Which candidate’s health plan will hurt the most?


The basic difference in the major candidates’ proposals for “health care reform,” according to Mark Pauley, writing in Health Affairs, is that McCain recognizes that workers earn their health benefits, while Obama apparently views benefits as the employer’s money (Greg Scandlen, Consumer Power Report 10/16/08).

Obama and supporters claim that the McCain plan will cause workers to lose employer-sponsored insurance, while Obama’s will permit those who like their employer-sponsored plan to keep it.

Summarizing the only two academic studies of the McCain and Obama plans,
John Goodman writes that
, according to the Lewin study, 9.4 million would lose employer coverage under McCain, and 13.9 million under Obama. That means for every three people who lose coverage under McCain, four would lose it under Obama. The loss under Obama could be much higher. Employer-based coverage could actually increase with the McCain plan, while dropping by 60 million under Obama, according to the analysis by Roger Feldman of the University of Minnesota.

Obama promised that people buying insurance on their own would have access to the same coverage as members of Congress. The Lewin study assumes that the government-sponsored “national plan,” with the same on-paper benefits, would pay providers 25%, or even 40% less than private plans do.

Medicaid rolls would swell by 16.6 million under Obama, and shrink by 12 million under McCain, as Medicaid enrollees shifted to private plans.

Neither candidate has proposed a realistic way to pay for his proposal. The estimated 10-year cost is $2.1 trillion for McCain and $1.1 trillion for Obama (according to Lewin), and $2 trillion for McCain and $6 trillion for Obama (according to Feldman).

According to an analysis by the Pacific Research Institute (PRI), the McCain plan would help to end job lock, and result in a wage increase averaging $9,000 per year. PRI states that the Obama “job-killing” taxes would be especially harmful to low-income workers, and his reforms would lead to a “death spiral” for privately chosen health insurance (John R. Graham, “Presidential Prescriptions: Diagnosing the Candidates’ Health Reforms, PRI 10/14/08).

The McCain tax credit would correct the “arbitrary, unfair, and wasteful” distribution of tax benefits for health insurance, writes John Goodman. The Obama proposal would “build on today’s regressive, discriminatory subsidies for employment-based insurance,” while new rules would make insurers “little more than functionaries in a new federal government regulatory regime,” states Grace-Marie Turner (Health Care News, September 2008).

Senator Obama seems to be confusing a tax credit with a tax deduction, suggests Ralph Weber, who spoke at the 2008 AAPS annual meeting. A $5,000 tax credit is the equivalent of a $20,000 deduction for most families. It actually is enough to pay the average family health insurance premium in New Mexico, leaving $2,000 to start building up health savings. McCain has also proposed allowing the purchase of health insurance across state lines (FlashReport 10/16/08).

The New England Journal of Medicine shows its political colors in its Oct 16 article, “Primum Non Nocere—the McCain Plan for Health Insecurity.” It concludes that “Senator McCain’s plan does not demonstrate the kind of judgment needed in a potential commander in chief of our health care system”—assuming a “system” that has a commander in chief (David Blumenthal, N Engl J Med 2008;359:1645-1647). For balance, however, Joseph Antos of the American Enterprise Institute writes in an accompanying article that Obama’s “hopes are too audacious to be believed.” A pay-or-play mandate amounts to a tax on labor (N Engl J Med 2008;359:1648-1650).

The “usual suspects show up as savers: health information technology, prevention, and comparative-effectiveness research”—but none is “likely to produce savings any time soon,” Antos writes.

Additional information:


  1. We have seen this all before in other redistribution schemes, they never work for anybody other than those who manage and parlay the payments. Then we find out they are corrupt and criminal and then we make more laws and regulations to police the problems the government created. What is the problem with a New Yorker buying financial advice and security from Warren Buffet in Nebraska, yet must be protected from health care policies derived from Nebraska?

  2. Obama has been careful in his campaign to stress that his plan is “not government run healthcare” (even though one has to believe that his left leaning tendencies are certainly no less so than Ted Kennedy), and the silence from the usual suspects constantly calling for “universal healthcare” is deafening. Obama and the NHI usual suspects understand that the notion of complete socialization of healthcare is a campaign loser, and consequently the ultimate bait and switch is on.

    The Pacific Research Institute is on the mark stating that Obama’s plan would ultimately cause the “death spiral” for private insurance. That eventuality of course would result in the heroic action of the government taking over another failed free market service – The Bait….and The Switch.

  3. Maybe I’m completely out of the loop here, as I really don’t know much about any of these people you are talking about. What I DO know is that I have had both private and employer provided insurance, as well as COBRA. I have private insurance now, and it is a joke. What our family had through our former employer actually covered visits to the doctor and treatments, and even covered part (80%) of our treatments for things like chiropractic care. I have been paying my private insurer ( a large, well known company) for 2 years now and they have refused to cover anything. I’m essentially throwing money away. We get new coverage with our new employer in January and I’m thrilled to know that we will once again have REAL coverage. The private insurance system is a joke, and I have no idea how Ralph Weber gets the idea that a family in New Mexico can pay $3000 a year for decent healthcare. (that family is NOT getting an extra $20k a year, if that’s what he’s trying to say… they will have $5k more cash in their pocket than they did before the tax break) I am paying $200 per month for basic coverage for just my daughter, and they are covering nothing. Coverage for our family of three would have been about $1300 PER MONTH. It seems to me, that if Obama’s plan is simply using an insurer like any other large company, how can it be different than what my husband gets through his employer? I would think that congress has the best of the best as far as health plans go…?!? I’m not understanding how this gets confused with socialized medicine.

  4. The Obama campaign has taken to calling John McCain’s health-care plan “radical” and Barack Obama himself declared during debate that it would “lead to the unraveling of the employer-based health care system.”

    If ever a system needed “unraveling” this is it:

    The current system discriminates against those who seek to purchase their own health insurance, because it only offers a tax exemption for those who get insurance through their employers.
    As a result, many self-employed Americans cannot afford health insurance, even though their taxes help subsidize others.

    McCain’s plan would go a long way toward fixing this situation:

    McCain’s plan would make the system fairer by ending the tax exemption for health-care purchased through one’s employer and replacing it with tax credits of $2,500 for each individual and $5,000 for every family.