AP Looks At How McCain's Health Plan Would Affect Employer Coverage

Main Category: Health Insurance / Medical Insurance
Article Date: 08 Jul 2008 - 10:00 PST

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The number of employers that would drop health insurance for employees under the health care proposal of presumptive Republican presidential nominee Sen. John McCain (Ariz.) remains a "great unknown," the AP/Houston Chronicle reports. The proposal would replace an income tax break for employees who receive health insurance from employers with a refundable tax credit of as much as $2,500 for individuals and $5,000 for families for the purchase of private coverage.

According to presumptive Democratic presidential nominee Sen. Barack Obama (Ill.), the proposal would "shred" the employer-sponsored health insurance system, which currently provides coverage for about 158 million workers. Most health care analysts say it "won't go that far," but "both liberals and conservatives say McCain's approach would strengthen the individual and small-group insurance market" and "pull in workers now covered through their jobs," the AP/Chronicle reports.

Paul Fronstin, a senior research associate at the Employee Benefit Research Institute, said that, under the McCain proposal, younger, healthier workers whose health insurance premiums would cost less than their tax credit are the most likely to shift from employer-sponsored to individual coverage. "To the degree that happens, the employer-based market will become less healthy as sicker, older workers stay with their employer-based coverage while more of the healthier workers move to the individual market," according to the AP/Chronicle.

Comments
Fronstin said, "What you'll see happening is average cost in the employer market will go up and average cost in the individual market will go down," adding, "You'll start to get into a cycle where people at the margin start to leave employer coverage for individual coverage. At some point, employers will start to ask: Why am I doing this if my workers don't value it anymore? If I don't need to do this to be competitive in the labor market, why should I do it?"

Joseph Antos, the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute, said, "This stuff about shredding the employer market, that's just campaign rhetoric in the sense that nothing changes real quickly in this country," adding, "We're not going to see employers drop coverage en masse, and the reason is health insurance benefits remain an important tool for attracting good employees and retaining good employees."

Len Burman, co-director of the Tax Policy Center, said, "It would be a mixed bag for the employer system. On the one hand, it's a much more generous tax subsidy than what currently exists for low- and middle-income workers," adding, "On the other hand, since you can get the credit outside work, some employers would probably drop coverage."

Dan Crippen, a McCain adviser who helped develop the proposal, rejected predictions that the plan would prompt a large number of employers to drop health insurance for employees. He said, "We've talked to a lot of employers who have no interest in giving up their insurance now no matter what the system would be" (Freking/Pickler, AP/Houston Chronicle, 7/6).

Balanced Budget Proposal
The McCain campaign on Monday plans to issue a policy paper on a proposal to balance the federal budget by the end of his first term through a reduction in spending for entitlement programs and other plans, The Politico reports. In the 15-page paper, titled "Jobs for America: The McCain Economic Plan," the campaign highlights his health care and other economic proposals. The paper states, "In the long term, the only way to keep the budget balanced is successful reform of the large spending pressures in Social Security, Medicare and Medicaid."

McCain "has a comprehensive health care reform plan that will reduce the spiraling cost of health care -- a major burden for those small businesses that offer health insurance and a major impediment for those who cannot," the paper states. According to the paper, "McCain opposes costly mandates or 'pay or play' requirements that would raise the financial burden on small business, cut the ability to hire, expand or raise payrolls."

In addition, McCain will "look to bring greater affordability and competition to our drug markets through safe reimportation of drugs and faster introduction of generic drugs" and will "promote the availability of smoking cessation programs," according to the paper (Allen, The Politico, 7/7).

Obama on Health Care for Veterans
During a speech on Thursday in Fargo, N.D., Obama discussed the need to improve health care and other services for veterans, the Boston Globe reports. He said that as president he would improve health care services provided by the Department of Veterans Affairs, with a specific focus on treatment for post-traumatic stress disorder.


According to Obama, the U.S. must provide veterans with the "care and benefits they have earned." He added that the "deplorable conditions" at military health care facilities such as Fort Bragg and Walter Reed Army Medical Center highlight the "broken bureaucracy of the VA." Obama said, "It doesn't have to be this way. Not in this country," adding, "There are many aspects of the war in Iraq that have gone inalterably wrong, but caring for our veterans is one thing we can still get right" (Helman, "Political Intelligence," Boston Globe, 7/3).

Group To Launch Health Care Reform Ad Campaign
Health Care for America Now on Tuesday will launch a $40 million national advertising campaign that calls for access to comprehensive, affordable health care in the U.S., group spokesperson Jacki Schechner said last week, the New York Times reports. According to Schechner, the campaign will promote the theme, "You can't trust the insurance industry to fix the health care mess." She said, "We're educating the public about our principles and what we'd like to see from the president and the new Congress."

