The socialistic implications of McCain’s “free-market” health plan

Presidential candidate John McCain has admitted he doesn’t know much about economics. He doesn’t seem to know much about health care policy either, and that’s a dangerous combination.  Basically, McCain wants to blow up the employer-funded health care system and replace it with a “free-market” approach that would leave people on their own to buy (or not buy) health insurance. Don’t get me wrong, there are some merits in this approach. In particular, loosening regulation and unleashing Americans’ sophisticated consumer shopping skills could help drive down costs and accelerate quality improvements.

If McCain stopped there his plan could at least be called ideologically pure.

But inconveniently for McCain, Elizabeth Edwards has pointed out that neither she nor fellow cancer survivor McCain would be likely to find coverage under the McCain plan. Partly in response, McCain has adopted the idea of high-risk pools that would offer subsidized insurance to those at high risk. It sounds promising, but McCain’s team appears to have wildly underestimated the costs. His policy adviser, Douglas Holtz-Eakin has estimated federal spending on such pools at $7-10 billion per year. (That number should be a red flag; no serious, national health care proposal could possibly cost so little.)

If McCain’s plan were actually implemented, the number of uninsured would certainly grow. In addition to those who lack insurance now, many currently insured employees would find coverage unaffordable or unavailable and their coverage would lapse.

Since it’s becoming politically unacceptable to let this happen, the high-risk pools would have to be awfully big. Before long we could end up right where we don’t want to be: with the high-risk pools comprising a large portion of total health care spend, e.g., a single payer system (except without the healthy people). That would be ironic.

June 2, 2008

3 thoughts on “The socialistic implications of McCain’s “free-market” health plan”

  1. I have been pushing for this for quite a while. Health insurance should be based on the same model as auto insurance. Each State has a pool for high risk drivers so that kind of set up can be used for people with pre-existing conditions..

    The main benefit of this style is that it allows the risk to be opened up to an entire zip code rather than the number of employees in each company. That is the way the risk pool is figured out now, by the number of employees in the company which of course increases the price because of such a small risk pool.

    Also removing them from under the company benefits removes the insurance companies from ERISA laws as well and puts them in State arena. I particularly do not like McCain nor do I don’t like any of the offerings this cycle but we’ll have to live with one of them. I think the biggest issue is there is no action being taken on what drives health care cost up the most and that is tort reform. Of course, those pushing for universal health care are lawyers. Take care of that and I’d bet a huge reduction occurs because now not so many tests are done for the lawyers.

  2. When it come to health insurance, the plan that would hurt our economy the least is Hillary Clinton’s plan. Everyone would have health insurance. WA, NJ, NY and a few other states who have already tried Obama’s proposed health insurance plan of not mandating coverage have driven out of their states the better insurance companies. When anybody can get health insurance without having to go through medical underwriting, people won’t get coverage until they need absolutely need it. Usually because of a serious illness. This causes health premiums to sky-rocket. That’s because insurance companies are only paying claims for unhealthy people. The plans in these states tend to not be that great either. If everyone has health benefits, the premiums would be less because healthly people would factor in on determining the premium.

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