The recent economic downturn is forcing states to “scale back safety-net health-coverage programs,” USA Today is reporting. Medicaid, which eats up 17 percent of state budgets is on the chopping block and millions of low-income adults and children are in danger of losing their health insurance.

Sen. John McCain’s solution is to push even more people off the rolls. As the Wonk Room reported, McCain recently proposed cutting $1.3 trillion from Medicare and Medicaid to plug the $1.3 trillion funding gap in his budget-neutral health care plan. And while the campaign has argued that McCain will make up the shortfall by finding trillions of dollars worth of “savings,” most observers disagree.

CAPAF’s very own Peter Harbage, for instance, who conducted the initial analysis of the effects of McCain’s cuts on both Medicare and Medicaid had released a new report documenting the consequences of McCain’s proposed “savings.”

According to Harbage, “the only way for Sen. McCain to achieve his goal is to slow Medicaid growth to 5.5 percent per year –well below what is would take to maintain enrollment growth and match the rising costs of medical care.” To accomplish this, McCain would have to lock in federal spending limits “through so called block grants, which deliver federal funds according to pre-set budget limits rather than on a needs basis, as is now the case.”

In other words, as unemployment creeps up and more Americans lose their health insurance (a 1 percent increase in unemployment resulted in 1 million more people enrolling in Medicaid and SCHIP and another 1.1 million more people uninsured), the federal government will sit on its hands, offering no extra Medicaid funding. Here are the consequences of McCain’s one-size-fits all block grant:

- Total program cut of $738 billion over 10 years

- 29 states could lose more than $5 billion in federal Medicaid spending over 10 years

- Every state could see a reduction of more than $1 billion in total Medicaid spending (federal and state) over 10 years

By limiting average annual growth to 5.5 percent — compared to the estimated 5.9 percent growth rate needed to keep up with medical inflation and Medicaid enrollment growth, states will have to make cutbacks in “program, eligibility and benefits or both.”

Today, the Center for American Progress and the Institute on Medicine as a Profession released The Health Care Delivery System: A Blueprint for Reform, a wonkish compilation of policy recommendations for reforming the health care delivery system.

The book, which assumes the implementation of a national heath care system, transcends popular campaign rhetoric to offer policy makers concrete solutions for transforming the health care system into an organization that places patient care ahead of insurer profit.

The questions are this:

- What specific measures can Congress and the next President adopt to transform the American health care system to promote quality, efficiency, patient-centeredness, coverage and wellness?

- What can we do to build up the health care infrastructure (workers, tools, and knowledge), fix the health organization (in which doctors don’t work as integrated teams to coordinate patient coverage), improve the quality of care, and encourage patient participation in the management of chronic diseases?

The answers, while complex and numerous, all rest, to one extent or another, on payment reform.

Most payment today is fee for service, “meaning that each service a doctor provides is paid for separately.” Doctors are discouraged to refer patients to complimentary providers — undermining coordinated care and holistic treatment initiatives — because it does not affect what they receive for their services. The more services doctors provide, the higher their compensation, and high-quality services are not compensated any more that poor quality services. Our payment system rewards action, not health management.

Moreover, Medicare reimburses specialists at a higher rate than primary care physicians and the number of family doctors is plummeting. Solo doctors don’t have a monetary incentive to treat patients in an efficient and holistic manner and in some cases even lose money. Doctors don’t have a financial incentive to adopt electronic records because using paper files allows them to perform more procedures and receive greater compensation. Why eliminate profitable redundancy?

The financial incentives are plain backwards. The current payment system discourages the kind of organization that values patient well-being above physician or insurer profit. To that end, the blueprint for reform recommends a better alignment between payment and outcome and a system that more accurately reflect relative costs of providing different services.

To read the entire blueprint, click here. Today, CAP also hosted an event on the blueprint featuring prominent health care experts. Find out more here.

