The Wonk Room

Palin Ignores Gender Discrimination: Women Would Benefit From Individual Health Care Plans»

Two days after new data from insurance companies and online brokers suggested that women buying health insurance in the individual market pay more for coverage, Sarah Palin argued that Sen. McCain’s plan to push more Americans into the individual heath insurance market would benefit women:

Of course we want and deserve equal pay for equal work. But we also want to be able to afford good health care for our families. John McCain’s plan for the $5,000 tax credit will allow us to make our own decisions, to be able to afford health care, to erase these state lines that prohibit a competitive environment to purchase a good health-care package. . . . That’s an issue that is important to women.”

Palin’s pro-market rhetoric obscures the consequences of exposing health care to a “competitive environment.” In fact, despite Palin’s pro-choice assertions, allowing insurance companies to sell policies across state lines would eliminate existing consumer protections and increase the costs of insurance.

Insurance companies are already charging women more than men for identical coverage. As the New York Times reported last week, “women pay much more than men of the same age for individual insurance policies providing identical coverage.” A 30-year-old woman pays “31 percent more than a man of the same age in Denver or Chicago” and in Iowa, “a 30-year-old woman pays $49 a month more than a man of the same age.”

Women pay more because they are more likely to have certain chronic diseases and are expected — as people who bare children — to need more care.

McCain’s plan would give insurance companies even more incentive to discriminate against women. Under his proposal, in order to attract the healthiest risk pool and maximize profits, insurance companies would market bare-bones policies from states that don’t require insurers to finance maternity care or cervical cancer screenings. But an exodus of non-insurance users into bare-bones policies would further fragment the health insurance pool, divide those who don’t use insurance from those who do and force women who require pregnancy check-ups or other health care services to pay more for identical coverage.

The only “choice” McCain’s health care plan would provide women, is the “choice” of paying more for health care. And that’s certainly “an issue that is important to women.”

For more on how McCain’s health care plan would effect women, click here and here.

Elizabeth Edwards On High Administrative Costs»

On Monday, during a discussion about health care policy, CAPAF Senior Fellow Elizabeth Edwards underscored the burden of administrative costs on the health system:

I ran into a woman who had worked in a hospital in Vancouver and she had moved to Boston. I met her in one of the New Hampshire primaries. And she said she worked in the accounting office in the hospital, and went to a hospital in Boston to get a job. Same number of beds in the hospitals. She got a job. She had worked in an accounting office with 6 people, she now worked in an accounting office with 600 people. Your health insurance dollars are being used to pay those 600 people. It is not an efficient use of our money.

Watch it:

Reducing administrative costs should be an important part of any serious cost-containment strategy. Unfortunately, Sen. John McCain’s reliance on the individual market would bolster the health bureaucracy and further grow the size of accounting offices.

That’s because marketing, medical underwriting, rescission, and increased paperwork for individuals leads insurance companies in the individual market to spend 29 percent of premium dollars on administrative costs, more than double the average amount in the group market.

As McCain adviser and individual market-proponent Douglas Holtz-Eakin admitted, employer based coverage “is way better” than a comparable plan in the individual market because the latter charges more for identical coverage. In fact, according to a study published in Health Affairs, higher administrative costs, along with other factors, increase the cost of an individual plan by an estimated $2,000.

So McCain’s push to get more Americans into the individual market, will have you paying more for less. As Peter Harbage points out, “shifting coverage from the group coverage market to the individual insurance market could generate as much as $20 billion in new administrative costs—which represents an increase of more than 20 percent in 2007 dollars.”

Holtz-Eakin Implosion Watch: Admits Inferiority Of Individual Health Care Plans…Again»

Earlier this month — after previously maintaining that Sen. John McCain’s health care proposal would lower costs by allowing healthier Americans to find cheaper coverage in the individual market — McCain senior policy adviser Douglas Holtz-Eakin argued that “younger and healthier employees with the McCain health care tax credit will have a bigger incentive to stay with the employers“ because employers offer better coverage than individual health care plans.

At the time, the Wonk Room considered Holtz-Eakin’s remark an unfortunate, if somewhat desperate argument, which betrayed a disorganized campaign frantic to convince voters that they won’t lose their employer-sponsored coverage.

But as the days passed and the campaign moved into its home stretch, Holtz-Eakin’s comments ranged from the bizarre to the truthful:

- On CNBC, Holtz-Eakin asserted that “you can’t cut taxes for 95 percent of the American people, if just under 50 percent aren’t paying taxes” and then claimed that McCain would cut taxes for “everybody.”

- Last week, during a segment on Bloomberg television, Holtz-Eakin finally admitted that temporarily cutting the capital gains tax would overwhelmingly benefit millionaires

- On Bloomberg, Holtz-Eakin conceded that McCain’s health care tax credit wouldn’t cover the entire cost of a comprehensive health plan and would only allow some Americans to buy insurance in the individual market.

- On Face the Nation this Sunday, Holtz-Eakin seemed to argue that carbon dioxide is not a pollutant.

