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McCain Offers Market-Based Health Plan

By Michael D. Shear
Washington Post Staff Writer
Wednesday, April 30, 2008

TAMPA, April 29 -- Sen. John McCain on Tuesday rejected calls by his Democratic opponents for universal health coverage, instead offering a market-based solution with an approach similar to a proposal put forth by President Bush last year.

McCain's belief in the power of the free market to meet the nation's health-care needs sets up a stark choice for voters this fall in terms of the care they could receive, the role the government would play and the importance they place on the issue.

Democratic Sens. Barack Obama (Ill.) and Hillary Rodham Clinton (N.Y.) have vowed government action to fulfill what they cast as a moral right for Americans to have health insurance. They favor mandates for coverage; McCain (R-Ariz.) proposes tax incentives. Obama and Clinton would impose new regulations on insurers; McCain's plan is designed to avoid direct regulation. The Democrats would build on the current employer-based system; McCain would shift to a more individual approach.

In a speech at a cancer research center here, McCain dismissed his rivals' proposals for universal health care as riddled with "inefficiency, irrationality and uncontrolled costs." He said the 47 million uninsured Americans will get coverage only when they are freed from the shackles of the current employer-dominated system.

McCain's prescription would seek to lure workers away from their company health plans with a $5,000 family tax credit and a promise that, left to their own devices, they would be able to find cheaper insurance that is more tailored to their health-care needs and not tied to a particular job.

Under McCain's plan, $3.6 trillion worth of tax breaks over a decade that would have gone to businesses for coverage of their employees would be redirected to individuals, regardless of whether they are covered by a company plan.

"Insurance companies could no longer take your business for granted, offering narrow plans with escalating costs," McCain said. "It would help change the whole dynamic of the current system, putting individuals and families back in charge, and forcing companies to respond with better service at lower cost."

Health experts predict a robust debate in the general-election campaign as anxiety about the cost of health care grows against the backdrop of a worsening economy, higher gasoline prices and rising unemployment.

"Health will increasingly become reframed as part of the broader pocketbook and economic concerns," said Drew Altman, president of the Henry J. Kaiser Family Foundation, a nonpartisan health research group. "The real health reform debate hasn't really begun -- the debate between the Democrats and the Republicans about the fundamental differences in how to reform health care."

Altman's group released a poll Tuesday showing that nearly 30 percent of Americans have faced a serious problem in paying for medical care or insurance in the past year. The survey also found that 25 percent of workers made job decisions based primarily on health-coverage considerations.

McCain's proposal is similar to one that Bush put forth in his 2007 State of the Union address. That plan, which would have replaced employer tax breaks for health insurance with a $15,000 tax deduction for married couples, flopped in Congress, failing to get even a committee hearing.

McCain's plan is aimed primarily at giving individuals the power to make health-care decisions by granting the same tax breaks for insurance whether workers get a policy from an employer or on their own. Aides call it a "radical" rethinking of health care that would drive costs down and give people more choice.

But it also leaves McCain open to criticism that he is not doing enough for the poor and sick, who could face steep premiums and limited choices as they search for an insurance company willing to cover them. Critics of McCain's plan said it would do little to help people already struggling with health-care costs.

Unlike his Democratic opponents, for instance, McCain would not mandate coverage for people with preexisting conditions who have not already been covered by a company health insurance plan. Critics say that would leave millions of people without coverage.

"Our next president has to get health-care costs under control. But like President Bush, John McCain won't stop rising health-care costs," asserts the Service Employees International Union, which has endorsed Obama, in a new television ad running in the swing state of Ohio. "When it comes to making health care affordable . . . we'll still be feeling the pain."

McCain sought to answer those charges Tuesday by saying he would create what he called a guaranteed access plan, or GAP, to help provide coverage of last resort for the sick and other "high-risk" people until the marketplace has matured enough to take care of them.

He gave few details of how such a program would work, who would run it or how it would be financed. He said it might be operated by a nonprofit organization with funds from the federal and state governments. And he said he would work with governors to solicit ideas from their experiences with similar state-run programs.

McCain advisers said such a program could cost as much as $7 billion a year. But McCain vowed not to "create another entitlement program that Washington will let get out of control." He added: "Nor will I saddle states with another unfunded mandate."

In a statement, Clinton said McCain's plan has "fundamental flaws" and charged that it would abandon millions of Americans to expensive, high-risk insurance arrangements. "Older Americans or those with pre-existing conditions would be allowed to get only one type of coverage in a high risk GAP pool," Clinton said. "That kind of arrangement does more to help insurers than individuals."

Obama spokesman Hari Sevugan said, "John McCain is recycling the same failed policies that didn't work when George Bush first proposed them and won't work now."

McCain also promised to fight for health savings accounts, a centerpiece of Bush's health-care efforts, and to lobby insurance companies for better coverage of preventive care. And he said he would provide incentives for doctors and hospitals to use cutting-edge technology to reduce medical costs.

In his own television commercial, which began running Tuesday across Iowa, McCain says, "I can characterize my approach on health care by choice and competition, affordability and availability."

The discussion about health care has for months centered on the debate between Obama and Clinton. But by highlighting his plan now, McCain is refusing to cede the issue to the Democrats.

Aides said he is driven by a belief that his rivals' approach would drive up costs and make health care less accessible.

"Clinton and Obama would put the government in charge of the choices you have to make," said Carly Fiorina, a top adviser. "John McCain's plan puts the choice, the power, the decision in the hands of the individual and the family."

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