The Wonk Room

CBS ‘Fact-Check’ On McCain’s Health Care Tax Contains Two Factual Errors»

CBS recently ran a “fact-check” on the claim that John McCain would raise taxes on workers’ health insurance. Watch it here:

Though we disagree with the conclusions of the piece (and will be addressing these disagreements in a future post), we first want to point out two factual errors.

–First: Thirty seconds in, the chyron reads “FACT: Employer health benefits for 16 million Americans will be taxed.” This, we believe, is a typo. There are around 160 million Americans who currently receive their health benefits through work, and, under McCain, all of them will pay taxes on their health benefits.

–Second: The announcer, at around forty-five seconds in, says that “McCain does want to tax the health insurance benefits that 60 million Americans now buy through their employer.” Again, the correct number is 160 million.

Check back soon for a more thorough critique of CBS’s conclusion.

Cornyn Falsely Claims That Rural Areas Of Texas Have Greater Access To Doctors»

Sen. John Cornyn (R-TX) is disputing the Houston Chronicle’s characterization of his claim that the Texas health care system — despite having the highest uninsured rate in the country — should serve as a model of reform:

Needless to say, the headline did not accurately reflect Senator Cornyn’s views…Instead, while relating several reasons why Texas’s economy is in better shape than most other U.S. states, he mentioned the 2003 law reforming medical malpractice law in Texas [Proposition 12]. Since its passage, doctors and medical school graduates have been flocking to Texas, providing health care services in underserved areas and improving patient access in others.

But as the Boston Globe points out, even as “doctors move into Texas in far greater numbers, they tend to locate in the same urban areas - undercutting one of the strongest arguments for Proposition 12.”

Indeed, while the number of physicians practicing in Texas has increased, “under-served areas” remain under-served:

During debate over the proposition, proponents of cutting jury awards in malpractice claims argued that “malpractice laws were responsible for shortages of doctors in rural” and specifically highlighted “152 counties that did not have an obstetrician.” But as of September 2007, “the same number of counties remains without one… [and] 124 counties have no obstetrician, neurosurgeon, or orthopedic surgeon.”

In ‘Jubilation’ She’s Not: Baby Cecilia Denied Coverage In Individual Market»

Acid reflux, a benign condition which afflicts about 50 percent of infants, can exempt otherwise healthy babies from coverage in the individual insurance market place, the Pittsburgh Post Gazette reports.

Consider the story of Cecilia Kownacki, a 7-month old baby (pictured on the right), who was denied coverage by a Pittsburgh insurer because she was unable to digest milk and often spit up:

Cecilia Kownacki found out the hard way. The denial letter from Highmark arrived last month: “Dear Ms. Kownacki: [We] are sorry to inform you that your application does not meet our underwriting criteria for approval,” the letter said…Her parents, Frank and Susan Kownacki, were considerably more distraught. Their baby daughter was uninsured, starting Friday.

“When we got the rejection letter,” said Mrs. Kownacki, of the North Side, “I was in tears.”

[…] whether you’re 70 years old or 7 months young, when you move away from one plan and try to enroll in an individual plan, you can be subject to health screenings if you want to enjoy a low-premium policy.

Unfortunately, Cecilia is not the exception; nearly 90 percent of people seeking coverage in the individual market “never end up buying a plan, finding it either very difficult or impossible to find one that met their needs or is affordable.” From a recent Commonwealth study:

In “most states, individuals with preexisting conditions are denied coverage, have conditions excluded, or face much higher and often unaffordable premiums.” Insurance companies will disqualify patients from coverage for undergoing caesarean sections, or “for just taking certain medicines because of the possibility of future costs, including common drugs as Lipitor, Zocor, Nexium, and Advairpre.”

As Julia Eisman of Stand Up For Health Care notes, “when the insurance company practice of cherry-picking the healthiest among us is so picky not even baby Celia can get coverage, there’s something wrong with this picture.”

McCain’s Plan To Tax Health Insurance»

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

Earlier today, McCain advisor Douglas Holtz-Eakin answered critics of McCain’s health care plan, who say it could raise taxes on millions of middle-class families. He said:

[The McCain plan] is a transformation of the tradition of a tax subsidy to private insurance to make sure that subsidy is fair, both in the sense that it is available to every American regardless of the source of their private insurance and that every person gets the same amount — $5,000 for a family, $2,500 for an individual. The Obama campaign has chosen to characterize only one piece of a comprehensive health care reform as a tax policy and thus try to hit John McCain with it. It is classic political rhetoric at odds with the reality of dealing with an important problem, like the underinsured in America.

Actually, considered as a whole, McCain’s plan will raise taxes on millions of workers for two reasons. First, his plan would tax workers’ health benefits, which are largely tax-free today. Although he also creates a new tax credit for insurance premiums, many workers will pay more in taxes on their insurance then they get from the new credit.

