In a McClatchy story published Sunday on the differences between Sens. Obama’s and McCain’s health plans, Paul Ginsburg, the president of the Center for the Study of Health System Change, describes McCain’s cost-containment measure:

If that tax exclusion is no longer allowed and all I get is a tax credit for $5,000, well, maybe I’ll decide a (cheaper) policy is all I need or all I can afford. I’ll get less health insurance, which means I’m going to be paying more of the cost of care, and that is a cost-containment.

Ginsberg touches on the fundamental conservative approach to containing costs: reducing access to health insurance. But as the Center for American Progress Action Fund has argued, conservative ideas on cost-containment “could deepen our health system crisis.”

The McCain plan is predicated on the idea that everyone is getting too much health care, and therefore, families should have to pay more money out of pocket in order to reduce the amount of care delivered. He also argues that higher cost sharing will lead to greater competition among providers and insurers. But research shows that higher cost-sharing can reduce utilization of needed care. And with little information available on quality of care, and even less information on costs of procedures, there is no way for individuals to become effective purchasers. All of this leaves families disadvantaged. Indeed, there is every chance that the ultimate result will be an increase in costs as opportunities for care management and preventative care are missed.

In addition, McCain would make care even more difficult to obtain because he focuses on using the individual market, which has few coverage standards. Jon Gruber, a Massachusetts Institute of Technology economist, has said:

Indeed, there is evidence that encouraging people to join such health plans might act as salt on a wound, exacerbating some of the very maladies that undermine our health care system’s ability to perform at the highest level.

Certainly, there are bipartisan ideas on cost containment. The Partnership to Fight Chronic Disease has been building support for programs on the Right and the Left to manage and prevent conditions like asthma and diabetes. But McCain’s approach of leaving persons uncovered will weaken any effort at cost containment. As Henry Aaron, a Brookings Institute economist put it, “Covering nearly all Americans is a precondition for effective measures to limit overall health care spending.”

An editorial in today’s Washington Times suggests that Sen. John McCain’s (R-AZ) plan to insure Americans who can’t obtain coverage from the individual market in high risk pools is the “most effective way to address the safety-net problem of the uninsurable”:

The best solution is to let the health insurance market work for the vast majority of Americans and create a safety net for those who can’t get coverage. That’s what Mr. McCain’s “Guaranteed Access Plan” (GAP) tries to do…Critics like to discuss the problems facing some state pools rather than honestly acknowledging that several of them – including Maryland, Wisconsin and Illinois – work very well.

McCain argues that “people with pre-existing conditions aren’t always as expensive to insure as private companies think.” If the federal government contributed just $7 billion to $10 billion to state-sponsored high-risk pools, the 56 million “uninsurable” Americans — those Americans with pre-existing conditions who currently receive coverage through the employer-based system but will be unable to find coverage in the individual market — will have health insurance.

But McCain’s proposal both overestimates the effectiveness of high-risk pools in covering the sickest Americans and financially overwhelms public high-risk pool initiatives.

According to a forthcoming report on the implications of McCain’s health reform for people with pre-existing conditions by Stephanie Lewis, high-risk pools “have not been a viable alternative for the medically uninsured because of high premiums…and inadequate funding to subsidize the full cost of providing insurance to a high-cost population.”

Indeed, experts estimate that McCain’s $7 to $10 billion funding boost is “nowhere near enough, [to cover the uninsured] particularly given the large number of people with pre-existing conditions who would need this help if employers send their workers out to the open market”:

The history of high risk pools is one of either inadequate coverage or high costs…only 200,000 Americans are covered by state high risk pools, with health expenditures of $1.6 billion. This means that a similar national program funded at $7 billion per year would cover only 875,000 people. Even if participants had to pay half of their own premiums, as is generally the case today in state high risk pools, less than 2 million Americans would be covered.

Moreover, as the Wonk Room has previously pointed out, high risk pools have many of the same draconian limitations as the unregulated private market: waiting periods, premiums that are out of reach for many families, substantial deductibles and co-pays, and limits on mental health and maternity care. While other states offer even harsher terms, “Maryland, Wisconsin and Illinois” – the very programs that the editorial touts– also exemplify the shortcomings of high-risk pools:

- Maryland: 6 month waiting period for coverage of services related to pre-existing conditions, $500-$1,000 deductibles

- Wisconsin: 6 month waiting period for coverage, $1,000-$5,000 deductibles

- Illinois: 6 month waiting period for coverage, $500-$5,200 deductibles, “Premiums charged are established by law at from 125%-150% of the average rates charged individuals for comparable major medical coverage by five or more of the largest insurance companies in the individual health insurance market in Illinois.“

Instead of spreading risk broadly and evenly in diversified insurance pools, McCain’s radical approach to health care policy still leaves many Americans with pre-existing medical conditions without health care coverage.