Monday, October 6, 2008

Health Care Destruction

If the Bush administration hasn't done enough to ruin our country, and by association our citizens, a McCain presidency would surely finish the job.

I have just spent several days in an e-mail discussion with an arch conservative about the economy, starting with the offshore drilling. He thinks it's a necessity and I think it would be a disaster. Neither one of us changed the others mind and he will surely cancel my vote. The consoling reverse is that I will cancel his.

I feel so much frustration in not being able to make my case better. He is adamantly against "social engineering" as he puts it. His premise is that social engineering is the entire cause of the housing crisis. While I have to agree that it certainly played a part in the crisis, I maintain that lack of oversight made it possible. In this case, there is enough blame to go around. Unintended consequences of allowing unqualified buyers to purchase houses started the problem, but it certainly was not the only cause of the unfolding disaster.

But on to the health care crisis. Again, my e-mail debater will not agree with this article as we are poles apart on politics. I do think that most of you will see the wisdom of Paul's analysis. Please make comments pro or anti.

For anyone who still thinks that John McCain's health care plan of giving a $5,000 tax credit to pay for health insurance is a good plan I recommend that they read the following article by Paul Krugman.

"Health Care Destruction

Sarah Palin ended her debate performance last Thursday with a slightly garbled quote from Ronald Reagan about how, if we aren’t vigilant, we’ll end up “telling our children and our children’s children” about the days when America was free. It was a revealing choice.

You see, when Reagan said this he wasn’t warning about Soviet aggression. He was warning against legislation that would guarantee health care for older Americans — the program now known as Medicare.

Conservative Republicans still hate Medicare, and would kill it if they could — in fact, they tried to gut it during the Clinton years (that’s what the 1995 shutdown of the government was all about). But so far they haven’t been able to pull that off.

So John McCain wants to destroy the health insurance of nonelderly Americans instead.

Most Americans under 65 currently get health insurance through their employers. That’s largely because the tax code favors such insurance: your employer’s contribution to insurance premiums isn’t considered taxable income, as long as the employer’s health plan follows certain rules. In particular, the same plan has to be available to all employees, regardless of the size of their paycheck or the state of their health.

This system does a fairly effective job of protecting those it reaches, but it leaves many Americans out in the cold. Workers whose employers don’t offer coverage are forced to seek individual health insurance, often in vain. For one thing, insurance companies offering “nongroup” coverage generally refuse to cover anyone with a pre-existing medical condition. And individual insurance is very expensive, because insurers spend large sums weeding out “high-risk” applicants — that is, anyone who seems likely to actually need the insurance.

So what should be done? Barack Obama offers incremental reform: regulation of insurers to prevent discrimination against the less healthy, subsidies to help lower-income families buy insurance, and public insurance plans that compete with the private sector. His plan falls short of universal coverage, but it would sharply reduce the number of uninsured.

Mr. McCain, on the other hand, wants to blow up the current system, by eliminating the tax break for employer-provided insurance. And he doesn’t offer a workable alternative.

Without the tax break, many employers would drop their current health plans. Several recent nonpartisan studies estimate that under the McCain plan around 20 million Americans currently covered by their employers would lose their health insurance.

As compensation, the McCain plan would give people a tax credit — $2,500 for an individual, $5,000 for a family — that could be used to buy health insurance in the individual market. At the same time, Mr. McCain would deregulate insurance, leaving insurance companies free to deny coverage to those with health problems — and his proposal for a “high-risk pool” for hard cases would provide little help.

So what would happen?

The good news, such as it is, is that more people would buy individual insurance. Indeed, the total number of uninsured Americans might decline marginally under the McCain plan — although many more Americans would be without insurance than under the Obama plan.

But the people gaining insurance would be those who need it least: relatively healthy Americans with high incomes. Why? Because insurance companies want to cover only healthy people, and even among the healthy only those able to pay a lot in addition to their tax credit would be able to afford coverage (remember, it’s a $5,000 credit, but the average family policy actually costs more than $12,000).

Meanwhile, the people losing insurance would be those who need it most: lower-income workers who wouldn’t be able to afford individual insurance even with the tax credit, and Americans with health problems whom insurance companies won’t cover.

And in the process of comforting the comfortable while afflicting the afflicted, the McCain plan would also lead to a huge, expensive increase in bureaucracy: insurers selling individual health plans spend 29 percent of the premiums they receive on administration, largely because they employ so many people to screen applicants. This compares with costs of 12 percent for group plans and just 3 percent for Medicare.

In short, the McCain plan makes no sense at all, unless you have faith that the magic of the marketplace can solve all problems. And Mr. McCain does: a much-quoted article published under his name declares that “Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.”

I agree: the McCain plan would do for health care what deregulation has done for banking. And I’m terrified."

After reading this I believe you will see the connection between the economy and health care as visualized by McCain.


Sylvia K said...

I am a big Krugman fan and never miss his column. I do agree with him completely. I just wish more people would listen to what he has to say. I was going to post his column myself later today, now I'll just refer readers to yours. I knew we thought alike!

kenju said...

What caused the housing/mortgage crisis was GREED! The greed of the big money types in all those investment banks. They should be paying for the bailout, not us!

If Medicare is canceled, I'm in big trouble.

Darlene said...

Sorry I beat you to it, Sylvia. We certainly do think alike [Great minds tend to do that. ;-).]

Right on, Kenju. We will all be in trouble if Medicare is canceled, but I think there are enough conservatives that need it that they won't let than happen. Funny, how government isn't the problem when is serves them. Ha!

Joy Des Jardins said...

I'm one of those paying high insurance premiums's awful. I never thought I'd be hoping to get older, but I'm looking forward to the day that I can go on Medicare....if it doesn't blow up in my face before that. It's all one huge stressful mess to me. Your post was very informative....thanks.

janinsanfran said...

I too am in that awful stage, as far as health insurance goes, between 60 and 65 -- and paying a private insurer huge premiums. I think Obama really showed he understood the health care problem last night in the debate.

Big John said...

In the UK we have the 'National Health Service' where everyone gets the treatment they require without receiving a bill for the cost of that treatment. We pay through our taxes. We pay a set price for drugs etc. at the pharmacy, but many, such as the elderly, get them for free. This system has it's problems, but on the whole it works reasonably well. Most European countries have similiar health care systems.

How come the wealthy USA never introduced such a scheme ?