Second, the value of McCain’s credit will erode quickly. While health care premiums are expected to grow by 7 percent a year, McCain’s credit will increase by only about 2 percent a year. In contrast, current tax benefits keep up with rising premiums.

More details on the tax implications of McCain’s health care plan are available here.

The McCain Campaign’s Latest High-Risk Pool Variation»

During Douglas Holtz-Eakin’s appearance on CNBC’s Squawk Box yesterday, John Harwood questioned Sen. John McCain’s (R-AZ) ability to provide insurance for individuals whose pre-existing conditions disqualify them from coverage in the individual marketplace. Harwood argued that McCain’s proposal to federally subsidize high-risk pools to the tune of $7 to $10 billion is not “really adequate to get those at-risk into health insurance.” Holtz-Eakin begged to differ:

The Senator’s commitment was to devise a best practice…so his idea was let’s look at the practices, get the one that works and make the commitment to fund it. ‘Cause you know, in the end these are high-cost patients who might need more money. So his 7 to 10 estimate, it was a ballpark estimate. It could be higher. The commitment is to get the job done…It could be $20 billion and you could make it work if you do the rest of the reforms in the McCain plan. The important thing is to change the cost of care, and there’s a long list of reforms that the Senator’s proposed. It means changing incentives.

Watch it:

Holtz-Eakin is spinning his wheels as the McCain campaign scrambles to explain how their individual-market centric health care proposal would deliver health coverage to the millions of Americans with chronic illnesses.The McCain health care plan has been a patchwork of conflicting proposals from the very beginning:

- In April, Elizabeth Edwards, a Senior Fellow at The Center for American Progress Action Fund, astutely noted that McCain’s plan offered nothing for the sickest Americans.

- In response to her criticism, McCain offered his current high-risk pool enhancement plan, G.A.P.

- Seven days ago, senior adviser Carly Fiorina floated the idea of establishing “a nonprofit corporation that would contract with insurers” and “partner with other state plans to broaden insurance pools” and cover the sickest Americans.

Holtz-Eakin’s funding boost is the latest inadequate variation. As the Tax Policy Center pointed out, McCain’s high-risk pools would need about $100 billion a year to “prevent large losses in insurance coverage among the sick and needy.”

Implementing “the rest of the reforms in the McCain plan” would only overburden high-risk pools. As The Wonk Room previously pointed out, McCain’ plan to deregulate the insurance industry and push healthy Americans into the individual market could shift sick people — who can’t find coverage in the individual market or afford the increasing cost of insurance in their old risk pools once the healthy people have opted out — into high-risk pools.

These programs don’t spread risks and costs across a mixed pool population of healthy and sick people and would force millions of Americans with pre-existing conditions to pay astronomical insurance premiums and deductibles.

Thus, while McCain’s proposals have changed, his message has remained the same: don’t get sick.

Humana CEO McCallister Endorses Univeral Health Care»

On Monday, during an appearance on Fox Business News’ Countdown to the Closing Bell, Humana CEO Mike McCallister endorsed the progressive prescription of universal health insurance:

HOST: Can we cover everybody, Michael? Is that possible, universal health care?

MCCALLISTER: We can. It’s heavy lifting. And there is no simple, silver bullet answer to that…. we don’t have the right economic model because not everyone is in the risk pool, as we say in our industry. So it’s possible, the money is there. It’s going to take a real concerted effort and it’s not simple….getting everyone in the risk pool or getting them covered is the right thing to do. We’re wealthy nation, we should find a way to do that.

Watch it:

McCallister joins the majority of Americans who already support universal coverage. According to an ABC News/Washington Post poll from June, 66% of Americans believe that “providing health care coverage for all Americans” is more important “even if it means raising taxes.”

Similarly, a Quinnipiac University poll from May found that 61% of Americans “think it’s the government’s responsibility to make sure that everyone in the United States has adequate health care.”

CNN Is Wrong: McCain’s Plan Would Do Little To Insure Chronically Ill Americans»

Today, while reporting on a new study that found that nearly one-third of the 47 million Americans without health insurance suffer from chronic conditions, CNN implied that the “16 million people in this country with a chronic condition but no insurance to pay for medical care” could use Sen. John McCain’s (R-AZ) proposed tax credits or money saved in Health Care Savings Accounts to purchase health insurance with “tax-free dollars”:

You know, this problem has been around forever and lots of great minds have opined about what to do about it. The two candidates are no exception…Now senator McCain wants to do this more through the private sector. He wants to give tax breaks to people so that, if they have more money, because they’re not using it for taxes, they could use it to buy insurance and also help savings accounts so that people could help pay for medical expenses with tax-free dollars. It’ll be interesting to see which solution the voters like better.

Watch it:

But McCain’s solution doesn’t solve the problem. While McCain would give $2,500 to individuals and $5,000 to families to buy health insurance in the individual market place, most insurance companies won’t provide insurance to the so-called uninsurables or individuals who “have conditions like cardiovascular disease, hypertension, and diabetes.”

