The McCain Health Plan: Millions Lose Coverage, Health Costs Worsen, and Insurance and Drug Industries Win

Today Arizona Sen. John McCain will deliver what his handlers are hyping as a major address on health care. McCain’s plan is a dangerous fraud.

He wants voters to think he is going after health care cost inflation. In reality, he wants to dismantle the employer-provided system that now covers over 60 percent (or about 158 million) of non-elderly Americans, forcing millions of us who now get fairly decent health insurance on the job to instead buy whatever they can find on the individual market controlled by unregulated and predatory insurance companies. And he would drive health care costs upward, not downward.

This is truly amazing: McCain and his handlers knew they had to say something about health care. So they turned to their friends (and financial supporters) in the health care industry and the conservative think tanks. And they have adopted the most extreme right-wing ideological approach, premised on the idea that the big problem in health care is that Americans have too much insurance – in their words, we don’t have enough “skin in the game” – and that only when we have to buy health care with money that comes directly out of our own pockets will consumers force doctors, hospitals and insurance companies to become more efficient.

So that’s the theory. But it is contradicted by the facts. Most of us already pay part of our premiums out of our own pockets, and we increasingly have to shell out for co-pays in order to get to see a doctor. The result—in practice—is that most people, even those with good insurance, now think twice or three times about even getting regular preventive health checkups. Having lots of “skin in the game” has meant that millions of Americans don’t get health care they need—and that’s one of the big problems in U.S. health care driving costs up, not down.

But McCain, like George Bush, pays more attention to ultra-conservative theory than he does to the facts. So McCain wants to tax workers’ health care premiums that are paid for by employers. Ask any expert, conservative or liberal, and they will tell you the result will be companies will stop providing health care as an employee benefit. Fortune Magazine quotes one of their experts [1] on the impact of McCain's plan: “I predict that most companies would stop paying for health care in three to four years,” says Robert Laszewski, a consultant who works with corporate benefits managers.

Now keep this in mind: McCain and his corporate advisers don’t dispute this. The massive upheaval that would result – millions of families losing their health coverage on the job and then having to try to find an insurance company that would sell them a new policy that would cover their families—that’s not an unintended consequence of his proposal. That chaotic loss of health security is exactly what McCain intends to happen. He wants us all to buy insurance not as part of a group—like an employee group or a co-op—that can negotiate for better coverage at lower premiums, but as individuals, at the mercy of the private insurance companies.

And get this: McCain wants to abolish the regulations that currently exist in most states that require companies to insure people with pre-existing conditions, provide benefits that don’t exclude some medical conditions, and prevent them from charging huge premiums for crumby benefits. How would he do this? By “giving people the freedom” to buy insurance in other states with weaker regulations. You can bet that most of the big insurance companies are now shopping around for the state that wants to become the corporate headquarters state for the new deregulated health insurance industry – if President McCain wins. Delaware? Mississippi? Arizona?

But, but, but . . . I can hear some people saying, McCain does give people refundable tax credits to help pay for health insurance. And that is part of his package. But his whole philosophy is that too many millions of American’s are getting health care benefits that are too rich, and you certainly can’t say that about the level of tax subsidy he would provide—$2,500 per year for individuals and $5,000 for a family, according to the McCain for President website. Last year the average yearly cost of the most popular type of insurance plan offered by employers hit $11,765, according to a Kaiser Family Foundation study. So the average person with a family would end up paying $11,765 minus the $5,000 tax credit, or $6,765—about double the $3,226 Kaiser tells us the average employee paid for his or her share of premiums.

Again, this is NOT unintentional. McCain and his corporate advisers think it is good for individuals and families to pay more because it makes them think twice before seeking health care, and—in theory—they will shop around for cheaper care. And if they can’t cover the costs of real health insurance with McCain’s tax credit, the insurance industry will sell you lower-cost plans with big holes in coverage or costly co-pays—that is, if you are not already sick and you aren’t too old for them to see you as profitable.

And McCain will be glad to help you invest your tax credit in a Health Savings Account —a savings account coupled with an insurance plan cooked up by his friends in the insurance industry with such high deductibles that it only applies for catastrophic health costs. For those normal trips to the doctor, you just take money out of the savings account until there is nothing left—and then you really reduce health care costs by forgoing the trip to the doctor altogether.

The ultra-conservatives have a name for this combination of tax credits and HSAs. They call it “consumer-directed health care.” A better name is “high-cost health care”—or “insurance company-directed health care.” And although they promote it as saving money for individuals, for our economy and our society, the available evidence shows that it does nothing to reduce health care costs—but it will leave millions of people with worse coverage, more chronic health problems, and higher levels of health cost-driven bankruptcies. And, perhaps most importantly for McCain’s financial backers, it would leave the insurance industry and the drug industry even more in control of America’s health care system than ever before.

The release of this McCain health care plan is an important test for the mainstream media. Health care experts who are “reality-based” will, if asked to comment, tell reporters that there is no evidence that McCain’s proposals will do anything to reduce health care costs, but will the media fall for the McCain spin?

Here’s the story they would like major media to report:

“While Democrats Obama and Clinton, stuck in an endless primary contest, fight with each other over who would cover more of the uninsured, John McCain has been using the luxury of uncontested time to develop a thoughtful plan for bringing down health care costs—the issue voters care most about when it comes to their own family budget worries. And McCain’s plan would attack the health cost spiral by unleashing the power of individual consumers and families in a more competitive health care marketplace, not by using the power of the federal government to either provide health care and not by dictating health insurance arrangements between workers and employers. Expanding consumer choice—and encouraging health care consumers to be wise purchasers of health care, said McCain, is the best way to force the health care system to become more efficient and reduce the burden of health care costs.”

Most honest reporters will note that the McCain will not improve the lot of America’s 47 million uninsured, but they may give McCain credit for focusing more on controlling prices than Obama and Clinton. That might sound “fair and balanced”—but it would be wrong.

The reality is, McCain’s proposals would greatly increase the number of uninsured Americans, while also doing nothing about health care costs except increasing the number of people who can’t afford good quality health care for themselves and their families. Let’s see if the media gets both parts of the story right.