In the final days of the election, the McCain campaign has significantly altered its health care rhetoric. Initially arguing that McCain’s health care plan would allow voters to abandon their employer-based insurance plans for cheaper options on the individual market, the campaign is now emphasizing the importance of group coverage.

Senior McCain adviser and implosion watch subject Douglas-Holtz Eakin created a firestorm after effectively conceding the inferiority of individual health care plans on Tuesday, and Rep. Michael Burgess (R-TX) is all too eager to follow his lead.

While stumping for McCain’s health care plan, the three-term congressman attempted to combat critics who charge that McCain’s plan “basically blows up the current system“:

Burgess agreed that many workers wouldn’t initially drop employer-sponsored coverage. He said the cost of individual plans would drop if insurers were allowed to offer plans across state lines, as Mr. McCain favors.

“The price for the policy goes down if you increase the size of your pool,” he said.

Progressives have long argued that larger risk pools effectively spread both the risk and cost of health insurance across a wide spectrum of the population, allowing healthier people to subsidize the sick. McCain plan flips this principle on its head, breaking up employer-risk pools and shuttling everyone into an individual plan.

By Burgess’ own definition, if you adopt McCain’s health plan and decrease “the size of your pool,” “the price for the policy” goes up.

Insurance companies will seize on anything to increase insurance premiums, and gender is no exception. An article in today’s New York Times points out that insurance companies rate-up individual insurance policies for women, forcing us to pay much more than men for identical coverage.

Since the individual market offers a raw deal to those who actually use care, women — who use maternity care and are more likely to have certain chronic diseases — may have a harder time finding affordable coverage than their male counterparts. A 30-year-old woman pays “31 percent more than a man of the same age in Denver or Chicago” and in Iowa, “a 30-year-old woman pays $49 a month more than a man of the same age.”

But Senator John McCain refuses to end this discrimination. McCain’s plan would make it even easier for insurers to cherry-pick the healthiest individuals who use the least amount of care. When asked why he didn’t support leveling the playing field and preventing insurance companies from covering only the healthiest and cheapest Americans, McCain replied that insurance companies should be able to decide who they cover and what they charge:

Q: Why not level the playing field, prevent insurance companies from cherry picking and let them compete on a level playing field?

MCCAIN: Because then I think then we would be mandating what the free enterprise sytem does and that would be, obviously, something I would not approve of.

Watch the ad from Health Care For America Now!:

I have often argued that buying health insurance is not the same as purchasing a refrigerator or a microwave. Health insurance is not another consumer good for which everyone pays the same price. Sick people are more expensive to insure than healthy people, the old accrue more cost than the young. For this reason, Senator John McCain’s belief in the dysfunctional and discriminatory individual market is fundamentally at odds with the point of health insurance, which requires that we share risks and pool costs.

Insurance companies should not be allowed to use a woman’s ability to become pregnant as an excuse to charge women more for health insurance. Unfortunately, by deregulating the individual market, Senator McCain would give insurance companies a free pass to continue charging women more for their health care.

On Monday, during a discussion about health care policy, CAPAF Senior Fellow Elizabeth Edwards underscored the burden of administrative costs on the health system:

I ran into a woman who had worked in a hospital in Vancouver and she had moved to Boston. I met her in one of the New Hampshire primaries. And she said she worked in the accounting office in the hospital, and went to a hospital in Boston to get a job. Same number of beds in the hospitals. She got a job. She had worked in an accounting office with 6 people, she now worked in an accounting office with 600 people. Your health insurance dollars are being used to pay those 600 people. It is not an efficient use of our money.

Watch it:

Reducing administrative costs should be an important part of any serious cost-containment strategy. Unfortunately, Sen. John McCain’s reliance on the individual market would bolster the health bureaucracy and further grow the size of accounting offices.

That’s because marketing, medical underwriting, rescission, and increased paperwork for individuals leads insurance companies in the individual market to spend 29 percent of premium dollars on administrative costs, more than double the average amount in the group market.