And so it is with great fanfare and anticipation that the Wonk Room unveils The Holtz-Eakin Implosion Watch, a semi-regular series chronicling Holtz-Eakin’s truthiest moments in the waning days of the campaign.

Today, Holtz-Eakin again strays off message, telling CNN, “younger, healthier workers likely wouldn’t abandon their company-sponsored plans“:

“Why would they leave?” said Holtz-Eakin. “What they are getting from their employer is way better than what they could get with the credit.”

Hotlz-Eakin argues that “under McCain’s plan, employer-funded care will generally be preferable to the tax credit alone — since it’s the tax credit plus the employer contribution — but that the tax credit alone will be a huge step up for people who have nothing at all.” In other words, in the individual market, without the employer contribution, Americans would have to pay more for less…and less as McCain’s tax credit does not keep up with medical inflation.

In fact, high deductible plans typically lead to higher out-of-pocket expenses, resulting in “a one-time shift in spending from premiums to patient out-of-pocket outlays.” As Holtz-Eakin himself points out:

McCain’s would leave them better off than they are now, but still with something less than complete coverage, unless they reach into their pockets to supplement the tax credit.

Oddly enough, Holtz-Eakin is now arguing that under McCain’s health care plan (which pushes about 20 million Americans out of the employer market and into the unregulated individual market), Americans would receive sub-prime health care coverage.

In Search Of An Honest Debate On Health Care»

Our guest blogger is James Kvaal, a Senior Fellow at the Center for American Progress Action Fund.

How much will Sen. John McCain cut from Medicare and Medicaid to pay for his new tax credits? McCain advisor Douglas Holtz-Eakin said that our estimate of $1.3 trillion – based on the work of the Tax Policy Center – is “false.” But he has refused to provide his own number or to endorse any of the independent estimates.

Holtz-Eakin also claimed that he could save “on the order of $2.6 trillion over 10 years” by cutting wasteful Medicare spending, without affecting benefits at all. If that’s true, than Obama’s plan – which costs $1.6 trillion – could provide universal health care coverage while saving $1 trillion.

There are only 10 days until the election. If the McCain campaign successfully avoids all the difficult questions on who, exactly, is paying for its trillions in tax breaks, than no future presidential candidate will have any reason to be honest in their budgeting. And if McCain actually becomes president, then he will have learned that he can put out whatever numbers he wants, or not, and leave all of us guessing about his true policies.

For more on this, read the new analysis released yesterday by the Center for American Progress Action Fund.

McCain’s Health Plan Isn’t Kid Friendly»

Sen. John McCain’s health care plan leaves too many Americans behind. Individuals with pre-existing conditions, women, baby boomers and children will have a harder time finding affordable health insurance under McCain’s proposal to move individuals from large employer-risk pools — where the risk and cost of health insurance are spread across a large group of people — into unregulated individual plans.

In fact, a new report from First Focus concludes that McCain’s $5,000 one-size-fits-all tax credit discriminates against families with children. “A family will get the same $5,000 tax credit regardless of the number of children they have. Based on this design, families are penalized for every child,” the report concludes.

And it only gets worse. Since McCain deregulates insurers and allows companies to cherry pick the healthiest individuals, 19 million children “currently with employer coverage could be barred from insurance” in the individual market place “due to pre-existing conditions.” Children who require autism care, well care visits, or lead poisoning treatments could “lose the protection of having guaranteed benefits” once companies can relocate to states without consumer protections:

McCain’s proposed cuts to Medicaid and his lack of support for maintaining SCHIP — combined, the two programs cover approximately 26.4 percent of all children under 19 — would also erode the safety net programs that families rely on to keep their kids healthy.

Obama Camp Questions If McCain’s Health Plan Is ‘Socialism’»

Yesterday, during a roundtable discussion at the Council on Foreign Relations, Austan Goolsbee, Senior Economic Adviser to the Obama campaign asked McCain spokesperson Douglas Holtz-Eakin if McCain’s plan to give every American a refundable tax credit to purchase health insurance was “socialism”:

What about the health care credit which is not tied to work, and is refundable, and goes to all the very people? Is that socialism? Are you a Muslim?

Watch it:

All kidding aside, Goolsbee has a point. For while McCain has regularly attacked Obama’s model of comprehensive health care reform as government-run or socialistic, McCain’s tax credits and Guaranteed Access Plan to cover uninsurables allows the government to redistribute the wealth to those who chose to purchase health coverage or the sickest Americans who can’t afford or find plans in the unregulated individual market. (The latter group would need about $100 billion.)

In fact, just yesterday, during an interview in Orlando, Florida, McCain explained that the government would fund, regulate and approve plans in the G.A.P. initiative:

To start with we will give every family in America a $5,000 refundable tax credit so they can go any place in America and get the health insurance they need. Second, if Carolyn is not able to qualify for any health insurance policy, we will establish government approved plans to give them the health insurance they need.

