Candidates Disagree On Primary Flaws Of Health Care Financing
By Don McCanne, M.D., PNHP Senior Health Policy Fellow
Huffington Post
October 10, 2008
John McCain and Barack Obama both recognize that there are serious problems with our health care system, and that the voters want something done about it. They would both use public policies to modify the private health insurance market to accomplish their goals. Although it would seem that their goals are similar, the specifics are quite different because they have started from very dissimilar perceptions of the primary flaws in health care financing.
John McCain believes that employer-sponsored plans and government health programs insulate individuals from the costs of health care, creating an excessive demand for health care. He believes that our financing problems would be solved if we put individuals in charge of purchasing their own health care and health care coverage in a marketplace that controls costs through competition. He does understand that coverage is now too expensive for the majority of us, so he would use government tax credits to help pay for private plans. He would also have the states establish “guarantee access plans” that would insure those who cannot otherwise obtain coverage because of preexisting conditions, though these high-risk pools would be exorbitantly expensive.
Barack Obama believes that the high costs of health care and health care coverage have created a financial burden for individuals and small businesses. He also recognizes that many health plans no longer prevent those with health care needs from facing financial hardship, because of inadequate benefits and excessive cost sharing. He would provide a regulated market of plans of a quality similar to those that federal employees have. Although both Sen. Obama and Sen. McCain recommend systemic reform measures designed to reduce costs, Sen. Obama understands that health plans would still be too expensive, so he would not require everyone to purchase them.
Under Sen. McCain’s proposal, greater numbers would go without insurance simply because health plans would still remain unaffordable even with the tax credits. In a deregulated insurance market, those who obtain coverage and have health care needs would find that affordable plans would no longer provide adequate protection against financial loss. It has been estimated that about 65 million people would be uninsured ten years into his program.
Under Sen. Obama’s proposal, ten years out about 33 million individuals would be without insurance simply because their incomes would be too high to qualify for welfare programs, but too low to be able to pay for private plans.
The problem with both proposals is that they depend on the obsolete model of private health plans. The costs of health care in the United States are much higher than in any other nation. They are so high that the private insurance industry is no longer capable of providing us with insurance products that cover all reasonable essential health care services at a premium that we can afford. Our national health expenditures are now $7900 per person. For a family of four, that’s over $31,000. With a median household income of $50,000, we could never expect to pay the health care tab through private health plans. (An employer-sponsored family plan currently averages $12,600, but we pay much of the difference in direct and indirect taxes for high-cost individuals in Medicare, Medicaid, the VA system, safety-net institutions, and other public programs.)
Our dysfunctional, fragmented system of financing health care through a multitude of private plans and public programs is highly inefficient, inequitable, wasteful, and ineffective in slowing the twin epidemics of uninsurance and underinsurance, while health care costs continue to spiral out of control.
Replacing our current financing system with a single, universal risk pool that is publicly-administered and equitably-funded through public financing would create an administratively-efficient system in which everyone is automatically included, for life.
The $2.4 trillion that we are already spending is more than enough to provide comprehensive services for everyone, providing that we adopt the efficiencies of a single payer system. With our own public, single payer monopsony, we would be able to demand much greater value in our health care purchasing by realigning incentives to improve our primary care infrastructure and to reduce administrative waste and the overuse of non-beneficial high-tech services, leaving more funds for high-tech care that does improve our health outcomes.
Sen. McCain wants each of us to go out and shop for our own health care and health insurance coverage, even if we can’t pay for it. His “you’re on your own” approach rejects the notion of social solidarity, even though all other wealthy nations accept solidarity as a fundamental foundation of a just society.
Sen. Obama has said that if we were starting from scratch, he would recommend adopting a single payer system. He’s right. The current financing system is such a disaster that we really should jettison it and start over with single payer system: a new and improved Medicare that covers every single one of us, at a price that we can afford.