The campaign includes an initial purchase of $1.5 million for national television, print and online ads, with the group expected to spend an additional $25 million. The first ad will appear in national newspapers, on CNN and MSNBC, and online.

Elizabeth Edwards, a breast cancer patient and the wife of former Democratic presidential candidate and former Sen. John Edwards (N.C.), will speak at the inaugural event for the group on Tuesday at the National Press Club in Washington, D.C. According to the Times, the "presence of Mrs. Edwards, an outspoken liberal activist and health care advocate, could give fundraising efforts a boost," as she "has made health care her signature issue since Mr. Edwards dropped out of the Democratic presidential race in January" (Bosman, "The Caucus," New York Times, 7/3).

Additional Coverage
Bloomberg/Miami Herald on Saturday examined the differences in the health care and other economic proposals from McCain and Obama (Benjamin, Bloomberg/Miami Herald, 7/5). On Monday, the Times examined how health care and other economic issues are "increasingly setting the contours of the race" between McCain and Obama (Nagourney, New York Times, 7/7). The Financial Times on Sunday examined a proposal by Obama to prohibit prices based on health status in the non-group health insurance market (Guha, Financial Times, 7/6).

Editorials, Opinion Pieces
Several newspapers recently published an editorial and several opinion pieces about health care issues in the presidential election. Summaries appear below.

• Paul Krugman, New York Times: "By huge margins, Americans think the economy is in lousy shape," in large part because of the "housing bubble and its aftermath, rising health care costs and soaring raw materials prices," columnist Krugman writes in the Times. He adds that, although most of the health care debate has focused on the uninsured and the underinsured, the discussion also must address the cost of health insurance premiums, which are a "major business expense." Health insurance premiums have "surged" since 2000, "imposing huge new burdens on business," Krugman writes. "If Bill Clinton's attempt to reform health care had succeeded, the U.S. economy would be in much better shape today," he adds (Krugman, New York Times, 7/7).
  
  
• Bruce Josten, The Politico: The current health care debate involves the "wrong or, at best, an incomplete conversation" and is "setting the wrong expectations for the American people," Josten, executive vice president for government affairs at the U.S. Chamber of Commerce, writes in an opinion piece in The Politico. According to Josten, although many "candidates and pundits suggest that small changes won't work -- that what we really need is a sweeping, top-down upheaval that can only happen through a federal solution" -- a "single solution doesn't exist." He writes that the U.S. needs a "multifaceted program of wellness and prevention, transparency, technology and consumer responsibility to cover more people and provide better care at lower cost." Josten adds, "We can dramatically reduce costs by implementing health IT, focusing on wellness and prevention, reducing medical errors and ending frivolous medical malpractice suits." In addition, he writes, "We need quality care, not just universal care. We need affordable care, not the false promise of 'free' care" (Josten, The Politico, 7/3).
  
  
• Jeanne Lambrew, The Politico: "The health care crisis -- and the opportunity to address it -- will be waiting for the next president on day one," Lambrew, a senior fellow at the Center for American Progress and an associate professor of public affairs at the Lyndon B. Johnson School of Public Affairs at the University of Texas, writes in an opinion piece in The Politico. She adds, "Fortunately, some solutions are ready to go." Such proposals include a shift in the "health care system toward proven prevention and the management of chronic disease," improved information on "what works and what we pay for" and the implementation of health care IT, Lambrew writes. "These health system tools are apolitical," but "some (but not all) politicians disagree on how best to harness them," Lambrew writes. She concludes that "reforming the health system requires leadership and commitment that can come only from the White House" and that the "full cost savings and health improvements of these nonpartisan ideas for improving the system can be realized only when all Americans are insured" (Lambrew, The Politico, 7/3).
  
  
• Wall Street Journal: The recent "theatrics" by congressional Democrats over the failure of the Senate to invoke cloture on a bill that would delay a scheduled 10.6% reduction in Medicare physician reimbursements and reduce funds for Medicare Advantage offer a "preview of the health care market if Democrats control both Congress and the White House" and should serve as "another health care red alert" for McCain, a Journal editorial states. According to the editorial, traditional Medicare should "convert ... into a premium-support program like" MA to address increased costs. However, in an "Obama administration, Advantage is dead," as he "wants to go in the other direction and create a Medicare-like 'public option' for everyone of any age" (Wall Street Journal, 7/7).

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