McCain health care plan a dangerous idea

The threat to the economy caused by the collapse of Wall Street has become the dominant issue of the presidential election. The credit crisis must be dealt with promptly. But the long-term strength of the nation's economy can't be separated from the drain caused by the cost, inefficiency and unfairness of what passes for America's health-care system.

Barack Obama and John McCain both have plans to change that system. Obama would retain the current employer-based system and expand on it by subsidizing coverage for those who can't afford insurance. His plan would not guarantee universal coverage and its cost is uncertain. But it would likely do more good than harm.

McCain would blow up the current system and ensure that fewer Americans are covered. He wants to eliminate the tax deduction employers get for providing health insurance. Instead, he would give tax credits to individuals and families to make it easier for them to purchase insurance on what he believes will be a new, bigger open market that will compete to lower health care costs. The credits would be $2,500 per individual and $5,000 per family.

There are more components to the McCain plan - portability of insurance from state to state, for example - but none would offset the enormous damage his on-your-own in a wide-open market approach would do.

Eliminating the employer tax deduction would make it more expensive to insure workers. Employers could lower wages to make up the difference, raise the amount employees pay to participate in the plan, or eliminate the benefit.

Lowering wages would make it harder to get and keep workers. Raising employee contributions would give healthier workers an incentive to opt out. That would leave companies with an older, sicker, more expensive pool of insured.

McCain imagines that people will form voluntary pools in churches, social clubs and other venues to negotiate for the best price. But people would be on their own, trying to sort between competing plans. Some of the plans would be good, some awful.

In the Sept. 16 issue of the journal Health Affairs, four experts dissected McCain's plan. They predict it would decrease the number of people insured through employers by 16 million to 28 million. If a large number of those who lose employer coverage buy private insurance and, thanks to the tax credits, a large number of people who now lack coverage buy it, the rolls of the uninsured could decrease by a few million, the experts say. But many people would buy bare-bones coverage, policies that typically have very high deductibles and are useful primarily for major medical problems.

Since the administrative costs for non-group insurance are higher than for group insurance, prices would be higher and coverage less generous, the experts said. As a result, people would pay more for less. McCain's plan would also override state laws that bar insurers from red-lining, selling cheap to the healthy and dear to those with prior conditions or a family history of disease. Insurers could also drop coverage for costly treatments now mandated by state laws.

McCain is willing to destroy the existing health-care system, which bad as it is, does provide excellent, albeit costly, care for almost all who have employer-based insurance. Instead, he would throw consumers on the mercy of a marketplace that he believes will fight for their business by offering high quality at lower prices and make health-care more affordable.

That's a plan that only a maverick who's strayed off the range and into a swamp would take.

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