The Cabinet of Dr. Obama
Dissecting the health care proposals of Obama and McCain.
Oct 20, 2008, Vol. 14, No. 06 • By YUVAL LEVIN
Where McCain seeks to address the problems of our health insurance system by building a market for private individuals, Obama seeks to do so by building a public-insurance system. His plan would force all but the very smallest businesses to either provide insurance coverage that meets the plan's requirements (which the Obama campaign has not specified, but would surely involve extensive particular coverage mandates like those in the federal employee health plan, which exceed what most popular employee plans provide today), or pay a tax to the government. Many employers would thus face the choice of increasing their insurance costs to comply with the new coverage requirements or dropping their workers' coverage. Obama, meanwhile, would create a new government-run insurance program (funded by the new tax on employers who don't offer coverage) that would compete with private companies to cover people who are not insured by employers.
In effect, the Obama plan creates an incentive to drop employees from existing plans, and then takes private insurers out of the race to cover them by using price controls to make the public option cheaper. The plan's goal is to drive Americans into a public Medicare-like insurance system by default.
The effect would be dramatic. An analysis by the Lewin Group suggests this approach would result in between 32 million and 52 million people moving from employer-provided coverage to the public system (depending on the rate of the "pay or play" tax on employers, which the Obama campaign has yet to specify). A recent analysis by HSI argues that "The offering of a public health plan will practically eliminate the group market medium PPO plan design that has been the most popular [employer-based] plan to date."
The Obama plan would also cost more than $400 billion a year, would impose a new burdensome tax on employment through the pay or play provision at a time of already rising unemployment, and, according to the Tax Policy Center, would increase the health care costs of taxpayers in the top 40 percent of the income range. All of this, HSI estimates, will reduce the number of uninsured Americans by about 25.5 million people, while McCain's plan would reduce it by more than 27 million.
Simply put, Barack Obama's criticisms of the McCain health care plan--that it would raise taxes and decimate employer-based coverage--apply far better to his own proposal.
The case for McCain's plan can be made very plainly: If you like your coverage as it is, the plan will let you keep it and you will pocket a little more money at tax time. If you don't like your coverage now, the plan will give you a lot more options to choose from and let you use the same money your employer now uses to pay for them. And, if you don't have insurance today, the McCain plan will offer you more options, reduce costs in the market for individual insurance, and put you $5,000 closer to having health insurance. Obama's plan would push tens of millions of people out of private insurance they like and into a vast government program. It would, moreover, raise taxes on hiring in hard economic times and break the federal budget.
It is John McCain, not Barack Obama, who should be pushing hard on health care in the next debate.
Yuval Levin is the Hertog fellow at the Ethics and Public Policy Center and senior editor at the New Atlantis magazine. His new book, Imagining the Future: Science and American Democracy, will be published this month by Encounter Books.