More importantly, Goosbee’s exchange with Holtz-Eakin underscores the government’s role in helping Americans find affordable health insurance coverage. A pragmatic approach to health care reform would expand the group health market and improve public programs, thus giving Americans the choice of staying in employer coverage or joining a private or public plan.

McCain Camp Lies About McCain’s Plan To Tax Healthcare»

In the final weeks and months of this campaign, the McCain campaign has adopted a patchwork-like approach to selling its ever-evolving health care proposal.

In the video compilation below, McCain admits that his health care plan would increase taxes on some Americans. Campaign advisers Tucker Bounds, Nancy Pfotenhauer and even running mate Sarah Palin, disagree:

Indeed, McCain’s health insurance plan gives you $5,000 (the size of McCain’s tax credit) but takes away $12,000 (the average cost of a plan in the employer market). By 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, McCain’s tax reform would increase costs for sicker workers and may force some workers to opt out entirely.

As James Kvaal explains, a middle-class family paying 25 percent in income taxes and 5 percent in state taxes would experience an immediate tax increase under McCain’s plan if they paid more than $16,700 in health care premiums. Moreover, since McCain’s credits diminish in proportion to growing health care premiums, by 2014, a middle-class family (who is in the 25 percent tax bracket and pays average premiums) would pay $300 more in taxes.

But the McCain campaign is talking out of both sides of its mouth, misrepresenting its plan and consistantly contradicting the candidate.

McCain’s Health Plan Puts Baby Boomers At Risk»

In the short term, if you’re healthy and wealthy, you can use Sen. John McCain’s $2,500/$5,000 health care tax credit and enroll in a low premium/high deductible health care plan in the unregulated individual health insurance market. Once you get sick, you may lose your coverage to another round of medical underwriting … see your costs increase astronomically … have certain conditions exempt from coverage … the list goes on and on.

But for the 56 million Americans with employer coverage today who have a chronic illness, who are women or who are ages 55 to 64 — three groups of people who pay more for health insurance in the individual market — McCain’s plan to shift Americans from the employer-based insurance market to the individual market is more than an inconvenience, it’s a net loss.

Because while insurance companies require older and sicker people (or those who simply use more care, like women) to pay higher premiums, McCain’s plan doesn’t offer them a higher tax credit.

In fact, according to a new report from CAPAF, “the flat $2,500 credit will cover less than 48 percent for older Americans and more than 48 percent for younger Americans”:

Specifically it would cover 84 percent of the premium for an 18-to-24-year-old, but only 23 percent of the premium for a 60-to 64-year old…The McCain plan gives people ages 60 to 64 a tax credit that is 53 percent lower than one that adjusts for premium variation by age.”

What’s more, boomers — who make up 17 percent of non-elderly adults but account for 26 percent of those with at least one chronic illness — will have a hard time finding coverage in a market which tries to maximize profit by insuring only the healthiest Americans. But if they go uninsured, Medicare costs will skyrocket. In fact, a recent study found that “chronically ill people turning age 65 who were previously uninsured had lower spending than insured people prior to Medicare. Yet once on Medicare, these uninsured Americans spent 50 percent more than previously insured Medicare beneficiaries who also had chronic disease”:

If, as one study suggests, being uninsured increases spending by 50 percent…having 2.4 million more chronically ill Americans join Medicare as uninsured rather than previously insured could raise its costs by $2.4 billion per year in 2005 dollars.”

Thus, under McCain’s plan older and sicker Americans — and in fact all Americans — pay more for less. Read the full CAPAF report here.

McCain’s Missing Cost-Containment Policy»

Sen. McCain has said that he would cut Medicare spending without reducing benefits or enrollment. Again today, Sen. McCain’s campaign talked about policies like reducing health care payments, promoting IT, and taking other cost containment steps. Despite his assertions, Sen. McCain has not put forward a serious health care cost-containment policy. Moreover, it would take restraining Medicare spending to below the rate of medical inflation and population growth achieve $882 billion in savings. Translation: funding would be inadequate to provide Medicare beneficiaries with the same services they receive today. Massive premium increases or benefit cuts would be required.

But let’s consider Sen. McCain’s cost-containment policy. Over the summer, CAP-AF released a 50-page analysis of presidential cost-containment plans. After that review, there was only possible conclusion: Sen. McCain’s cost-containment plan is ineffective. Others have found that the McCain plan could raise costs, including Emory Professor Ken Thorpe in a new report. More »

How ‘Joe The Plumber’ Is Hurt By McCain’s Health Care Plan»

Responding to conservative claims that progressives would raise taxes on middle-class Americans like Samuel J. Wurzelbacher (a.k.a. ‘Joe the Plumber’) and undermine the success of small businesses, today’s Progress Report argues that a progressive tax policy is exactly how millions like ‘Joe the Plumber’ can realize the American Dream. The same is true for health care policy.

