Inflating The Numbers: McCain’s Plan Boosts Coverage By Redefining ‘Insurance’

numbers2.jpgAfter the Lewin Group released its analysis of Sen. John McCain’s health care plan, the McCain campaign and even some in the media, have used the report to argue that McCain’s plan would cover about 20 million uninsured Americans and save millions:

Jay Khosla, McCain policy adviser: But our internal estimate all along had been that we would cover anywhere between 25 million to 30 million uninsured. Lewin said it’s about 21 million. [Kaiser Foundation Webchat, 10/16/2008]

Maria Bartiromo, host of Wall Street Journal Reports: According to a recent study by the independent Lewin Group, both candidates plans would reduce the total number of uninsured by the year 2010. Obama’s plan mandates coverage for children under 19. In the 55 to 64 age range, Senator McCain would reduce the number of uninsured by 25 percent, compared with the 52 percent under Obama’s plan. [CNBC, 10/19/2008]

McCain campaign: “A recent Lewin Group study estimated savings of more than $1,400 per American family – almost three times the savings as under the Obama plan.” []

Robert Carroll, Tax Foundation: “The Lewin Group, a respected private health-care research outfit, recently estimated that the McCain credit would increase the number of insured by as much as 21 million.” [WSJ, 10/27/2008]

But as the Wonk Room argued earlier this month, Lewin’s conclusion that McCain’s health care plan would reduce the number of uninsured by 21.1 million and cost $2.05 trillion dollars is the black-sheep of the candidates’ health care comparisons. In fact, their conclusion paints a more favorable picture of McCain’s proposal precisely because it ignores the consequences of opening the health insurance market to unfettered market competition, overstates the purchasing power of McCain’s health credit and the quality of individual health insurance plans.

Yesterday, Len Berman of the Tax Policy Center, which conducted its own analysis of McCain’s plan, similarly argued that Lewin produced its favorable numbers by “ignoring the campaign’s statements and supplying their own assumptions.

– While the campaign has said that it would allocate $7-10 billion for the Guaranteed Access Plan, “John Sheils of the Lewin Group assumed that the government would provide $470 billion in subsidies over ten years ($47 billion per year) for the GAP, half of it financed by a new assessment on insurance premiums.”

– “Sheils also concluded that Senator McCain’s proposals to limit health care costs would be effective, something my colleagues in the Urban Institute’s health policy center doubt.”

– “Sheils appears to assume that firms are less sensitive to changes in the price of health insurance than TPC does, which means that fewer firms drop coverage.”

– “There is one way that McCain’s plan might really boost coverage: if just about anything could be labeled as “insurance.” With no minimum standards, insurers could design products that cost less than the tax credit amounts, even for people with serious pre-existing conditions.”

Berman’s suggestion that McCain can significantly boost coverage by redefining “insurance” to include even the skimpiest of coverage recalls the now-infamous remarks of McCain adviser John Goodman, founder of the National Center for Policy Analysis and the so-called “father of Health Savings Accounts.” In late August, Goodman suggested that the term “uninsured” is a misnomer because Americans have ER access. According to Goodman, “only people who are denied care are truly uninsured – everyone who gets care is effectively insured by some mechanism.”

Goodman’s preposterous remarks led the McCain campaign to distance itself from Goodman, but its health care policy is very much a child of his philosophy. As the Tax Policy Center analysis demonstrates, McCain is staunchly convinced that health care costs are rising because people use too much insurance and he’s much more interested in shuffling Americans into sub prime plans in the individual market than managing health care costs by increasing access to affordable coverage.

Only by ignoring the quality of coverage can the Lewin Group, and by extension the McCain campaign, argue that McCain’s plan would cover some 20 million more Americans.