Those of us who analyze health policy and trends for a living have struggled to follow John McCain's health plan through its many seemingly-improvised changes. First he was taxing health benefits through both payroll and income tax. Then he said he only intended to apply income tax, which meant that his plan would create even larger deficits. Now he says there won't be deficits, because he's going to make up the cost of those tax credits by slashing Medicare and Medicaid.
When a candidate suddenly, almost whimsically changes the way he proposes to handle $1.3 trillion - which is the amount of money his plan puts in play over the next ten years - it's time to get nervous.
We already knew the McCain plan was going to cost most Americans money (in at least three different ways.) Now we know it could jeopardize their medical care when they get older, too. The end result of this off-the-cuff planning could change the way Americans receive, or don't receive, medical care in this country.
Even though the Washington Post gave Joe Biden "two pinocchios" for his remarks about the McCain health plan, a careful reading of even their critique shows that Biden told the real story. Middle-class wage earners could save something in the first year, but that amount would dwindle over time and eventually become a deficit. And the number of uninsured would actually increase over the long term, according to unbiased studies.
McCain's campaign is now saying that he has given up on the idea of taxing payroll taxes for health benefits, or that it was never intended in the first place. Yet the distinction was not drawn for quite some time, making it appear like a relatively last-minute tweak. Some lobbying may have been involved, too, since this change also insures that corporations won't have to pay a portion of McCain's tax increases. (Companies have payroll tax obligations, too).
With this change, conservative estimates now place the initial number of people losing employer benefits at twenty million. These twenty million people will have $5,000 in credits to buy $12,000 worth of coverage. And that $12,000 figure could rise rapidly without the bulk-buying power and employee satisfaction concerns of employers. (Yes, they do have them.)
McCain is also proposing to dismantle a number of the state rules governing insurance. The way carriers set rates, their ability to deny care, and other practices might be stripped of current consumer protections in many parts of the country. That $12,000 figure could skyrocket as these rules are lifted and as more coverage is transferred to from group to individual policies. (Individual rates tend to be lower now because enrollees tend to be younger and healthier. That will change, perhaps drastically, as the rest of us move in and other factors take over.)
It's important that Americans understand the implications of these changes. We should continue to discuss the uninsured, but it's also important to consider the underinsured - which now includes most of us to some extent. Insurers are covering less and less of the cost of care for those of who have coverage. As a result, personal medical indebtedness is increasing, even as credit is getting harder and costlier to obtain.
So we're talking about at least three kinds of health "tax increases" (more accurately described as increased personal cost) under the McCain plan: a "slow bleed" for people who retain coverage as the tax credit falls behind inflation, a $,7000-plus spike for people who lose their coverage immediately, and an increase in out-of-pocket costs (and denials, etc.) for people who still have insurance. What do we get in return? According to that neutral study, three million uninsured would gain coverage - briefly. After five years the number of uncovered would go up.
About this new Medicare/Medicaid wrinkle: Now that he's dropped the payroll tax idea, estimates show that McCain's plan would cost $1.3 trillion over the next ten years. But today, as Jonathan Cohn reports, he decided to zig instead of zag. He says he's going to make his plan revenue-neutral by cutting Medicare and Medicaid to make up the difference.
Specifically, McCain's campaign says " the savings would come from eliminating Medicare fraud and by reforming payment policies to lower the overall cost of care." Yet I know of no credible studies saying there is that kind of savings to be found in Medicare. By "reforming payment policies," they mean paying doctors and hospitals less. That means less treatment, less access to care, and a variety of other drastic problems for the one program we'll all join (if we're lucky enough to live that long.) There will also be severe repercussions in the health economy, too complex to go into here.
That means there's now a fourth way that McCain's plan will increase your out-of-pocket healthcare costs. When you cut Medicare and Medicaid payments to doctors and hospitals, they charge private payers more to help make up the difference. That means insurance will cost even more as a result - but that $5,000 won't be increased to cover the difference.
The McCain people also say their new credit will help prevent some low-income people from joining Medicare, further reducing costs. But how many low income people can make up the difference between the tax credit and the real cost - $7,000 and rising fast?
The conclusion seems impossible to avoid: McCain's health care ideas are risky, unstable, and poorly thought out. They could result in a 'healthcare meltdown' that Americans can ill afford. You don't want the surgeon who's operating on you to "wing it." The same is true for the President who can determine whether you can afford that surgery in the first place.
RJ Eskow blogs when he can at: