McCaincare: provocative but vague.

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Oct. 16 2007 6:30 PM

McCaincare: Provocative but Vague

The health-care primary, Part 5.

John McCain. Click image to expand.
John McCain

A principle I've tried to uphold in writing this series is that a candidate's health-care plan is not what some campaign aide says it is when speaking to a reporter on background, but rather what the candidate's own campaign literature says in black and white. As Curtis Armstrong tells Tom Cruise in Risky Business, "If you can't say it, you can't do it."

This principle was put to the test by John McCain's health plan, which is very poorly explained on the McCain campaign Web page labeled "Straight Talk on Health System Reform." This "straight talk" consists almost entirely of airy platitudes. A   multimedia page that links to a petition signing on to McCain's health plan is similarly unhelpful. (How can you sign the petition—really a fund-raising gimmick, of course—if you don't know what the damn health plan is?) Slightly more helpful is this transcript of a speech McCain gave Oct. 11 to Rotarians in Des Moines, Iowa. Even here, though, I needed help interpreting this potentially significant passage:

Like most of our system, Medicare reimbursement now rewards institutions and clinicians who provide more and more complex services. We need to change the way providers are paid to focus their attention more on chronic disease and managing their treatment. This is the most important care and expense for an aging population. And in a system that rewards quality, Medicare should not pay for preventable medical errors.

We need to change the way providers are paid.

Until now, we've heard the candidates discuss, ad nauseum, ways to change who pays doctors and hospitals for medical care—the choices being the patient, the insurer, the government, or some more-feasible blend of these three—but we haven't heard them talk about changing how those doctors and hospitals should be paid. Possible reform in this area would be far more radical than anything proposed by the Democratic presidential candidates, even if confined only to Medicare. Does McCain really mean to change how doctors and hospitals are paid? If so, how would he change it?

McCain's publicly available material doesn't say. So I broke my rule, phoned the campaign, and requested an interview with anyone who might be able to explain. In essence, I learned, McCain is challenging fee-for-service medicine, though not to the point of mandating that doctors be put on salary. Under the present fee-for-service payment scheme, doctors have an economic incentive to maximize their income by performing as many medical procedures as possible. That drives up costs, overtaxes hospitals, and threatens patients' lives. McCain deserves congratulations for taking on the fee-for-service problem, even if his proposed solution is short on specifics.

The rest of McCain's health-care plan is an uninteresting mishmash of proposals that are mostly useless and occasionally harmful.

Candidate: John McCain

Elegance: None.As noted above, clarity is a problem, too.

Market gimmicks: The main one is health savings accounts, which "put the family in charge of what they pay for, and should be expanded and encouraged." Actually, health savings accounts are a roulette game that favors young, healthy people who don't expect to get sick. If they get sick anyway, they're screwed. If they don't get sick, they're screwing those who do by reducing funds available for the larger risk pool.

Susceptibility to the insurance lobby: There's nothing I can find in this plan that would displease insurers. Indeed, McCain proposes eliminating rules that prohibit insurers from selling policies across state lines. There's nothing inherently wrong in that idea, but in implementing it insurers would surely press to eliminate existing consumer protections.

Cost: Not stated, but since the thrust of the plan is to limit expenditures rather than improve health care, that isn't much of an issue.

How universal? The plan isn't universal, butMcCain would extend a tax credit of $2,500 to individuals and $5,000 to families for the purchase of health insurance. That wouldn't come close to covering the market cost of a decent health-insurance plan, but presumably it would increase the proportion of people who purchase health insurance directly to those who receive it through their workplace.

How socialistic? There's no mention anywhere of expanding government-paid health insurance. If McCain's proposed changes to the way Medicare pays hospitals and doctors were mimicked by private health insurers, as they almost certainly would be, you could argue that constituted a pinko intrusion into the marketplace. It would be as ridiculous as the claim Republicans often make that demanding volume discounts for drugs purchased by Medicare—something the Bush administration refused to do when it expanded Medicare to include pharmaceuticals—constituted pinko intrusion into the marketplace. (To be clear, allowing the government to buy senior citizensdrugs is the pinko intrusion, one that was long overdue.) Like demanding bulk discounts, changing the way the government pays doctors and hospitals would merely be a rational exercise of the government's buying power. Calling McCain a parlor pink for proposing such a change would therefore be vile. But McCain's rivals for the Republican nomination will probably do it anyway if his poll numbers rise, and possibly even if they don't.

How disciplined? That depends on how effective McCain is in reining in fee-for-service payments. "You don't want to pay per procedure," a McCain staffer explained to me, "you want to pay per episode, per outcome." This would entail getting the various parties involved in treating a patient for a specific "episode" to coordinate their care (a good in itself with regard to patient care) and send the government a single bill. (As noted above, McCain also wants Medicare to stop paying for medical errors, which sounds reasonable.) Even episode- or outcome-based payments, though, are susceptible to profit-maximizing manipulation if coordination shades into collusion. That's why the best payment reform of all would put doctors on salary. The only way the government could exercise sufficient market leverage to do so, however, would be to institute single-payer health insurance.

Impact on employers: Favorable. The point of the health-care tax credit would be to encourage people to get health insurance on their own rather than through the workplace. As I've written before, I don't see why private businesses should pay for health care in the United States, when they don't have to in other countries.

Longevity: McCaintalks about extending the period of insurance coverage and encouraging portability of health-insurance policies, but still his plan would leave insurers focused mainly on the here-and-now rather than on the patient's health over his lifetime. Like everyone else, McCain talks about promoting competition, but greater competition among health insurers would shorten their time horizons with regard to individual patients, not lengthen them.

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