Tuesday October 7, 10:08 am ET
By Kristen Gerencher
Four in 10 voters don't see one plan as better than the other
SAN FRANCISCO (MarketWatch) -- As the unemployment rate climbs in the wake of the U.S. economic crisis, health coverage is becoming a bigger issue for voters. But neither presidential candidate has staked out a health-care position that is resonating strongly with Americans -- unless they are uninsured or fear they soon could be.Beyond a few overlapping ideas on preventive care and health-information technology, Sens. Barack Obama and John McCain have dramatically different views on how to fix what ails the nation's health-care system.
Yet when it comes to how Americans think the candidates' plans would affect them personally, four in 10 registered voters said they don't believe one would be better than the other, according to a new poll of 935 voters from Harris Interactive and researchers at the Harvard School of Public Health. Within that group, 13% said they didn't know if there would be a difference.
A third of voters say Obama's plan would work better for them, while 27% favor McCain's plan.
The health-care blueprints laid out by both candidates would maintain a significant role for private health insurers.
Obama's reform plan would build on the existing employer-based health insurance system, expand access to Medicaid and the state children's health insurance program and require all employers except small businesses either to offer coverage or contribute to its cost.
Obama's goal of universal coverage starts by mandating that all children have insurance and that insurers take all applicants regardless of their health status. He also wants to introduce a government-administered plan similar to the one available to federal employees that would compete with private plans in a new market he calls the National Health Insurance Exchange.
McCain's proposal doesn't aim for universal coverage but would radically change the way health insurance is financed and distributed, experts say. His plan revolves around two major themes: Changing the tax code and loosening state regulations that govern health insurance.
McCain would replace the tax exclusion workers currently get for their job-based health plans with a refundable tax credit of $2,500 for individuals or $5,000 for families, effectively making the value of insurance taxable income for the first time and encouraging people to buy coverage in the individual market.
In the voter poll, the biggest gap appeared to be on the issue of securing health insurance, where Obama carved out a lead: 45% of uninsured people said Obama's proposal would be more likely to provide them with coverage compared with just 14% for McCain, according to the survey.
What's more, 31% of currently insured people said they'd more likely be protected from losing their insurance under Obama's plan versus 19% who said the same about McCain's proposal.
Running the numbers
McCain's plan would have little effect on the number of uninsured in the beginning, but over time the number of uninsured people is likely to grow as the value of his proposed tax credit erodes relative to rising health-care costs, according to a report published in the Sept. 16 online edition of the journal Health Affairs. His plan likely would result in less-generous policies than the ones people have now, the study found.
Despite fears that all employers would drop their coverage as a result of the tax changes, it doesn't appear that would be the case, though many small employers may cease offering insurance, said Sherry Glied, co-author of the report and a professor at Columbia University's Mailman School of Public Health.
The tax changes would lead to about 20 million people initially losing employer coverage and 21 million people enrolling in individual coverage, including some who are currently uninsured and others who would lose job-based group coverage, the study found.
McCain's plan relies heavily on the individual market, where administrative costs are far higher than in the group insurance market, said Karen Davis, president of the Commonwealth Fund. "Much more of spending would be going toward administrative overhead in McCain's proposal than Obama's."
McCain's proposal tries to account for the people with pre-existing conditions who would be left out of the individual market due to prohibitively high costs or denials of coverage by creating what he calls Guaranteed Access Plans, or high-risk pools for the sick. Thirty-four states now sponsor such pools, but they cover fewer than 200,000 consumers, and it would take far more than the $7 billion to $10 billion that McCain has proposed to subsidize affordable coverage for the people who would need it, the Health Affairs report found.
Another of his ideas, deregulating state insurance rules so people could buy coverage across state lines, may result in loss of protections such as minimum benefits standards, limits on who can be excluded from health plans and access to appeals processes for denied claims.
"The worry you have is there would kind of be a race to the bottom to see which states can have the least consumer protection, and that's where the healthiest would go," Glied said. "The sick people would be left in a pool without any healthy people to bolster them."
"The other thing I think is important is fine, you're a young and healthy person now, but no one stays young and healthy forever," she said. "What does [the proposal] do to protect you now against the day when you do get older and sicker?"
Obama's plan, despite significantly broadening coverage, would leave about 6% of the working-age population uninsured compared with 17% of the non-elderly who are uninsured today, according to an analysis from the Urban Institute.
"Neither plan addresses the undocumented population," said Linda Blumberg, an economist at the Urban Institute's Health Policy Center in Washington. "They would have to continue to be served by safety-net providers."
Employers weigh in
Employers want a greater focus on health-care quality and cost and warn that a change in the tax treatment of employee health coverage would compel them to reduce the level of benefits they offer, according to a survey from law firm Miller & Chevalier and the American Benefits Council, which represents 280 major employers.
About three out of four employers said a repeal of the employee tax exclusion for job-based health coverage, the centerpiece of McCain's plan, would have a strong negative impact on their work force, according to the poll of 187 large employers whose health plans cover 10,000 to 50,000 individuals.
If workers would be taxed on the cost of health insurance above a certain threshold, 32% of companies said they'd reduce the level of coverage available either immediately or gradually, while 59% would offer a new plan option with less-generous benefits.
Changing the tax treatment would affect employees differently depending on where they live since local health-care markets vary widely in costs, said James Klein, president of the American Benefits Council.
"From the standpoint of large employers with workers spread across the country, repealing the exclusion or limiting it can have uneven results," he said, noting that another reason they object is the tax credits that would replace the current system wouldn't be indexed to keep up with health-care inflation, further exacerbating inequities.
When it comes to forcing employers to offer coverage or pay a financial penalty, a concept known as pay or play that's featured in Obama's proposal as well as in Massachusetts' current health-reform system, 46% said the move would have a strong negative impact on their work force.
"Our members have been concerned that there might be too many incentives to pay rather than play," Klein said. "Therefore the benefits that come from the employer-sponsored system would be lost."
Attitudes toward the expansion of public health programs appear mixed, with 21% of employers saying it would have a strong positive impact on workers compared with 29% who said the opposite.
The split reaction may reflect the political leanings of the respondents. Forty-six percent identified themselves as Republican, 25% said they were Democrats and 30% said they were independent.
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