‘Joe the Plumber’ has himself experienced the consequences of rising health care costs. After St. Charles Mercy Hospital filed a lien against him in 2007 for $1,261, ‘Joe the Plumber’ joined a long-line of Americans who are squeezed by growing costs.

Nationally, costly illnesses trigger about half of all personal bankruptcies, and most of those who go bankrupt because of medical problems have health insurance. Total health care spending has doubled between 1996 and 2006, and without reform it is expected to double again in the coming decade.

But the change that Joe’s preferred candidate for President, Sen. John McCain (R-AZ), offers would do very little to reduce Americans’ health care debt; in fact, it may add to it. Sure McCain speaks a good game about controlling health care costs, but his health care plan merely shifts the costs of insurance from the employer and the government to the individual. McCain controls cost by providing less care.

In McCain world, Joe is responsible for negotiating with a health insurance company and finding affordable coverage for himself or his children. Should he be lucky enough to find insurance in the individual market place (and only about 10 percent of applicants do), high deductibles and out-of-pocket expenses would bankrupt the plumber, should his family become sick and actually need care. Since McCain’s plan undermines existing consumer protections, the insurance company could exclude certain conditions from coverage, deny medical claims, and increase premiums. In time, McCain’s $5,000 health credit would depreciate in value, raising Joe’s taxes, and forcing him to pay more for his health insurance plan.

Unfortunately, since ‘Joe the Plumber’ is no ‘Joe Millionaire,’ McCain’s health care plan would do little to help him afford health insurance.

The Importance Of The Presidential Bully Pulpit»

According to a recent survey from The Commonwealth Fund, a whopping 82 percent of Americans think the health care system “should be fundamentally changed or completely rebuilt.” But in almost every election poll, health care trails the economy and the war in Iraq. Americans agree that the system is broken, but they’re not asking the candidates to address the problem; voter dissatisfaction has not translated into electoral demand.

In fact, even as health care costs have more than doubled since the 90s, fewer Americans consider health care “one of the two important issues for government to address” than did during President Clinton’s reform efforts:

So why are Americans paying more, but caring less? The answer may lie in presidential leadership, or lack thereof. As Clinton prioritized health care reform in his first term and educated the public about the consequences of allowing health care costs to spiral out of control, support for government action peaked. But his failure to secure reform and the Bush administration’s dearth of solutions to the health care crisis took the health issue off the table and out of the political consciousness.

The trend highlights the role of the president in shaping the political debate and helping voters “get behind solutions to big problems.” As Faiz Shakir points out, “voters could get behind solutions to big problems” if leaders would “help them divine what they are.”

Conservatives Spread Benefit Mandates Myth»

Yesterday, during an NPR segment about the impact of Sen. John McCain’s (R-AZ) proposal to allow insurance companies to sell policies across state lines, Michael Cannon of CATO and Rep. John Shadegg (R-AZ) both repeated the false claim that benefit mandates significantly increase the costs of health insurance:

CANNON: [Some states require that a health plan] includes chiropractic coverage, in vitro fertilization, which is very expensive and a lot of people find morally objectionable but a lot of states require that.

SHADEGG: You’re going to allow them [insurance companies] to bring a policy into your state that is going to cover basic services but might not cover hair prostheses, might not cover aroma therapy, might not cover acupuncture. That means that policy will cost less money and enable people to afford it.

Very few states actually cover hair prostheses (10), in vitro fertilization (13) and acupuncturists (11). In fact, after the second presidential debate, in which McCain also suggested hair prostheses drive-up health care costs, the Wall Street Journal Health Blog contacted William Parsley, “a dermatologist who is president of the International Society of Hair Restoration Surgery, a nonprofit group of about 700 hair-restoration doctors world-wide.” According to Parsley, “insurance payment for cosmetic hair is the real joke. Parsley said that only hair restoration as part of reconstructive surgery necessitated by severe burns, serious injuries and accidents is customarily covered by insurance“:

Such reconstructive surgeries account for about 1 to 2% of hair transplants performed, he said. What about the gold-plated health insurance, we asked. Ever see any of that? Yes, he said, twice in 34 years of practice that insurers paid for a patients’ cosmetic hair transplant. The most recent instance was two decades ago, though.

Are we alone in withholding payment for hair loss? Parsley says no, cosmetic hair transplants aren’t covered in countries with government-run health systems. “They don’t even offer that in Canada,” he said.

What’s more, conservative claims that benefit mandates significantly increase the cost of health insurance fly in the face of fact. According to state experiences and an exhaustive study by the Congressional Budget Office, “eliminating some of the most expensive mandates — maternity, mental health, and preventive care for children — would bring” only a small reduction to health care premiums. The CBO report found that “the impact in the small group market is no more than five percent of premiums” while California’s Health Benefit Review Program “determined that eliminting all 44 of California’s mandates would reduce premiums by no more than 4.8 percent.”

In short, insurance companies lose money by insuring sick people, not though benefit mandates.