Secondly, 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”:

For those that never go to the doctor, or who can afford the high out-of-pocket costs incurred when using health savings accounts (you need to pay $1,050 as an individual or $2,100 for a family before your insurance will cover the rest), health savings accounts are great….For the rest of us, however, health savings accounts don’t work. If we get sick and see the doctor often, we have to pay those huge costs often; that means we have to save a lot of money in that health savings account. For those on fixed incomes, or even those just barely scraping by (and that’s a lot of us in today’s economic climate), putting away even $4,000 in a health savings account is out of the question.

As CAPAF Senior Fellow Peter Harbage and Director of Health Policy Karen Davenport argue in a new report, until the uninsured are part of the health care system, there will be no way to get a handle on their health care spending. Thus, “policies aimed at achieving savings while also improving quality would be even more effective in improving overall health system performance if they were combined with a policy to extend affordable health insurance coverage to everyone in the United States.”

Unfortunately, rather than analyzing the effects of McCain’s plan on the uninsured, CNN regurgitated McCain talking points. Such vapid reporting will not help voters decide “which solution [they] like better.”

UPDATE: The New Health Dialogue adds:

The challenge of chronic disease is intricately related to the goals of sustainable health reform. Both will require a comprehensive approach—one that provides access to care for all Americans and ensures that such care is delivered in an integrated system where providers are paid for the quality, and not just the quantity of care.

California To Provide Greater Access To Individual Health Insurance»

California wants to take on the largely unregulated individual health insurance market — a system within which insurance companies impose waiting periods for pre-existing conditions, offer less comprehensive benefits than employer-based coverage, charge higher premiums and deductibles, successfully exclude high-risk individuals form coverage, charge higher rates to higher-risk patients, offer a limited range of benefits, and spend a relatively small proportion of premiums on actual medical care.

California is proposing new rules to regulate the ‘wild-west‘ environment that is the individual health insurance market:

- The new rules “would set a maximum amount patients would have to pay each year toward their bills” and “restrict insurers’ ability to cancel policies retroactively.”

- Another proposal would “limit cancellations to the first 18 months of coverage and require insurers to obtain approval from regulators before revoking a policy.”

- Schwarzenegger would have “independent arbitrators decide whether an insurer could cancel a policy.”

- State regulators “would sort policies into categories based on the benefits they offer and establish minimum benefits for each category. Presumably, that would allow consumers to compare what competing companies offer.”

- Insurers may be “be required to spend at least 85% of the premiums they collect on medical care, limiting the amount they keep as profit and for administrative expenses.”

The new rules come out of necessity, not regulatory zeal. Nationally, 89% of applicants are unable to find an individual health care plan that meets their needs.

The new rules would provide patients “with preexisting conditions and other medical problems” greater “access to quality, affordable health care” and begin to establish the individual market place as a viable source of insurance for the millions of Americans who are currently denied coverage.

Note To McCain: Small Businesses Don’t Agree With You On Health Care»

Yesterday, Sen. John McCain (R-AZ) suggested that requiring employers to share the costs of expanding access to health insurance would add “$12,000 to the cost of employing anyone with a family” and lead to greater unemployment and lower wages:

Small businesses are the job engine of America, and I will make it easier for them to grow and create more jobs. My opponent wants to make it harder by imposing a ‘pay or play’ health mandate on small business.

But the rising costs of health insurance are already making it harder for small businesses to “grow and create more jobs.” According to a recent study from the Institute of Medicine, “the lost human capital related to lack of health insurance - including lost earning potential and the value of extra years of life - is as much as $170 billion.”

As the Small Business Majority points out, the current system is broken. Small businesses either “pay the overblown and disproportionate costs in purchasing and administering a health care plan or, worse, offer no health care plan at all and suffer the competitive disadvantage in attracting and retaining talented labor.”

To ensure that small businesses aren’t overwhelmed by the growing costs of health care, “all interest groups — business owners, employees, the health care community and government” must step-up and contribute through the concept of shared responsibility. Such an approach would save small businesses from the inadequacies of the current system.

Small businesses are willing “to pay their fair share“:

When part of a larger solution that includes pooling, cost controls and government subsidies, [employer] mandates offer useful tools in building comprehensive reform…Small businesses are prepared to pay their fair share: nothing less, nothing more.”

But unfortunately, McCain’s rhetoric suggests that he doesn’t understand the cost of doing nothing. McCain’s proposals don’t address the out-of-control costs of providing health care coverage and do nothing to ameliorate the current crisis. Progressives would control costs and provide new opportunities for small businesses to purchase affordable coverage.

McCain’s Tax Credit Still Keeps Health Insurance Out Of Reach For Millions Of Families»

This is part two in a series of blog posts explaining the findings of John McCain’s Radical Prescription for Health Care, a new paper from the Center for American Progress Action Fund. For more, check out part one.

John McCain’s health care plan would create a new health insurance tax credit worth $2,500 tax credit for individuals and a $5,000 credit for families.

