The debate between Hillary Clinton and Barack Obama over health care can hold little interest for any rational person. She wants to force us all to purchase health insurance in 2009; he would wait to see if he had achieved “universal coverage” without a mandate, and then impose one if needed (which it surely would be, under his plan). Under both of their plans, employers small and large would very likely drop their health coverage and the government would pick up the tab. Either plan would lead us to a government monopoly on health care, albeit slightly faster in Clinton’s case.
Senator John McCain’s plan, in contrast, eliminates the roadblocks the government has erected on the way to a better system of financing health care. In place of the unlimited tax break for employer-provided health care that now exists, he would offer a tax credit of $5,000 that couples could use to buy insurance — and they would get that credit whether they bought a policy for themselves or got it through their workplace. Couples who bought a policy that cost less than $5,000 could put the difference in a health savings account for use in paying out-of-pocket expenses. This shift in tax policy would raise taxes for a few people who have very expensive coverage, but cut them for many others. (Taken as a whole, McCain’s platform would cut taxes.)
The market for individually purchased health insurance should expand in response this proposal. But McCain would take an additional step to spur the development of that market. He would allow people to purchase insurance out of state, thus bypassing their own states’ regulations. The same family that cannot afford insurance in New Jersey could buy it cheaper in Pennsylvania, thanks to overregulation in the former. By freeing interstate commerce, McCain would make insurance more affordable.
Steve Parente, a professor of finance at the University of Minnesota, estimated the effects of an earlier version of McCain’s plan, with a $4,000 tax credit. He found that even that less generous plan would increase the number of people with insurance by 23 to 27 million. There will be two main lines of attack on the plan. The first is that McCain would not cover absolutely everybody, as Clinton aspires to do, or nearly everybody, as Obama does. But there is no way to do either thing without forcing people who don’t want to buy insurance to do so, increasing taxes, or increasing spending by quite a lot. (McCain’s tax shift would leave the budget roughly the same.)
The second attack is that people with pre-existing medical conditions will have trouble getting affordable coverage on the individual market. That is true. But those people already have such trouble under today’s system. McCain’s plan would lead to a system in which that problem would be reduced and perhaps eventually eliminated. Under that plan, more people would own their insurance policies and be able to take them from job to job. More people would buy renewable policies rather than first developing medical conditions and then having to switch policies. McCain’s tax credit is also sufficiently large to get most people covered.
Democrats think that the public is eager for universal coverage. We suspect that what the public most wants is affordable insurance they can take with them from job to job, without worrying about what their current employer or their next employer might do. McCain’s plan addresses those concerns, prevents a government takeover of health care, cuts costs, and sticks with the country’s tradition of limited government. Democrats who think that they own the health-care issue may be in for a rude awakening.