How The Lewin Analysis Falls Short»

On Sunday, former Rep. Rob Portman (R-OH) cited The Lewin Group’s new analysis of Sen. John McCain’s (R-AZ) health care plan to argue that McCain’s proposal “will cover about the same number of uninsured” as Sen. Barack Obama’s (D-IL):

With all due respect, they are very different plans. But the independent evaluations that I’ve seen, including one last week, shows that the McCain plan will cover about the same number of uninsured–in fact, this particular analysis said a few million more people–but it will reduce costs. That’s the key.

Watch it:

According to last week’s Lewin analysis, McCain’s health care plan would reduce the number of uninsured by 21.1 million and cost $2.05 trillion dollars. But the Lewin assessment is the black-sheep of the candidates’ health care comparisons– in fact, the three other prominent analyses of the candidates’ health care plans estimate that McCain would reduce the number of uninsured by just 1-5 million:

The Lewin Group inflates McCain’s numbers in several ways. Put simply, the report ignores the consequences of opening the health insurance market to unfettered market competition, overstates the purchasing power of McCain’s health credit and the quality of individual health insurance plans.

More »

Palin Asserts McCain’s Health Care Plan Is Free: ‘Doesn’t Cost Anything And Doesn’t Increase Taxes’»

As health care issues heat up on the campaign trail, Sen. John McCain (R-AZ) can’t seem to get his plan straight. Last Sunday, the senator admitted that his health care plan would increase taxes. On Friday, the campaign inadvertently called McCain a liar. And yesterday, in an interview with a local NBC affiliate in Florida, Gov. Sarah Palin again disagreed with McCain and explained that their health care plan “doesn’t increase anyone’s taxes”:

Q: Obama campaign calls Sen. McCain’s health care plan radical. That there could be a chance your Medicare could be in dander if not taxed then in some way cut. Explain John McCai’s health care plan.

PALIN: Maybe it’s radical because we don’t want the government to control it all we want the private sector we want through competition for American families to be able to afford health care. Doesn’t cost the government anything and certainly doesn’t increase anyone’s taxes.

Listen:

Well, it either does or it doesn’t, and both McCain and the Wonk Room agree that it does.

Everyone also agrees that McCain’s health care plan is radical, and, despite Palin’s best attempts to pivot the argument in her favor, most observers aren’t buying her spin. In fact, today’s New York Times reports that numerous business groups and associations oppose McCain’s proposal to replace the current tax exemption for employer-sponsored health care benefits with a one-size-fits all tax credit.

The officials, with organizations like the “U.S. Chamber of Commerce, the Business Roundtable and the National Federation of Independent Business, predicted in recent interviews that the McCain plan, which eliminates the exclusion of health benefits from income taxes, would accelerate the erosion of employer-sponsored health insurance and do little to reduce the number of uninsured from 45 million”:

- R. Bruce Josten, Chamber of Commerce: “To some in the business community, this is very discomforting. The private marketplace, in my opinion, is ill prepared today with an infrastructure for an individual-based health insurance system…There are huge questions about the $5,000 per family being an insufficient amount in terms of being able to purchase the same coverage.”

- John J. Castellani, Business Roundtable: “One of the things we don’t want to do, is jeopardize 170 million Americans who do get insurance through their employers.”

- Helen B. Darling, National Business Group on Health: “The last thing you want to do to the average working person, especially when you’re bailing out big financial companies, is take something they hold near and dear partially away.”

Recent analyses of McCain’s health care plan suggest that 20 million Americans could lose their employer-sponsored health care coverage (while 21 million would pick up subprime health insurance plans in the individual insurance market).

UPDATE: Appearing in Jacksonville, Florida Palin said, “our health care plan will give millions of middle-class families access to better health care without costing them a dime.”

McCain Admits Health Plan Would Increase Taxes»

Today, during an interview with ABC’s George Stephanopoulos, Sen. John McCain (R-AZ), who has previously promised “not [to] raise your taxes nor support a tax increase,” finally admitted that his health care tax credits would not cover the costs of a comprehensive health insurance plan:

MCCAIN: Actually, my position is that it will be, it will give people actually more money to go out and purchase tax - health insurance on their own and only those with the Cadillac gold-plated health insurance policies today are the ones who might suffer from it. The ones -

STEPHANOPOULOS: So they would see their taxes go up potentially.

MCCAIN: It depends on, on, on what plan they have. But that’s usually the wealthiest people. Ordinary working Americans have the kind of - or an overwhelming majority have the health insurance plans that this tax credit, refundable tax credit, will actually put more money in their pockets for the purchase of health care than what they had before.

Watch it:

McCain’s tax increase is worse than he lets on:

- Eliminating Tax Exemption Increases Cost Of Plan For Those Who Need It Most: By 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, McCain’s tax reform would increase costs for sicker workers and may force some workers to opt out entirely.

- Tax Credits Don’t Keep Up With Health Costs: McCain’s credits will diminish in proportion to growing health care 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 a large tax increase on the middle class.