As McCain adviser and individual market-proponent Douglas Holtz-Eakin admitted, employer based coverage “is way better” than a comparable plan in the individual market because the latter charges more for identical coverage. In fact, according to a study published in Health Affairs, higher administrative costs, along with other factors, increase the cost of an individual plan by an estimated $2,000.

So McCain’s push to get more Americans into the individual market, will have you paying more for less. As Peter Harbage points out, “shifting coverage from the group coverage market to the individual insurance market could generate as much as $20 billion in new administrative costs—which represents an increase of more than 20 percent in 2007 dollars.”

After 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.” [JohnMcCain.com]

- 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.

Read more

Earlier this month — after previously maintaining that Sen. John McCain’s health care proposal would lower costs by allowing healthier Americans to find cheaper coverage in the individual market — McCain senior policy adviser Douglas Holtz-Eakin argued that “younger and healthier employees with the McCain health care tax credit will have a bigger incentive to stay with the employers“ because employers offer better coverage than individual health care plans.

At the time, the Wonk Room considered Holtz-Eakin’s remark an unfortunate, if somewhat desperate argument, which betrayed a disorganized campaign frantic to convince voters that they won’t lose their employer-sponsored coverage.

But as the days passed and the campaign moved into its home stretch, Holtz-Eakin’s comments ranged from the bizarre to the truthful:

- On CNBC, Holtz-Eakin asserted that “you can’t cut taxes for 95 percent of the American people, if just under 50 percent aren’t paying taxes” and then claimed that McCain would cut taxes for “everybody.”

- Last week, during a segment on Bloomberg television, Holtz-Eakin finally admitted that temporarily cutting the capital gains tax would overwhelmingly benefit millionaires

- On Bloomberg, Holtz-Eakin conceded that McCain’s health care tax credit wouldn’t cover the entire cost of a comprehensive health plan and would only allow some Americans to buy insurance in the individual market.

- On Face the Nation this Sunday, Holtz-Eakin seemed to argue that carbon dioxide is not a pollutant.

And so it is with great fanfare and anticipation that the Wonk Room unveils The Holtz-Eakin Implosion Watch, a semi-regular series chronicling Holtz-Eakin’s truthiest moments in the waning days of the campaign.

Today, Holtz-Eakin again strays off message, telling CNN, “younger, healthier workers likely wouldn’t abandon their company-sponsored plans“:

“Why would they leave?” said Holtz-Eakin. “What they are getting from their employer is way better than what they could get with the credit.”

Hotlz-Eakin argues that “under McCain’s plan, employer-funded care will generally be preferable to the tax credit alone — since it’s the tax credit plus the employer contribution — but that the tax credit alone will be a huge step up for people who have nothing at all.” In other words, in the individual market, without the employer contribution, Americans would have to pay more for less…and less as McCain’s tax credit does not keep up with medical inflation.

In fact, high deductible plans typically lead to higher out-of-pocket expenses, resulting in “a one-time shift in spending from premiums to patient out-of-pocket outlays.” As Holtz-Eakin himself points out:

McCain’s would leave them better off than they are now, but still with something less than complete coverage, unless they reach into their pockets to supplement the tax credit.

Oddly enough, Holtz-Eakin is now arguing that under McCain’s health care plan (which pushes about 20 million Americans out of the employer market and into the unregulated individual market), Americans would receive sub-prime health care coverage.

Should Sen. Barack Obama (D-IL) win the election, most health care analysts predict that SCHIP expansion will kick-off a larger effort of health care reform. In 2007, despite broad bipartisan support and the urging of governors, President Bush vetoed two separate bills (HR 976 and HR 3963) that would have extended health care coverage to some 10 million children.