But according to a new study, the one-size-fits-all tax credit fails to make insurance affordable for millions. It falls far short of covering premium costs for low income families and it ignores the higher premiums faced by individuals with existing illnesses, who are approaching middle age, or who live in states with higher medical costs.

For millions of families, it’s a five foot rope for a ten foot hole.

A $5,000 tax credit for a low income family is not enough to cover the average price of an insurance policy costing around $14,000. Many poor or near poor families would fail to use the credit at all because they wouldn’t be able to make up the difference in premium costs.

Additionally, older Americans, and those with pre-existing conditions, face much higher premiums in the private market, but John McCain’s credit does nothing to address this.

In fact, an analysis of CBO premium data finds that McCain’s credit would cover only a third of the premiums for individuals who need insurance the most:

McCain’s $5,000 and $2,500 tax credits seem like a simple proposal: but it’s also simplistic and insufficient for the vast majority of Americans. It’s one-size-fits-nobody.

In Controversy Over Medicare Pay Cuts, Conservatives Side With Insurance Industry»

Last week, the White House and its allies in the Senate, voted down a proposal that would have made “cuts to the private Medicare Advantage program” in order to finance the deferment of a 10.6% physician fee cut for doctors who treat Medicare patients.

Writing an editorial in the Wall Street Journal, Scott Gottlieb, a former policy adviser at the Centers for Medicare and Medicaid Services, laid out the conservative argument and baselessly suggested that the private insurance plans that participate in Medicare Advantage provide better care than traditional Medicare and should not be cut:

Private insurers employ thousands of doctors, nurses and pharmacists, many experts in new technologies….private plans spend roughly four times more than Medicare on “consumer services, provider support, and marketing,” which includes money spent answering the telephone to adjudicate individual issues. Smaller health plans use one clinician for every 10,000 beneficiaries. Medicare would need 4,500 clinicians to keep pace.”

But as Robert Laszewski of Health Care and Marketplace Review points out, while Medicare Advantage plans “are paid 13% more than traditional Medicare pays for similar seniors,” there is no evidence to suggest that they deliver “a better cost/quality result” than traditional Medicare programs.

As AARP CEO William D. Novelli explained, “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.”

Insurance companies pocket the extra dollars. In fact, according to a Government Accountability Report (GAO) released just last week, private plans participating in Medicare Advantage earned greater profits and spent less on benefits:

Because organizations spent less revenue on medical expenses than projected, they earned higher average profits than projected. On average, MA organizations’ self-reported actual profit margin was 5.1 percent of total revenue, which is approximately $1.14 billion more in profits in 2005 than MA organizations projected…Nearly two-thirds of beneficiaries were enrolled in health benefit plans offered by MA organizations for which the percentage of revenue dedicated to profits was greater than projected and the percentage of revenue dedicated to expenditures (medical and non-medical combined) was lower than projected.

Thus, rather than bringing Medicare Advantage payments back to parity with fee for service, and using the savings to prevent the scheduled physician fee cuts, conservatives sided with the insurance lobby.

McCain’s High-Risk Pools — A Gift To The Insurance Industry»

Yesterday, during Sen. John McCain’s (R-AZ) “tele-townhall meeting,” Debbie, a woman who was laid off her job and subsequently denied health insurance in the individual market because she was taking “blood pressure medication,” asked McCain if his health reform plan would “reform the insurance business” and help her find coverage.

McCain conceded that Americans with pre-existing conditions would have a hard time finding coverage in the unregulated market but reassured Debbie that she could find coverage in government subsidized high-risk pools:

We have to develop - the state of FL is starting to develop them – government approved plans. Which is the legislatures and the governors and the federal government join together with the Federal government making a very significant contribution so that they can establish risk pools and others and make sure that every American is able to get – particularly with somebody like you – that basically can’t get insurance, can get affordable and available insurance and the government is going to have to weigh in physically and financially to see that you get the ability and the health insurance that you need…These are tough times and a lot of people facing the same challenge you are, Debbie. I’m committed to fixing it.

Watch It:

Thus, Americans like Debbie would have to pay outrageous premiums and deductibles for health insurance because high risk pools, unlike general risk pools, don’t spread risks and costs across a mixed pool population of healthy and sick people. She would pay more for insurance because, under McCain’s plan, her pre-existing condition would force her into a pool that cannot offset the costs of treating her condition.

In some ways, McCain is right. He would “reform the insurance business.” But rather than increasing access to health care, McCain’s plan to subsidize high risk pools would only release insurance companies from covering sicker people.

Nagourney: McCain’s Health Care Proposal ‘Is In Many Ways Similar To What Bush Has Proposed’»

During an appearance on MSNBC today, veteran New York Times reporter Adam Nagourney suggested that Sen. John McCain’s (R-AZ) health care proposal represented an extension of President Bush’s failed health-care reforms:

I think politically the issue that John McCain has to be careful about is that Democrats will be able to use his proposal on health care as another way of presenting him as Bush III because his proposal is in many ways similar to what President Bush has proposed.

