HEALTH AFFAIRS & MCCAIN’S HEALTH PLAN

The recent article in Health Affairs about John McCain’s health care reform plan is not to be taken seriously. It reads like it was written by Barack Obama’s campaign staff. John Goodman does a good job of exposing how slanted the piece really is:

Somewhat unusual for an article in Health Affairs, this piece is incredibly biased. Among other things, the paper ignores the reasons why economists tend to like proposals such as the McCain plan. That is, it ignores the expected benefits:

Among the plan’s many benefits is that it would bring more equity to the tax structure as it affects health insurance:

The current system of $250 billion in annual health insurance tax subsidies is regressive – giving families in the top fifth of the income distribution four times as much tax relief as families in the bottom fifth.  Replacing this system with a same-subsidy-for-all arrangement (as McCain advocates) seems desirable on equity grounds.

And McCain’s plan would remove the perverse incentives that cause overinsurance and overutilization:

The current system encourages wasteful overinsurance (because taxpayers subsidize up to half the costs of marginal purchases).  By contrast, a fixed-sum tax credit (as McCain advocates) subsidizes the core insurance that we want everyone to have, leaving people free to purchase additional insurance with after-tax dollars.  This type of reform seems desirable on efficiency grounds.

The plan would also remove the necessity of keeping a dead end or otherwise unpleasant job just to remain insured:

The current system’s failure to subsidize all insurance uniformly, regardless of how acquired, contributes to job lock and discourages labor market mobility.  By contrast, McCain would subsidize all insurance the same.

 McCain’s plan would also eliminate the free rider problem that leads to much “uninsurance”:

Embedded in a McCain-type proposal is a pay-or-play choice for individuals.  Middle-income families who choose to be uninsured would face up to $5,000 in additional taxes.  So there would be no free ride.  Relative to the current system, the “tax price” of uninsurance would be transparent and large.

Goodman correctly concludes that the authors had no real interest in the many benefits McCain’s approach to reform offers: 

The authors of the attack piece apparently concluded that equity, efficiency (cost control), factor mobility and political transparency are not very valuable goals – not even worth discussing! 

The transparent bias of the Health Affairs article explains why so may left-leaning bloggers normally too lazy to read Health Affairs suddenly began quoting it with such enthusiasm.

Sadly, that once-august journal has become just another media outfit publishing Democrat talking points under the guise of objective analysis.

Comments 3

  1. Jane Hiebert-White wrote:

    Just to let your readers know that Health Affairs is not “just another media outfit.” On the same day as the McCain critique was published, we also published an equally strong critique of the Obama health plan. Along with the two critiques, we published a third paper by Wharton economist Mark Pauly that looked at what elements of both plans might work together.

    Posted 25 Sep 2008 at 1:06 pm
  2. Catron wrote:

    As it happens, I linked to the critique you mention, and it’s a good piece. However, the critique of McCain’s plan isn’t merely “strong.” It is dishonest.

    As Goodman points out, it studiously ignores several very important positive features of McCain’s plan and deliberately exaggerates its defects.

    And in at least one instance (as Goodman points out at the end of his post) the authors make an assertion that is demonstrably false.

    Posted 25 Sep 2008 at 1:30 pm
  3. John A. Riolo, PhD wrote:

    Mr. Catron:

    I found your article interesting in many respects. I do not necessarily agree with every point. But I am one of a very few mental health care providers that is not totally convinced that every mandate and mental health parity is actually good for the country or even consumers of health care. The amount of fraud that goes on in health care in general and mental health care in particular should be cause to consider every option and alternative seriously.

    For example Department of Health and Human Services OFFICE OF INSPECTOR GENERAL found that One-third of outpatient mental health services provided to Medicare beneficiaries were medically unnecessary, billed incorrectly, rendered by unqualified providers, and undocumented or poorly documented. See http://www.oig.hhs.gov/oei/reports/oei-03-99-00130.pdf .

    Ironically I found your article not referenced but cut and pasted in its entirety on a left leaning discussion group pf mental health professionals. See http://health.groups.yahoo.com/group/Clinicians_Exchange/message/31253

    I am going to guess that permission to reprint your copyrighted article was never obtained. Yahoo apparently does very little to enforce their terms of user about copyrights despite several inquiries about their enforcement of their own terms of use.

    In any event some of us are interested in your views and even if you are accused of being on the right that does not mean that you are always wrong. I am not saying you are right but we do need a civil discourse on the issues. Of course it’s easy to have a civil conversation with someone who is in agreement. The challenge is to have one with someone who thinks differently.

    Thanks for your views.

    John A. Riolo, PhD

    Posted 26 Sep 2008 at 10:47 am

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