Politics & Policy

Obama’s Mediscare Tactics

John McCain will suck your blood and leave you for dead. Or not.

Watch out Joe the Plumber: Under John McCain’s health-care proposal, you’ll get hit with the biggest tax hike in history and you could lose your health coverage.

That, in a nutshell, is the argument forwarded by the Barack Obama campaign. In the dying days of the campaign, they’ve upped the ante, airing ads that portray the McCain plan as so expensive that he’ll need to gut Medicare to pay for it — a threat, then, to the middle class and their elderly parents. Obama, however, is committing the political equivalent of malpractice: confusing tax reform with tax increases, half-quoting studies, and misstating his opponent’s ideas. These attacks speak more to the mendacious politics of Obama than the worthy policies of his opponent.

#ad#Start with the new ad running in swing states. It claims that a McCain administration will need to cut $882 billion from Medicare over the next decade to fund his health reforms. Obama pushes further on the stump, claiming a 20-percent Medicare benefit cut next year. “You’ll pay more for your drugs; you’ll receive fewer services; you’ll get lower quality care… it ain’t right.”

Grannie, don’t get your gun just yet. The McCain campaign maintains that their health care reforms — first and foremost a refundable tax credit of $5,000 for every family — will offset new costs by finding efficiencies in public programs. What then of the cuts? The figure comes from a partisan action fund led by the head of Sen. Obama’s transition team — about as credible as quoting the candidate’s spouse. CBSNews.com describes the ad as a “among the biggest whoppers of the whole campaign.”

The McCain campaign has committed itself to reforming Medicare, not cutting it. On the to-do list: paying for outcomes, adopting electronic health records, and eliminating fraud. These ideas may or may not work, but McCain’s position is virtually identical to his opponent’s, who also claims that billions will be freed up in the process.

Obama’s campaign, however, hasn’t just fear-mongered about Medicare. Consider the other attacks:

The tax hike. Obama campaign ads charge that McCain’s health-care proposal will result in the “largest middle-class tax increase in history.” Sen. Biden explained in a speech: “It will cost the middle class over $1 trillion dollars in additional taxes . . . you almost don’t believe what I’m telling you, because it sounds so wrong.” Actually, he is wrong. Yes, the McCain plan will tax health benefits, but it will also offer tax credits to families. As the Washington Post noted: “By most independent calculations, the McCain plan will leave most taxpayers better off in strictly financial terms, at least until 2013.” Such estimates show middle class earners doing well through the next decade.

The disappearing $7,000. Sen. Obama explained in the last debate: “the average policy costs about $12,000. So if you’ve got $5,000 [in a tax credit] and it’s going to cost you $12,000, that’s a loss for you.” As Sen. Biden quipped in the vice presidential debate: “I call that the ‘Ultimate Bridge to Nowhere.’” Strong rhetoric — but the tax credit isn’t meant to cover the cost of the insurance plan, it’s meant to replace the value of the employer’s tax advantage. In fact, the Lewin Group criticized the McCain plan as being overly generous for middle Americans, leaving them with a robust tax reduction.

The new wave of uninsured. In the final debate, Obama claimed that 20 million Americans will lose employer-coverage under McCain’s plan. As his ad notes, the plan will end up “raising costs for employers who offer health care, so your coverage could be reduced or dropped completely.” But McCain’s plan doesn’t touch the employer deduction on health benefits (including the payroll tax) — which makes it difficult to see why companies would suddenly ditch their insurance policies. That said, it is true that a commentary in Health Affairs did speculate that some 20 million Americans would stop getting employer-based coverage. It also suggested that 21 million would buy on the market. Actually, every estimate predicts that the McCain plan will lead to a drop in the number of uninsured: by 5 million (the Tax Policy Center), 21 million (the Lewin Group), or 27.5 million (HSI). The last two studies, incidentally, conclude that more employees will lose coverage under the Obama plan.

McCain’s proposal isn’t “radical” or “catastrophic for your health care” — to use the words of Obama. It simply offers to give families the tax advantages they’d enjoy with employer-based coverage should they choose to opt out and get coverage through their church, trade association, or union. As Jason Furman, now economic policy director of the Obama campaign, noted in February: “The most promising way to move forward in all three dimensions — coverage, cost, and long-run fiscal situation — is to replace the employer exclusion with a tax credit.”

McCain’s health-care proposal may not be perfect. But the Obama campaign isn’t offering a reasoned critique, it’s smearing the man. Obama, it seems, preaches post-partisanship but practices the politics of Mediscare.

– Dr. David Gratzer, a physician, is a senior fellow at the Manhattan Institute. His latest book, now in paperback, is The Cure: How Capitalism Can Save American Health Care.

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