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.Â 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