The Wonk Room

Cost-Containment: Two Candidates, One Real Plan

Health care costs have become a major issue this election—and with good reason. The facts are staggering.

- In 2006, America spent approximately $2.1 trillion on health care—even as more than 47 million individuals went without insurance and thus without access to affordable routine care.

- Health care spending, which doubled between 1996 and 2006 and is expected to double again in the next decade, outpaces wage growth and inflation.

- Between 2000 and 2006, private health insurance premiums increased more than 90 percent.

Today, the Center for American Progress Action Fund released a new analysis on the cost containment approaches articulated by Senators Obama and McCain. The political rhetoric emanating from the leaders of the conservative and progressive movements sounds remarkably similar. Agreement on the problem of rising health care costs, however, does not translate to agreement on how to achieve those solutions. And as the new analysis shows, there is little evidence for McCain’s claim that conservatives’ health care reforms will address health care costs, which he has called, “the biggest problem with the health care system.”

McCain’s Extreme Plan Will Likely Not Contain Health Care Costs:
Sen. McCain’s plan asks the impossible of consumers – it asks them to drive down prices and improve quality through one-on-one interactions with insurance companies. Extensive research, however, consistently shows that the pooling of individuals into large groups is the most effective way to manage risk and promote efficiency. The individual market approach is both more costly and less efficient than the group market approach.

McCain’s Lofty Rhetoric Unmatched by Details:
An analysis of Sen. McCain’s plan shows that his cost-containment steps lack specificity—regardless of his efforts to camouflage his proposals with rhetoric about “freedom” and “responsibility” lowering costs. There are few concrete steps for implementation in his plan, and almost no detail about the resources he would dedicate to the effort.

Coverage for All Americans Is the Fundamental Way to Contain Costs:
Current research suggests that the closer a health care system is to providing affordable coverage for all, the more successful it will be in achieving significant cost containment. By extending coverage to all, we can achieve efficiencies, end cost-shifting and rationalize financing mechanisms. Given Sen. McCain’s refusal to provide health care coverage for all, any success he may have in cost-savings will be limited.

The Progressive Alternative:
In contrast, progressive leaders have consistently offered concrete steps to making sure all Americans have access to affordable health care, and to help bring down health care costs. And progressive governors have led by taking proactive action when possible, as this report shows. Indeed, for his part, Sen. Obama has articulated clear steps to implement his cost containment measures.