McCain Health Plan And Tax Credit

John McCain's fix for health-care reform is based the logical Republican remedy: competition in the marketplace.

"John McCain is putting the American family in charge," said Douglas Holtz-Eakin, McCain's chief policy adviser, a former director of the Congressional Budget Office and a member of President Bush's Council of Economic Advisers.

"The basic template is to control the cost and growth of health care and to control the outcomes," he said. "It's about competition in the marketplace Let's have them compete on the right grounds -- quality of care."

The foundation of McCain's health-care strategy is his proposal to provide a tax credit of $2,500 for individuals ($5,000 for families) to buy health insurance. His campaign estimates the plan could remove 25 million to 30 million people from the rolls of the uninsured; critics contend the number would be far fewer.

At the same time, McCain proposes removing the favorable tax treatment of employer-sponsored insurance, a move that some people think will cause employers to drop health-care coverage for employees, pushing them into the private market.

"The goal of the McCain plan is to transform health care to center on Americans' choices, while providing access to quality and affordable health care for all Americans," the campaign says. "Families -- not government bureaucrats or insurance companies -- will make the decisions that best reflect their family needs."

Other provisions of the McCain plan would make coverage portable, allow insurance to be purchased across state lines, and permit reimportation of drugs.

McCain's plan is vague about cost savings.
Holtz-Eakin from McCain's campaign said the average out-of-pocket cost for an individual health plan is $5,100. For those who are turned down for insurance, coverage would be available through a fallback "guaranteed-access plan."

McCain would use "the biggest lever available" by reforming Medicare, the federal health-care program for the elderly that sets the standard, in terms of cost and service, for private health-care plans, Holz-Eakin said.

If new standards for Medicare are enacted, all health-care providers, as McCain sees it, would have to become more conscious of the quality of care to compete in a retooled health-care system that pays a single price for a cardiac bypass surgery, not the tidal wave of bills that now deluge patients after such a procedure.

Holtz-Eagin said: "Providers would have an incentive to get their act together, to share records cheaply and quickly, and even to prevent the person from having the bypass if possible. There's no incentive to do anything now.

"This is something that has to happen. We have to get something done in America on health care. None of this should be done overnight. This isn't the kind of thing where you pass a bill and you're done."

Jay Khosla, a McCain health-policy adviser who worked for then-U.S. Senate Majority Leader Bill Frist, R-Tenn., emphasizes the competition aspect. "We need to ensure that drug companies, insurance companies, hospitals and every other aspect of the health-care system compete vigorously.