- Middle Class Experiences Largest Tax Increase: For a couple earning $40,000 and paying $13,800 for insurance, “McCain’s new tax credit would cut their taxes by $50 in 2009, but because the credit quickly falls behind rising premiums that are the basis of the current tax break, the family would pay $1,169 more in taxes in 2013…[and] would pay $2,809 more in taxes by 2018.”

Ironically, McCain’s health care plan raises taxes for families whose yearly income just barely covers the cost of a Cadillac.

Digg It!

Hitting The Iceberg Of Higher Health Care Costs»

The latest Kaiser Family Foundation survey of employer health benefits concludes that “workers are shouldering higher health care costs as more employers demand bigger out-of-pocket payments from employees before their insurance kicks in.”

According to the survey of 1,927 employers, “annual deductibles — the amount employees pay out of their own pockets for medical care before their insurance coverage starts — jumped an average of 29%, to $1,344, for those with family coverage.” “This is partly, but not entirely, driven by growth in consumer-directed plans such as those that qualify for a tax-preferred Health Savings Account,” the study concludes.

Consumer driven health care plans do increase out-of-pocket expenses. “We may be seeing the tip of the iceberg toward less comprehensive, skimpier coverage,” Kaiser President Drew Altman warned.

But under Sen. John McCain’s (R-AZ) proposed health plan, too many Americans may actually hit the iceberg. As a recent study published in Health Affairs points out, McCain’s plan would push more Americans into the unregulated individual health market place. But, since “it is much more expensive to sell insurance to millions of individuals,” a family that moves from the group to the individual market will experience higher costs:

The typical deductible in nongroup plans is about $2,750, compared to about $1,000 for group policies. Coinsurance rates average 26 percent in nongroup plans, compared to 20 percent in a typical employer-based plan. For plans with copayments, the average copayment in the nongroup market is between $30 and $40 per doctor visit, well above that of group plans. Many services are not covered at all. Thus, much of the apparent savings from shifting to nongroup coverage would be offset by higher out-of-pocket costs for care.

The Value of McCain’s Health Care Tax Credit = One Designer Jacket»

Our guest blogger is Adam Jentleson, the Communications and Outreach Director for the Hyde Park Project at the Center for American Progress Action Fund.

The centerpiece of John McCain’s health care plan is a tax credit worth $2,500 for individuals. By coincidence, in her speech at the RNC two weeks ago, Gov. Sarah Palin wore a jacket designed by Valentino Garavani that cost $2,500.

Admittedly, McCain’s health care tax credit is worth more than most jackets. The problem is that it’s worth far less than the cost of health care for most Americans.

Individuals paid an average of $4,400 for health care in 2007 – nearly twice the value of McCain’s credit. For families, McCain’s credit is $5,000 – which covers less than half of the $12,000 the average American family paid for health care in 2007.

And unlike Gov. Palin’s jacket, McCain’s credits are not tailored. They are one-size-fits-all. So if you’re healthy, you should be in good shape. But if you are sick, have a pre-existing condition, or endure a medical emergency, once you exceed the value of the credit you are on your own.

Which is why many health care experts agree than McCain’s health care plan boils down to this: don’t get sick.

Joe Klein Nails It On McCain’s Health Care Tax Increase»

Our guest bloggers are Robert Gordon and James Kvaal, senior fellows at the Center for American Progress Action Fund.

At Swampland, Joe Klein posts a great piece on McCain’s plan to raise taxes on many families with health insurance. Joe Biden raised the same issue yesterday, as did a misleading piece in the New York Sun. We wanted to add one more point.

McCain endlessly charges that Obama wants to “raise taxes.” But due to McCain’s health care plan, far more middle-class families will see a tax increase under McCain than under Obama. Consider:

- McCain raise taxes on more people. Obama would raise taxes on about 4 million high-income households, all with incomes above $200,000. McCain would eventually raise taxes on most of the roughly 90 million households with health benefits from their employers. As explained here, the main reason is that McCain’s tax credit is designed to fall further and further behind rising premiums.

- In addition, McCain raises taxes on the middle class. While Obama would only increase taxes on households making more than $200,000 a year, McCain would raise taxes on typical families making $60,000 by $1,100 in 2013.

So remind us again, who wants to raise taxes?

Middle Class Americans Hardest Hit Under McCain Health Plan»

In an editorial in yesterday’s New York Sun, Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor and a senior fellow at the Hudson Institute, misrepresented the effects of Sen. John McCain’s (R-AZ) plan to expose health benefits to taxes. In defending McCain’s proposal, Furchtgott-Roth argued that McCain’s proposed tax credits “would wipe out the new tax liability for nearly every worker”:

Workers in the 25% tax bracket pay an extra $5,000 in tax on an additional $20,000 of income. So a $5,000 credit would offset the federal tax on employer-paid premiums up to $20,000 — and an average plan only costs $12,000 per year, according to the bipartisan National Coalition on Health Care.

