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