The Wonk Room

Carly Fiorina Misrepresents The ‘Nitty-Gritty Of John McCain’s Health Plan’

Over at BlogHer, Carly Fiorina, Sen. John McCain’s (R-AZ) senior policy adviser, promises to get into the “nitty-gritty of John McCain’s health care plan.” But in marketing McCain’s proposal, Fiorina misrepresents the consequences of McCain’s radical reforms.

CLAIM: “John McCain’s plan builds on the current system and allows for greater choices for American families that more uniquely fit their needs, including allowing families to keep their existing coverage.”

FACT: McCain’s vision places the 158 million Americans who receive their health care through their jobs in danger of losing coverage.

- McCain replaces the current tax breaks for employer-sponsored health insurance with a one-size-fits-all tax credit of $2,500 for individuals and $5,000 for families, equalizing the tax treatment of employer and individual plans and enticing healthy workers to buy cheaper but less substantive insurance in the individual market place.

- The departure of healthy workers from employer insurance pools would drive up average health costs, forcing more workers to opt out entirely. The entire employer health insurance system could unravel, “ending this as an option for Americans who prefer it.”

CLAIM: “He believes that Americans should be able to purchase health insurance in a national market, across state lines, should they so desire. That will, in turn, drive insurance rates down and simultaneously allow Americans access to a greater diversity of insurance plans…”

FACT: McCain’s market permits insurance companies to deny coverage to Americans with pre-existing conditions and dismantles important consumer protections.

- Under McCain’s plan, insurance companies “would have little incentive to continue doing business” under certain state rules which “require that companies issue coverage to all new customers and not set higher rates for people who are already sick.”

- Two years ago, California’s then-Insurance Commissioner John Garamendi issued a scathing report on the conservative’s reform approach, explaining that insurers could avoid the health plan rules in some states mandating that specific benefits (such as cancer testing and preventive care for children) be offered and that specific providers (such as psychologists) be covered. State rules that help small businesses purchase insurance coverage would also be in jeopardy.

CLAIM: “Because John McCain plans to offer a tax credit of $5,000 per family, or $2,500 per individual, to purchase insurance, Americans will have viable options for acquiring personal, as opposed to just employer-provided, insurance.”

FACT: McCain’s tax credits will not cover average cost of premiums.

- According to the Kaiser Family Foundation, “the average annual premium costs for a family with employer-sponsored insurance was $12,106 in 2007, and it was $4,479 for a single person.”

- Annual premiums for nongroup coverage vary widely, currently ranging from $1,163 to $5,090 for singles, and $2,325 to $9,201 for family coverage.

FACT: McCain’s credit will diminish in proportion to growing health premiums.

- The individual consumer would have to stretch McCain’s tax credit to cover the ever-growing costs of medical premiums. This is because McCain indexes the growth of his initial $5,000 offering to inflation, not premiums. And, since premiums grow at a higher rate than inflation, McCain’s proposal imposes $3.6 trillion tax increase on the consumer.

CLAIM: “In addition, he plans to expand the benefits of Health Savings Accounts (HSAs), and bring down actual health care costs (as opposed to insurance costs).”

FACT: The high out of pocket costs associated with HSAs place them out of reach for Americans living on fixed incomes.

- As Health Care For America Now points out, health care savings accounts would not work for those with chronic conditions because such plans “by definition favor the wealthy and/or the healthy.”

- Individually purchased HSA products “tend to have higher deductibles and lower premiums in large part because individual subscribers are subject to underwriting and are not issued policies if they have substantial health problems or a history of using medical care services.”

CLAIM: “It also would be accomplished by focusing federal research efforts on curing chronic disease, promoting new treatment models, rewarding quality and encouraging preventive health care.”

FACT: By shifting the cost of insurance to the individual, McCain’s plan would discourage patients from investing in preventive care.

- According to a study published in the New England Journal of Medicine, $10 co-pays caused a significant reduction in the use of mammograms among seniors. Other studies suggest that cost sharing, especially for low-income families, people with chronic disease, or families with children with special needs, could deter patients from seeking preventive services.

CLAIM: “No American should be denied access to quality coverage simply because of a pre-existing condition. This is an important priority for John McCain. He would work with the states to make sure that those without prior group coverage and those with pre-existing conditions would have access to health coverage, via a Guaranteed Access Plan (GAP).”

FACT: McCain’s plan to shore up state-run high-risk pools is an extremely expensive, inefficient and ineffective way of providing health care.

- Financing insurance for the millions of Americans with pre-existing conditions who would lose employer-based coverage under McCain’s plan, would cost $100 billion a year, far more than the $10 billion McCain has proposed spending on shoring-up high risk programs.

- The high cost of insuring a large pool of sick people has forced states to limit eligibility. As a result, the 33 states that run high risk pools “exclude from coverage the pre-existing condition that made you eligible for it in the first place.”

- High risk pools have many of the same draconian limitations as the unregulated private market: waiting periods, premiums that are out of reach for many families, substantial deductibles and co-pays, and limits on mental health and maternity care.

CLAIM: “For the 47 million Americans currently without health insurance, John McCain’s plan will do a great deal to decrease the cost of care and increase the accessibility of coverage and it will bring this startlingly high number down.”

FACT: McCain’s plan would cover only 5 million uninsured Americans.

- According to a recent report from the Tax Policy Center, the McCain plan would decrease the number of uninsured by 5 million in 2013.

- Under McCain’s proposal, there would still be 55 million without insurance, 8 million more than today. And McCain’s plan covers fewer people each subsequent year.