Furchtgott-Roth is wrong. As James Kvaal, Peter Harbage, and Ben Furnas point out in a recent report, because McCain’s tax credits are indexed to inflation — and not the faster growing cost of health care — McCain’s tax credit quickly becomes a tax increase. In fact, the largest tax increases fall on middle-class families:

The largest tax increases fall on those who earn enough to be in the 25 percent or 28 percent income tax bracket but not so much that they no longer pay Social Security taxes. Higher income families—those who pay higher income tax rates but no Social Security taxes on their incomes above $208,000 a year—would see a smaller tax increase.

From the report:

Digg It!

REPORT: The Costs Of ‘Extra Payments To Medicare Advantage’»

This summer, when Republicans initially resisted curbing the excessive federal reimbursements to Medicare Advantage plans, the Wonk Room argued that the government’s overpayments to Medicare Advantage “raise costs for beneficiaries in the traditional program.” This is because Medicare premiums increase with Medicare costs, and overpayments by Medicare “drive premiums higher than they otherwise would be.” As a result, the millions of seniors enrolled in traditional Medicare “are charged higher premiums each month to help subsidize the cost of these overpayments.”

And while the bill that passed reduced the extra reimbursements to private plans, it did not completely eliminate “those extra payments.” According to a new study by Commonwealth Fund, the government is still spending billions subsidizing private insurance companies:

- “Private Medicare Advantage (MA) plans will be paid an average 12.4 percent more per enrollee in 2008 compared to what the same enrollee would have cost in the traditional Medicare fee-for-service program.”

- Medicare costs increased by $33 billion “in the five years since 2004 because of extra payments to MA private plans.”

- “In 2008, for each of the 8.6 million Medicare enrollees in managed care, Medicare will spend an average of $986, or 12.4 percent, more than it would for comparable beneficiaries in traditional fee-for-service Medicare, with total extra payments to MA plans exceeding $8.5 billion.”

As the report notes, “these overpayments put pressure on both Medicare and the federal budget, drain resources from other, potentially more productive, uses, and dilute the incentive for Medicare Advantage plan efficiency—which was one of the original reasons for including a private plan option in Medicare.”

Palin’s Conservative Ideology Is An Obstacle To Real Health Care Reform»

Despite Sen. John McCain’s (R-AZ) claim that Gov. Sarah Palin (R-AK) “will help me reform Washington,” Palin’s adherence to a rigid conservative ideology that treats health care like any other commodity will only drive-up health care costs.

While governor Palin led an effort to repeal Certificate of Need laws, (CON) — “a regulatory process that requires certain health care providers to obtain state approval before offering certain new or expanded service.” As the National Council of State Legislatures points out, “the basic assumption underlying CON regulation is that excess capacity (in the form of facility overbuilding) directly results in health care price inflation“:

When a hospital cannot fill its beds, fixed costs must be met through higher charges for the beds that are used. Bigger institutions have bigger costs, so CON supporters say it makes sense to limit facilities to building only enough capacity to meet actual needs.

Palin argued that CON programs have failed to “lower costs for the consumer“:

But after much consideration, we believe that the program has not accomplished what it set out ultimately to do more than 30 years ago — lower costs for the consumer. It is time to end Alaska’s program in its present form. Doing so will not only reduce the cost of health care, it will also improve the access to health care, allow more competition and improve quality of care for patients.

But as Joe Padula points out over at Managed Care Matters, Palin has “no clue what she’s talking about.” In fact, a study of the health care costs of the big three automakers concluded that “CON states have lower health care costs than non-CON states“:

Like many conservatives, Palin assumes that increasing the number of hospital beds will lower health care costs. But “health care is not like any other good or service.” Indeed, “competition in health care is very different from other types of products and services,” — “the more supply there is, the higher costs are.”

Massachusetts Providing A Model For Reversing The National Trend Of Rising Health Care Costs»

The Commonwealth Fund released a new report today documenting the difficulty American families face in keeping up with the ever-growing costs of health care. In 2007, nearly 66 percent of Americans “were either uninsured for a time during the year, were under-insured, reported a problem paying medical bills, and/or said they did not get needed health care because of cost”:

- Since 2003, the “proportion of adults with high deductibles nearly doubled.”

- Half of adults with low income lacked coverage at some point during the year.

- 41 percent: of working age adults “reported a problem paying their medical bills”

- 33 percent: “spent 10 percent or more of their income on health insurance and health care, up from 21 percent in 2001″

The high costs of the current system ration care. The 47 million Americans without health insurance and the 25 million who don’t have enough insurance, lack access to needed services and are often forced to use expensive emergency care as a measure of last resort.

But in Massachusetts, health care reform is reducing the number of uninsured and increasing access to care.

According to new data released by Gov. Deval Patrick’s administration, “nearly three-quarters of previously uninsured Massachusetts residents now have medical coverage.” Half of the newly-insured “are enrolled in private health insurance and employer-sponsored plans” — coverage that does not cost the state money. Meanwhile, “the number of visits to hospitals and community health centers by the uninsured declined by 37 percent,” saving the state an estimated $68 million.