Indeed, the Wonk Room has long argued that McCain’s plan, like Bush’s failed initiative, pushes Americans into the individual and insurance market-place and places 158 million Americans who currently receive their health insurance through an employer, in jeopardy. Today, Elizabeth Edwards, a Senior Fellow at the Center for American Progress, outlined the dangers of McCain’s approach:

Senator McCain’s never been in the individual market, he doesn’t know how difficult it is, in fact how impossible it is, if you happen to be one of the unlucky Americans who has a preexisting condition. He does, Senator McCain does. I do. Among the people who are employed right now and getting their insurance that way, fifty six million of them do, and they’re going to find it incredibly expensive, if it’s available at all, for those people who have preexisting conditions.

Watch It:

Well, I like what we did in Massachusetts, for Massachusetts…but John McCain has endorsed the plan of letting each state craft their plans to get people insured and to make sure that issues like preexisting condition are covered. We did it in our way.

Fortunately, most Americans support universal health insurance and reject Bush’s and McCain’s radcial health care policies.

Elizabeth Edwards On The Inequitable Individual Market»

Our guest blogger is Elizabeth Edwards, a Senior Fellow at the Center for American Progress Action Fund and wife of former Presidential candidate John Edwards.

David Lazarus, in Sunday’s Los Angeles Times, brought us a fresh reminder of the challenges posed by preexisting conditions by raising a new one – being a woman.

Senator John McCain’s health plan is based on the idea that everyone should be on their own to buy their health insurance on the individual market. And it’s an approach fundamentally at odds with the point of health insurance: that we share risks. People with preexisting conditions, like McCain and myself, would pay much more for health insurance under his health plan, if we could get coverage at all.

Insurance companies have all sorts of characteristics they look at in order to increase premiums, such as preexisting conditions, occupation, age, and residence. But I hadn’t realized that the McCain plan would enable insurers to “rate-up” my insurance bill for not only my status as a breast cancer patient, but also my gender.

The ability to become pregnant has long been understood as an excuse to charge women more for health insurance (because, of course, men have nothing to do with that particular health condition). But what makes the Lazarus column interesting is that he tells us that insurers are charging women higher premiums even if pregnancy benefits are excluded. Blue Shield of California (Blue Shield) is now charging woman more in the individual market because:

“Our egghead actuaries crunched the numbers based on all the data we have about healthcare,” explained Tom Epstein, a Blue Shield spokesman. “This is what they found.”

That women get sicker than men?

“It’s all about the statistics,” Epstein said.

That doesn’t really inspire a sense of fairness. Doctors recommend that women have mammograms and other preventative screenings. Is Blue Shield really trying to discourage health screenings? Do they think that women are more accident prone? Whatever their reasoning, one thing is clear – they don’t want to enroll too many women:

“We don’t want to get a disproportionate share of high-risk people,” added Epstein.

As Lazarus noted, “by ‘high risk people,’ what he means is ‘women.’”

Blue Shield, a not-for-profit company, says they are just following the trend of for-profit insurers in California (at least two competitors already adjust premiums based on gender). Blue Shield exists in a competitive market that rewards insurers for doing the wrong things. In that sense, it isn’t fair to pick on Blue Shield in particular, especially since Blue Shield’s CEO speaks constructively on health reform.

The point is that the insurers have given us just another example about how the individual market is fundamentally broken. Embracing it as the solution to our health crisis – as the McCain plan proposes to – will only make matters worse.

Conservatives Start Fearmongering Campaign About Obama’s Health Care Plan»

There they go again. Conservatives are already trying to demagogue Senator Obama’s health care plan. No sooner has Obama become the presumptive Democratic nominee then they have dusted off their playbook for trying to kill health reform. Their number one tactic? Fear-mongering.

In a Washington Times op-ed by the disinformation crew at the Center for Medicine in the Public Interest, conservatives tipped their hand: try to convince people that the big bad government is going to take over health care. Never mind the truth.

As they prepare to launch an anti-health reform campaign, CMPI’s op-ed (oh so cleverly titled “Obamacare,”) implies that Obama would enroll everyone in Medicaid and SCHIP:

Rather, Mr. Obama plans to make Medicaid and State Children’s Health Insurance Program (SCHIP) expansion the foundation of his proposal to expand coverage.

In reality, Obama’s plan would expand both private and public insurance options and make coverage more affordable. As more and more employers drop coverage, Obama would extend public insurance options to lower and middle class Americans, strengthening the existing safety-net of coverage for those who would otherwise become uninsured. His plan would also provide sliding-scale assistance to help families purchase comprehensive private coverage. More »

Public Health Plans Should Compete With Private Policies»

During Monday’s “Prepare For Launch: Health Reform Summit 2008,” Jeanne Lambrew, a senior fellow at The Center For American Progress, underscored the importance of government health care programs.

