Candidates' health plans compared

Posted: October 13, 2008

DURING A discussion on health care in last week's presidential debate, Sen. Barack Obama described health insurance as a "right" while Sen. John McCain called it a "responsibility."

And the philosophical differences between the candidates don't end there.

Obama and McCain's proposals reveal starkly different perspectives on how best to provide health insurance in a country where roughly 47 million people - or 17 percent of the population - lack coverage.

"Obama is really working much more toward having universal coverage," said Linda Blumberg, a principal research associate for the Urban Institute's nonpartisan Health Policy Center. "And the coverage issue is really not the dominant one under McCain. It's much more a focus on how we can reduce health-care spending."

The McCain plan

McCain's plan would dramatically change how many Americans get health insurance. He proposes ending tax breaks on employer-provided benefits and instead giving a tax credit - $5,000 per family or $2,500 per individual - to people to buy their own coverage.

Obama has slammed the plan, saying during the debate that the new tax credit counted for little since employer benefits would be taxed.

"So what one hand giveth, the other hand taketh away," Obama said.

Experts said that the $5,000 may not cover the cost of a comprehensive plan. And they argue that the proposal would reduce the incentive for employers to offer health insurance, pushing many people into the private sector for benefits.

"If you take the tax subsidy off, a lot of employers are going to decide it's not in their best interest to provide benefits," said Thomas Buchmueller, a health economist at the University of Michigan, who co-authored an analysis of McCain's plan for the journal Health Affairs.

McCain argues that his free market approach will create more competition among insurers and give people more options. But experts said that older people and those with pre-existing conditions could have difficulty getting coverage.

"We estimate that it will be more or less a wash in how many people end up being uninsured," said Buchmueller.

Asked about the criticism that McCain would not have much impact on the number of people with insurance, McCain spokesman Peter Feldman pointed to a recent study by the Minnesota-based HSI Network LLC, which said that McCain's plan would cover half of the currently uninsured.

But that study has raised eyebrows because it differs wildly from other academic analysis - and because one of the HSI researchers helped write the McCain health plan.

McCain's plan would cost about $1.3 trillion over 10 years, according to the non-partisan Tax Policy Center.

McCain's campaign said last week that he would pay for the plan with reductions to Medicare and Medicaid, the government health plans that cover seniors, the poor and the physically challenged.

Here are the details of his plan:

* Offers a tax credit of $2,500 per person and $5,000 per family for insurance.

* Taxes benefits that people get through their employer. So if an employer provides $12,000 in benefits per worker, each worker would pay taxes on that money as income.

* Cuts Medicare and Medicaid to pay for the plan.

* Encourages the promotion of private insurance plans.

* Deregulates insurance markets so that people could buy insurance from any state.

* Would cost $1.3 trillion over 10 years, according to the non-partisan Tax Policy Center.

The Obama plan

Obama's plan takes a different approach, basically building on to the current system where most people get insurance through their employers and enhancing the options for those who lack coverage.

Buchmueller said that the Democrat approach is:

"Let's take what works and keep it and replicate it for people who don't have it."

Obama proposes creating a new National Health Insurance Exchange where the uninsured would buy coverage, as well as boosting subsidies for low-income people who lack health insurance.

In addition, Obama would prohibit insurers from denying coverage for pre-existing conditions.

He also would require employers to provide health insurance, although there would be an opt-out for small business.

Blumberg said that 96 percent of Americans would likely have coverage under Obama's plan, compared with about 83 percent today. She did question how Obama would pay for his proposals, noting that many details on how to cover the estimated $1.6 trillion cost aren't fleshed out.

McCain has attacked Obama's proposals, saying he would create government-run health care.

"If you're a small business person and you don't insure your employees, Sen. Obama will fine you," McCain said. "Will fine you. That's remarkable."

Details of Obama's plan:

* Sets up a national health-insurance exchange that offers private insurance options.

* Offers a national health-care plan for uninsured.

* Mandates that employers must offer insurance or pay a fine, with the exception of small businesses.

* Prevents insurance companies from setting prices or denying coverage due to health status.

* Mandates that all children must have coverage.

* Would cost $1.6 trillion over 10 years, according to the nonpartisan Tax Policy Center.

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