As Americans around the country are losing health coverage, Massachusetts residents are enjoying greater access and improved health outcomes. Opponents of comprehensive health reform should sit up and take notice.

The McCain Dilemma: Raise Taxes Or Add To The Deficit»

Today, during an appearance on Fox Business Channel, McCain adviser Nancy Pfotenhauer disingenuously argued that the senator’s health care plan would cover “30 million” uninsured Americans and would be “budget neutral over 10″ years:

HOST: So Nancy, who foots the bill?

PFOTENHAUER: Well, our plan is budget neutral over 10 years… we insure 30 million, approximately, and we’re budget neutral over 10.

Watch it:

While most reports estimate that McCain’s plan would only cover an additional 5 to 7 million Americans, Pfotenhauer’s claim that the proposal would be “budget neutral” disguises large tax increases or huge budget deficits.

The McCain campaign estimates that its health care proposal would cost $3.6 trillion over ten years and promises to pay for it by exposing health benefits to income taxes.

But as the Tax Policy Center argues, income taxes alone fall $1.3 trillion short of paying for McCain’s health plan. At this point, the senator will have a choice: finance the proposal by exposing the health benefits to payroll taxes, thus forcing millions of American families to “foot the bill”, or add $1.3 trillion to the national deficit.

But, having promised to balance the budget by 2013 and not raise taxes, McCain is stuck in the impossible.

Rising Health Care Costs Will Eliminate McCain’s Health Tax Credit»

A new report from Aon Consulting Worldwide predicts that health care costs will increase by 10.6 percent in 2009, outpacing inflation.

And while the “increase is the smallest Aon has seen in six years,” the jump in costs still outstrips the growth of Sen. John McCain’s (R-AZ)’s much-touted health care tax credit. As James Kvaal, Peter Harbage, and Ben Furnas argue in a recent CAPAF report, since McCain indexes his health tax credit — $2,500 for individuals and $5,000 for families — to inflation, and not growing premiums (which are driven by increased cost), his credit depreciates every year:

As a result, McCain’s credit becomes a tax increase. For a couple earning $40,000 and paying $13,800 for insurance, “McCain’s new tax credit would cut their taxes by $50 in 2009, but because the credit quickly falls behind rising premiums that are the basis of the current tax break, the family would pay $1,169 more in taxes in 2013…[and] would pay $2,809 more in taxes by 2018.”

Holtz-Eakin Backs Away From McCain’s ‘Key To Real Reform,’ Proud Of One-Size-Fits-All Tax Credit»

During an appearance on CNBC’s Squawk Box today, Sen. John McCain’s (R-AZ) senior policy adviser Douglas Holtz-Eakin disingenuously argued that the McCain’s health care plan would “buttress” “the traditional source of health insurance” and proudly proclaimed that under McCain’s plan, Warren Buffet and his secretary would receive the same health care subsidy:

This is actually not a plan that relies on the individual market, it relies on the traditional source of health insurance, which is employers. And it would buttress that by taking the traditional subsidy, that exclusion from tax, for private health insurance and spreading it more fairly. Instead of only getting it in the employer market, you would get it regardless of your source of insurance. And you get the same amount whether you’re rich or poor, $5,000 for every working family.

Watch it:

Holtz-Eakin’s claim that McCain’s plan does not rely “on the individual market” is surprising. In fact, when McCain outlined his plan in April, he stressed the importance of giving Americans the “choice” to opt out of the employer-based system and buy insurance in the individual market:

The key to real reform is to restore control over our health-care system to the patients themselves… When families are informed about medical choices, they are more capable of making their own decisions, less likely to choose the most expensive and often unnecessary options, and are more satisfied with their choices….Americans need new choices beyond those offered in employment-based coverage. Americans want a system built so that wherever you go and wherever you work, your health plan is goes with you. And there is a very straightforward way to achieve this.

As the Wonk Room has previously pointed out, rather than building on the “traditional source of health insurance,” McCain’s plan would tear it down. By equalizing the tax treatment of employer based coverage with insurance bought in the individual insurance market, the McCain plan would remove the employer’s incentive to provide coverage and could potentially unravel the current system. Here is why:

- McCain would entice healthy workers to buy cheaper but less substantive insurance in the individual market place.

- The exodus of healthier workers from employer-pools would increase the average health care costs for sicker employees who can’t find coverage in the individual market, forcing them to opt out entirely.

In fact, the Tax Policy Center estimates that by 2013, 16 million Americans would lose the health benefits they get from their employer and the number of uninsured would increase to 55 million, 8 million more than are uninsured today.

The one-size-fits-all tax cut offered by McCain, along with numerous other factors, will contribute to the increase. Under McCain’s plan, a chronically ill older patient, who require more care or more expensive care, would obtain the same amount for health care as a younger, healthier, or wealthier American.

Sicker or poorer Americans would not be able to stretch