer becomes an empowered consumer.  He or she elects the coverage option that best fits his or her needs.  This includes employer-sponsored health insurance, which employers are free to continue offering.  But under the McCain plan, people have real choices.

Lower costs stemming from beefed-up competition will mean more coverage options.  And this approach avoids costly government mandates, which drain taxpayers and businesses while ultimately leading to less access to care.

Sen. McCain’s proposal also addresses the challenge of the hard-to-insure.  Those with pre-existing health problems (thus more expensive to insure) could count on affordable insurance through a Guaranteed Access Plan.

The Guaranteed Access Plan would be offered in each state.  After taking office, McCain would meet with the stakeholders, such as governors, insurers and medical providers, to write the details.  The details could vary state to state.

GAP represents a state high-risk insurance pool plan.  A nonprofit board might govern the GAP plan in some states.  GAP in other locations might follow successful high-risk pool models like those of Minnesota or Maryland.

The point is that stakeholders design what works best in their state.  No Washington bureaucrats dictating to them.  No HillaryCare secret meetings that exclude the people who’d have to live under the scheme.

GAP would follow McCain’s ground rules:  “reasonable limits on premiums,” taxpayer subsidy of those “below a certain income level,” incorporation of “best practices” in medicine and insurance.  But with these Sen. McCain commits federal funding sufficient to make GAP work.

Beyond the competitive design, the McCain plan has elements that enhance the model.  Health information technology.  Coordinated care and prevention.  “Transparency” by giving consumers ready access to medical performance and price information.  Promoting care access in such places as walk-in clinics at retail stores.  Paying for quality care, not just volume.  Liability reform.  Health savings accounts.  Picking options from another state, creating a national insurance market.

Essentially, the McCain health proposal builds on the strengths of today’s private sector health care system and improves the current system’s weaknesses.  It empowers consumers, small business, the self-employed, medical providers and employers who presently offer health benefits.  

One tweak might improve this proposal.  If someone’s employer offers health insurance, he might be required to take it or else show he’s obtained coverage.  This stabilizes the employer-based system.  

And to carry health insurance is being a responsible grown-up.  There shouldn’t be $50,000 salaried workers running loose declining their employer’s health benefit, for themselves or their families.

Americans who favor having more control over their health care dollars and more options for obtaining quality, affordable health care should like the McCain plan.