About the Author

James C. Capretta

James C. Capretta

New Atlantis Contributing Editor James C. Capretta is an expert on health care and entitlement policy, with years of experience in both the executive and legislative branches of government. E-mail: jcapretta@aei.org.


 READ MORE

James C. Capretta’s Latest New Atlantis Articles

 Health Care with a Conscience” (Fall 2008) 

 Health Care 2008: A Political Primer” (Spring 2008) 

 The Clipboard of the Future” (Winter 2008)

 

 More on James C. Capretta

Text Patterns - by Alan JacobsFuturisms - Critiquing the project to reengineer humanity

Wednesday, October 8, 2008

What’s the Real Difference Between the Obama and McCain Plans? 

In Tuesday’s Washington Post, Ruth Marcus joined a chorus of columnists offering their views in recent days on the health-care plans of the two presidential candidates.

It may surprise some supporters of John McCain to find out her piece was not entirely one-sided. She offered some faint praise for the potential of Senator McCain’s tax credit plan to do some good. But she did make it clear she favored the plan put forward by Senator Obama:

Overall, Barack Obama’s health-care plan is preferable to John McCain’s. Obama’s approach—which would require employers to provide insurance or pay into a fund, subsidize those unable to afford coverage on their own and set up new purchasing pools—would cover more people and would help those who have the hardest time obtaining insurance.

But Ms. Marcus, as well as many others, is focusing on the wrong criteria in judging the plans.

The real question for the candidates is this: what is your theory of health-care cost control?

Rising health-care costs already threaten to overwhelm the federal budget—and family budgets too. If premiums continue to rise at a rate 2 to 3 percentage points above wage growth, there is no way Senator Obama will be able to sustain all of the new subsidies he is promising in his plan. And without the subsidies, enrollment in insurance coverage will decline.

Senator McCain, to his credit, has a vision for what needs to be done. He wants to convert today’s tax preference for employer-paid health insurance into a refundable tax credit in part because a reform of this kind is crucial to building a more effective marketplace for insurance and health care services. Even Jason Furman, a top health-care advisor to Senator Obama, agreed that is the case—at least up until he joined the campaign staff.

So what’s Senator Obama’s vision for cost control? He really doesn’t have one. His plan includes new public investments in information technology, effectiveness research, prevention measures, and disease management. All of these may be helpful, but no credible analyst believes these steps would materially slow cost growth absent a fundamental re-alignment of financial incentives. And the Obama plan offers no such changes.

The Obama health-care plan would never work as drawn up. Cost escalation would overwhelm it. Ms. Marcus and others shouldn’t be so easily swayed by illusory promises of expanded insurance coverage.

posted by James C. Capretta | 11:06 am
File As: Health Care