While conservatives often demonize government-funded health care as “socialize[d] medicine,” Lambrew pointed out that government programs “insure over one-fourth of the population and finance 45 percent of the health system“:

Over the years, a number of public programs have emerged to fill certain cracks in the system. Altogether, these programs insure over one-fourth of the population and finance 45 percent of the health system, including the safety net programs that directly pay for services for vulnerable populations.

Government programs pick-up where private insurers leave off, providing insurance for the sickest Americans. Lambrew noted that “public programs serve at least four functions”:

- Make health insurance affordable for low-income Americans

- Insure a disproportionated percent of Americans with disabilities or severe health problems

- Help private insurers manage risk by taking on the sickest and costliest patients

- Offer an alternative to private insurance

Enrollees of government programs are satisfied with the cost and quality of coverage. In fact, “research has shown that Medicare has performed as well as private insurance on costs and has exceeded it on satisfaction.” Thus, if public programs can successfully compete with private policies, “the question might be best directed toward opponents:”

Why should policymakers give private insurers the exclusive right to cover Americans? If private insurers can better meet our goals for the health system, why object to a level competition with public plans?

McCain’s Cost-Containment Plan: Reduce Access to Health Insurance»

In a McClatchy story published Sunday on the differences between Sens. Obama’s and McCain’s health plans, Paul Ginsburg, the president of the Center for the Study of Health System Change, describes McCain’s cost-containment measure:

If that tax exclusion is no longer allowed and all I get is a tax credit for $5,000, well, maybe I’ll decide a (cheaper) policy is all I need or all I can afford. I’ll get less health insurance, which means I’m going to be paying more of the cost of care, and that is a cost-containment.

Ginsberg touches on the fundamental conservative approach to containing costs: reducing access to health insurance. But as the Center for American Progress Action Fund has argued, conservative ideas on cost-containment “could deepen our health system crisis.”

The McCain plan is predicated on the idea that everyone is getting too much health care, and therefore, families should have to pay more money out of pocket in order to reduce the amount of care delivered. He also argues that higher cost sharing will lead to greater competition among providers and insurers. But research shows that higher cost-sharing can reduce utilization of needed care. And with little information available on quality of care, and even less information on costs of procedures, there is no way for individuals to become effective purchasers. All of this leaves families disadvantaged. Indeed, there is every chance that the ultimate result will be an increase in costs as opportunities for care management and preventative care are missed.

In addition, McCain would make care even more difficult to obtain because he focuses on using the individual market, which has few coverage standards. Jon Gruber, a Massachusetts Institute of Technology economist, has said:

Indeed, there is evidence that encouraging people to join such health plans might act as salt on a wound, exacerbating some of the very maladies that undermine our health care system’s ability to perform at the highest level.

Certainly, there are bipartisan ideas on cost containment. The Partnership to Fight Chronic Disease has been building support for programs on the Right and the Left to manage and prevent conditions like asthma and diabetes. But McCain’s approach of leaving persons uncovered will weaken any effort at cost containment. As Henry Aaron, a Brookings Institute economist put it, “Covering nearly all Americans is a precondition for effective measures to limit overall health care spending.”

High-Risk Pools An Ineffective Way of Covering The ‘Uninsurable’»

An editorial in today’s Washington Times suggests that Sen. John McCain’s (R-AZ) plan to insure Americans who can’t obtain coverage from the individual market in high risk pools is the “most effective way to address the safety-net problem of the uninsurable”:

The best solution is to let the health insurance market work for the vast majority of Americans and create a safety net for those who can’t get coverage. That’s what Mr. McCain’s “Guaranteed Access Plan” (GAP) tries to do…Critics like to discuss the problems facing some state pools rather than honestly acknowledging that several of them - including Maryland, Wisconsin and Illinois - work very well.

McCain argues that “people with pre-existing conditions aren’t always as expensive to insure as private companies think.” If the federal government contributed just $7 billion to $10 billion to state-sponsored high-risk pools, the 56 million “uninsurable” Americans — those Americans with pre-existing conditions who currently receive coverage through the employer-based system but will be unable to find coverage in the individual market — will have health insurance.

But McCain’s proposal both overestimates the effectiveness of high-risk pools in covering the sickest Americans and financially overwhelms public high-risk pool initiatives.

According to a forthcoming report on the implications of McCain’s health reform for people with pre-existing conditions by Stephanie Lewis, high-risk pools “have not been a viable alternative for the medically uninsured because of high premiums…and inadequate funding to subsidize the full cost of providing insurance to a high-cost population.”

Indeed, experts estimate that McCain’s $7 to $10 billion funding boost is “nowhere near enough, [to cover the uninsured] particularly given the large number of people with pre-existing conditions who would need this help if employers send their workers out to the open market”:

The history of high risk pools is one of either inadequate coverage or high costs…only 200,000 Americans are covered by state high risk pools, with health expenditures of $1.6 billion. This means that a similar national program funded at $7 billion per year would cover only 875,000 people. Even if participants had to pay half of their own premiums, as is generally the case today in state high risk pools, less than 2 million Americans would be covered.

