As a physician, I have a lot of politically conservative colleagues. Much of this stems from our experience with the government. The influence of Medicare helps set prices, which we are not at liberty to change, and affects how we practice. On the other hand, Medicare is usually pretty good at paying its bills—except when it doesn’t. If our costs go up, say in increased rent, we can’t raise our prices. And if we get together with a group of doctors to try to negotiate fees, it can be considered collusion, and as such, illegal. So we’re in a bind.
On the other hand, the current system of multiple payers causes no end of headaches and paperwork. A single payer system could reduce costs through having us deal with a single entity. But Medicare is also subject to the whims of politics, as when earlier this year, Medicare held onto all physician payments while Congress and the President negotiated a new Medicare fee structure. This had a real world impact of making it hard to pay our bills.
But this isn’t about the advantages and disadvantages of a single payer system—neither candidate is proposing such a thing. This is about the disaster the McCain plan would wreak on all of us.
Let’s start with the most insidious proposal—to eliminate state borders with regard to regulation. This idea is both consistent and inconsistent with conservative values. It tramples states’ rights, but it also does away with regulations. What kind of regulations? In my last post, we talked about the problem of diabetic testing supplies, and a reader pointed out that California law mandates coverage. Under McCain’s plan, insurance companies would simply pack up and move to Nevada (or wherever) and be free of pesky life-saving regulations. Sure, this could reduce costs, but how often have we seen these savings passed on to consumers? Plans can become as restrictive as they wish by simply finding a state of refuge.
Moving on to the big part of the proposal, we’ll take an example from my family and my small business. Coverage for my family costs about 12,000 USD yearly. That cost is subsidized and untaxed, making it reasonably affordable for me (I’m paying out of pocket about $1200/year for my coverage). Coverage for the employees of my practice changes yearly because of the costs of the various plans offered. Some years we have a great plan, some years we have a high-deductible plan.
Anyway, under McCain’s plan, our employees benefits will be taxed. That will reduce their income. However, they will get a tax credit. This credit will be worth $2500 for most of them. With this credit, they will be able to purchase only a crappy, high-deductible plan. Why? First of all, we probably won’t provide coverage anymore because it will save our narrow-margin business quite a bit. Second, my employees will no longer belong to a larger risk pool, and will be at the mercy of unregulated insurance companies who can make all but the most basic coverage unaffordable.
Insurance is about pooled risk—that’s what makes it work. On the other hand, if, as an insurance company, you can get away with only insuring low-risk people, your profit will go up. McCain’s plan eliminates state coverage mandates, risk pooling, and the incentive for employers to provide coverage, which is usually better than individual coverage.
McCain’s plan will destroy health insurance as we know it, will save no money, and will increase the dis-incentive to seek preventative and other early care.
One thing was clear in this week’s debate: Obama and McCain, independent of their health care plans, have a basic philosophical difference. Obama sees health care as a right, McCain does not. I know many people who share McCain’s view, but I do not. A healthy society (in all senses of the word) requires universal coverage, large risk pools, and a dose of humanity. Any good health plan will encourage the largest possible risk pool (the entire population), will cover the most important basic health needs, and will take into account quality and cost. It will have to balance the benefits of an open market vs. bureaucratic control. It’s a tough problem. But it’s one we can’t ignore, and McCain’s plan isn’t a solution, but a guaranteed way to exacerbate all of the faults of our current system.