McCain’s Plan

This was on Health08.org today, (a great site run by the Kaiser Family Foundation for a non-partisan look at health care policy):

The New York Times on Wednesday examined a plan by presumptive Republican presidential nominee Sen. John McCain (Ariz.) to expand high-risk health insurance pools as part of his plan to provide greater access to health insurance in an “invigorated individual market.” High-risk pools, now based in states, generally help individuals who cannot obtain private coverage because of pre-existing medical conditions or no previous group coverage.According to the National Association of State Comprehensive Health Insurance Plans, such pools have existed for 30 years and cover about 207,000 U.S. residents. “Premiums typically are high, as much as twice the standard rate in some states,” but they “are still not nearly enough to pay claims,” which has left states to cover about 40% of the cost of the pools, “usually through assessments on insurance premiums that are often passed on to consumers,” according to the Times. “Health economists say it could take untold billions to transform the patchwork of programs into a viable federal safety net” as McCain has proposed in his Guaranteed Access Plan, the Times reports. However, the “McCain campaign has made only a rough calculation of how many billions would be needed and has not identified a source for the financing beyond savings from existing programs,” and efforts to finance his proposal “will only get more difficult now that McCain has pledged to balance the federal budget by 2013, which already requires a significant reduction in the growth of spending,” according to the Times. Cost Douglas Holtz-Eakin, chief domestic policy adviser to McCain, in April estimated McCain’s health plan would cost the federal government $7 billion to $10 billion, with five million to seven million uninsured residents targeted for coverage. However, Holtz-Eakin recently said that the cost “could change dramatically” based on the plan’s structure. Holtz-Eakin and other McCain health care policy advisers — such as Thomas Miller, a resident fellow at the American Enterprise Institute, and Stephen Parente, a health economist at the University of Minnesota — said that the plan likely would cap premiums at twice the standard rates, with subsidies possible for residents with annual incomes less than 400% of the federal poverty level. In addition, financial incentives “would probably be provided to those who effectively manage their diseases,” according to the Times. “McCain’s proposal would represent a huge increase over the $50 million a year that Congress now appropriates in grants to the state pools,” but “several analysts questioned whether even $10 billion would be nearly enough, given that the states now spend about $2 billion to insure 207,000 people,” the Times reports. Karen Pollitz, a professor at Georgetown University who has studied high-risk health insurance pools, said, “They are run in ways that protect the profitability of commercial insurers,” adding, “They leave the illusion that there’s a safety net without there really being much of one”

Gil