Moreover, as the Wonk Room has previously pointed out, 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. While other states offer even harsher terms, “Maryland, Wisconsin and Illinois” – the very programs that the editorial touts– also exemplify the shortcomings of high-risk pools:

- Maryland: 6 month waiting period for coverage of services related to pre-existing conditions, $500-$1,000 deductibles

- Wisconsin: 6 month waiting period for coverage, $1,000-$5,000 deductibles

- Illinois: 6 month waiting period for coverage, $500-$5,200 deductibles, “Premiums charged are established by law at from 125%-150% of the average rates charged individuals for comparable major medical coverage by five or more of the largest insurance companies in the individual health insurance market in Illinois.“

Instead of spreading risk broadly and evenly in diversified insurance pools, McCain’s radical approach to health care policy still leaves many Americans with pre-existing medical conditions without health care coverage.

Health Group: Insurance Companies Can Leave Sick Americans Behind»

The Council for Affordable Health Insurance has released a report arguing that health insurance mandates make insurance more expensive because they unnecessarily require “insurers to pay for care consumers previously funded out of their own pocket”:

Mandating benefits is like saying to someone in the market for a new car, if you can’t afford a Cadillac loaded with options, you have to walk. Having a Cadillac would be nice, as would having a health insurance policy that covers everything one might want.

Comparing health insurance mandates to luxury cars is both disingenuous and misleading. While the Council concedes that “just because we list something as a mandate doesn’t necessarily mean it should be excluded for a standard health insurance policy,” its list of 65 benefits contains at least 16 services that prudent individuals would expect insurance policies to cover — these benefits are the wheels in the Center’s car analogy.

Indeed, states have had to require companies to cover the most basic of services: cancer medications, cervical cancer/HPV screening, ovarian cancer screening and prostate cancer screening:

- 44 states: mandate emergency services

- 50 states: mandate mammograms

- 29 states: mandate cervical cancer/HPV screening

- 28 states: mandate colorectal cancer screening

- 31 states: mandate well-child care

As the Center for American Progress’s Peter Harbage explains:

In large part, the reasons the mandates exist is because insurance companies don’t want to know if their enrollees have cancer in the hopes that person will change jobs (and insurers) before surgery is needed…And then, here is the funniest thing about the mandates, most people when they get a policy don’t look to see about well-child visits or cancer screening or anything else because, like most things in life, you don’t look for it until you need it. More than that, most people are crazy enough to think that a maternity stay in a hospital is of course part of their insurance plan. The mandate laws passed for a reason.

Moreover, the council suggests that if insurance companies could market their policies across state lines they could offer cheaper policies “by allowing individuals to get around their state’s coverage mandates and pick a less-comprehensive plan.” But lifting mandates would place the most basic services out of the reach of most Americans.

Without mandates, insurance companies would have no incentive to offer coverage for chronic conditions or expansive procedures, leaving the sickest Americans without any health insurance. In fact, insurers that continue to extend coverage for certain procedures would quickly find themselves at a competitive disadvantage with insurers that provide the least coverage.

Thus, the Council’s message is simple: health insurance should only be available to the healthiest Americans.

REPORT: Deregulation of Insurance Industry Would Create Wild West Environment»

Conservative health care plans push Americans to buy health insurance in the individual market, outside of the employer-based system. Citing the rising costs of health care, conservatives argue that consumers can find cheaper plans and exercise greater control over their health care decisions if they go out and buy their own insurance.

But their rhetoric of “freedom” and “choice” obscures the dangers and shortcomings of the individual insurance market. “While employers are guaranteed the right to purchase health insurance,” the great majority of states — which govern the individual insurance market place — do not extend the same protections to Americans who buy individual insurance policies.

In fact, according to pre-released copy of a study by Families USA, acquired by the Wonk Room, in most states “insurers can refuse to sell individuals policies based on their health, recreational activities, occupations, credit histories, and a variety of other factors” — and state governments do little to stop them:

[States] are doing very little to provide basic protections for health care consumers. As a result, many consumers are turned down from coverage or are charged unaffordable premiums or have their health claims wrongfully denied.

Indeed, the study found that “only five states prohibit all insurance companies from cherry-picking the healthiest consumers and excluding everyone else” and gave the majority of states a “failing grade in consumer insurance protection”:

- 35 states: have “no limits on how much insurers can increase premiums based on an individual’s health status.”

- 21 states: “exclude coverage for pre-existing conditions for more than one year.”

- 44 states: allow insurers to “revoke an individual’s health insurance policy without advance review by the state.”

- 20 states: do not approve premium rates before they go into effect.

- 29 states: do not require insurers to complete all medical underwriting and resolve all questions at the time of application.

As Families USA points out, “the last thing the health care system needs is a new wild west mentality…with little or no protection or oversight”:

Without adequate protections, insurers can deny coverage, charge exorbitant premiums, and even revoke people’s policies without warning.

