Friday, May 02, 2008


McCain on Health Care

Posted by David Bernstein

John McCain's recent speech accompanied by his newly unveiled "reform" plan demonstrates the GOP's serious problem addressing health care -- what is probably the number one domestic issue facing the country.

McCain's proposal is an ideological hodgepodge of various band-aid approaches that have been floating around the Hill and think tanks for some time. Some are good, some are bad, and some are outright ugly.

The Good: Tort reform (although this more of a moral issue than an economic one); portability beyond COBRA; expanded HSAs. Combined these are a nice little package of benefits which will provide a little help to a lot of people in the short-medium term.

The Bad: Reimportation of prescription drugs. This is one of McCain's "maverick" issues where he thinks he's siding with the people against evil pharmaceutical companies. And while big pharma may well be evil in many ways, sometimes even evil folks can be right on an issue. Essentially this is a money laundering scheme where the Canadian government subsidizes the cost of drugs for the American public. Stupid.

Also Bad: Offering tax credits to individuals and families to offset insurance costs -- $2500 for singles and $5000 for families. A nice idea in principle, but the amount is way to small, and I'm willing to bet it won't be indexed for inflation. Meaning it will be an expensive proposition for the government that ultimately isn't nearly generous enough to address the problem its aimed to alleviate. Kinda like, uh, $600 tax rebates.Or summer-long gas tax holidays. Seeing a pattern here, kids?

The Ugly: Insuring the chronically ill. Let me quote from McCain's website:

As President, John McCain will work with governors to develop a best practice model that states can follow - a Guaranteed Access Plan or GAP - that would reflect the best experience of the states to ensure these patients have access to health coverage. One approach would establish a nonprofit corporation that would contract with insurers to cover patients who have been denied insurance and could join with other state plans to enlarge pools and lower overhead costs. There would be reasonable limits on premiums, and assistance would be available for Americans below a certain income level.
Now, If I'm reading this correctly ... what this sounds like to me is that he's going to pass the burden of chronic care even further on to the states, but without additional Federal funding -- thus forcing further increases in state debt, income taxes, property taxes, and sales taxes. I hope I'm reading it wrong. But if I'm not, this is a measure certain to push states and localities into near-bankruptcy as they are hammered with still more unfunded Federal mandates.

The Rest: A lot of nice-sounding stuff about prevention, reduction of medical errors, and setting up more "storefront clinics". None of which will address the real problems.

The bottom line is two-fold: First, the causes of the health care problem are complicated -- too complicated to discuss in this post, and certainly too complicated to be addressed by a laundry list of unconnected, untested, and unhelpful little proposals that were clearly put together in order to impress focus groups, not to solve anything.

Second, the GOP tone-deafness and political ineptitude on health care will cost the party far more votes than Iraq in the Fall, and will increase the chances that we'll see socialized medicine in our future. As much as I'm skeptical of universal care, a single-payer system would actually be preferable to the continuation of the current mess, which is threatening simultaneously to bankrupt American families, businesses, and government. Sadly, the so-called free market party is too timid to put market-based alternative on the table.

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