Conservative reform initiatives would provide consumers with even less protections. By deregulating the insurance industry and allowing individuals to purchase insurance policies across state lines, without requiring insurance companies to comply with the consumer protection laws of the state, companies would offer cheaper plans to healthier Americans, while charging higher premiums — or not offering any coverage — to the sickest Americans.

Rep. Burgess Is Wrong: McCain’s Health Care Plan Would Undermine Existing Coverage»

Yesterday, speaking at the Heritage Foundation, Rep. Michael Burgess (R-TX), who helped craft Sen. John McCain’s (R-AZ) health care plan, suggested that McCain’s reforms would not push Americans to abandon their current insurance plans. TechRepublican wrote about the event:

He [Burgess] noted that when discussing health care it’s important to leave people with the notion that they don’t have to change. If you like your current health care plan, you can keep it. He noted that 62% of people in his home district are satisfied with their existing care. Bottom line: be careful about rocking the health care boat.

McCain’s proposal wouldn’t just rock “the health care boat,” it would tip it over. As the Wonk Room has previously reported, McCain’s plan to replace the current tax breaks for employer-sponsored health insurance with a one-size-fits-all tax credit places the 158 million Americans who receive their health care through their jobs in danger of losing coverage.

By equalizing the tax treatment of employer and individual plans, 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.

As the Center for American Progress Action Fund pointed out, the entire employer health insurance system could unravel, “ending this as an option for Americans who prefer it.” According to a 2007 Gallup survey, that’s a lot of people. Despite rising health care costs, 70 percent of Americans still rate their health care coverage as either “excellent” or “good.”

McCain’s plan would increase their costs and provide less coverage.

Rep. Mark Kirk: Uninsured ‘Are Overwhelmingly 20 And 30 Year Olds’»

Progress Illinois is reporting that Rep. Mark Kirk (R-IL) misled his “audience about the makeup of the uninsured population in America” during a May 10th address to the Republicans of Wheeling Township. Kirk incorrectly suggested that 15 million of the 47 million uninsured are “illegals” and that the remaining 30 million “are overwhelmingly 20 and 30 year olds working for small businesses.”

As Progress Illinois points out, Kirk oversimplifies the uninsured problem by suggesting that only undocumented Americans and young and healthy workers encounter coverage problems.

CLAIM: Fifteen million illegal aliens are uninsured.

FACT: The “National Institute for Health Care Management put the number of uninsured illegal immigrants at approximately 5.6 million,” not 15 million as Kirk suggests.

CLAIM: Americans below the poverty line have health care.

FACT: A 2007 report by the Kaiser Foundation found that in 2006, “37 percent” of Americans below the poverty level did not qualify for Medicaid and remained uninsured.

CLAIM: The uninsured are “overwhelmingly 20 and 30 year olds working for small businesses.”

FACT: Fifty-two percent of the uninsured are not in the 19-34 age range. According to the same Kaiser study, 20 percent (or 9.3 million) of the uninsured are under 18 years of age,” 39 percent of the uninsured are in the 19-34 range and 32 percent of the uninsured “are in the 35-54 age bracket.”

Moreover, today, the Commonwealth Found released a study which found that in the past four years, middle class families — not “20 and 30 year olds working for small businesses” — had the hardest time paying for health care:

The number of underinsured U.S. adults—that is, people who have health coverage that does not adequately protect them from high medical expenses—has risen dramatically…Much of this growth comes from the ranks of the middle class. While low-income people remain vulnerable, middle-income families have been hit hardest. For adults with incomes above 200 percent of the federal poverty level (about $40,000 per year for a family), the underinsured rates nearly tripled since 2003.

‘The Voice of Small Businesses’ Cool To McCain’s Health Care Reform»»

This morning, Sen. John McCain (R-AZ) addressed the National Federation of Independent Business (NFIB) summit to peddle his health care prescription:

We’re going to offer every individual and family in America a large tax credit to buy their health care, so that their health insurance is theirs to keep even when they move or change jobs. My plan would allow those who want to stick with employer provided health insurance to do so. But I want to give individuals greater choice, rather than give small business no choice at all.

While the NFIB was “one of the chief assassins of President Bill Clinton’s health care reform plan,” the organization has yet to endorse McCain’s radical health reform agenda.

In fact, the federation seems less supportive of unraveling the employer-based health care system. While not fully embracing the Wonk Room’s progressive prescription, the NFIB’s plan does not call for a complete restructuring of the tax code, suggesting that small businesses are not confident in McCain’s proposal.

As Peter Harbage wrote yesterday, McCain’s proposal is also receiving a cool reception from the larger business community. America’s biggest companies prefer to participate in “regional purchasing pools so that employers can band together in negotiating with insurance companies.” Thus, “even large companies don’t have much negotiating power when facing large health plans throwing their weight behind the concept of building.”

UPDATE: This post has been amended.