In preparation for the next SCHIP battle, the Wonk Room has compiled the voting records of politicians up for re-election who opposed SCHIP expansion:

Name	HR 976	HR 3963
Sen. Mitch McConnell (R-KY)	No	No
Sen. Elizabeth Dole (R-NC)	No	No
Sen. Saxby Chambliss (R-GA)	No	No
Sen. Roger Wicker (R-MS)	-	No
Rep. Michelle Bachmann (R-MN)	No	No
Rep. Bill Sali (R-ID)	No	No

Along with the president, the above complained that the bipartisan compromise would “raise taxes on working Americans,” add “nonpoor children to the program” and encourage “many to drop private coverage, to go on the government-subsidized program.”

Despite their claims, however, “the overwhelming majority of children who would gain health coverage under the emerging agreement are precisely the low-income children the President says he wants to focus on.” A Congressional Budget Office analysis of the SCHIP the first bill found that the overwhelming majority of those who would gain coverage under the bill have incomes below states’ current SCHIP eligibility limits. Two-thirds of “those who gain SCHIP coverage…would otherwise be uninsured.”

The importance of covering children cannot be overstated. Publicly insured children are “more likely to have asthma, learning disabilities, and/or health conditions that require regular treatment with prescription medications.” Medicaid and SCHIP, in turn, “provide access to the medical care that can treat these problems and help children grow, function, and learn more effectively.”

Ninety-one percent of Americans want “Congress to help states cover more uninsured children.” The next President and Congress will have a unique opportunity to channel this consensus towards concrete health care reform, of which SCHIP will only be the beginning.

In today’s Wall Street Journal, Robert Carroll lays out the conservative philosophy for health care reform. Like Sen. John McCain, Carroll believes that the employer-insurance subsidy contributes to higher health care costs by encouraging overutlilization of care. “The subsidy encourages people to buy bigger policies that cover more, and leads to greater health-care spending,” Caroll argues.

Eliminating the income-tax exclusion “should reduce private health-care spending; to the extent this reduced the cost of health care, it should also put downward pressure on the growth of Medicare and Medicaid costs.”

But in shrilling for McCain’s plan to dismantle the employer-based system and push Americans into high-deductible plans in the individual market, Carroll gets the consequences of leaving individuals responsible for financing their own health care entirely backwards.

According to a Commonwealth study, for instance, the major effect of a high deductible is likely to be “a one-time shift in spending from premiums to patient out-of-pocket outlays.” Premiums to employers and workers would be reduced by 10 to 15 percent, “but most of that reduction would be a reduction in covered medical outlays and a shift to out-of-pocket expenses for which patients would be responsible,” a Commonwealth study concluded.

Shifting the risk and cost of health insurance onto the individual will increase medical debt and discourage preventive care utilization. In fact, adults enrolled in high-deductible insurance plans (with deductibles of $1,000 or more) reported one of four cost-related access problems:

- because of cost did not fill a prescription

- did not see a specialist when needed

- skipped a recommended test treatment, or follow-up

- had a medical problem but did not see a doctor

Encouraging more people to skimp on preventive care, could fuel growth in health care spending, not reduce it. In fact, advocates of so-called consumer driven health care plans, miss the forest for the trees. The sickest 20 percent of Americans account for 80 percent of health care costs. Yet consumer plans would do little to lower the costs of their care and may actually add to their ranks.

Carroll proclaims that “Almost Everyone Would Do Better Under the McCain Health Plan.” In truth, it’s difficult to think of anyone — the not-yet sick or the already sick — who would benefit from punting needed care because of higher cost.

The Wall Street Journal released an editorial on Saturday with the outrageous argument that Sen. Barack Obama’s “own health-care advisers support plans much like Mr. McCain’s,” which replaces the current employer-based coverage tax preference with a straight tax credit, “or at least they did before joining up with Mr. Obama.” The Journal’s erroneous claim rests on the fact the Obama advisors Jason Furman and David Cutler – like other notable Democratic voices in health care arena – have commented that tax credits could be part of health reform and that our current tax exemption for health insurance could (or should) be revamped. Sen. McCain has called for tax credits and eliminating the health insurance tax exemption on income taxes.

But the Journal pulls quotes out-of-context and completely ignores the fundamental differences in the thoughtful, comprehensive Democratic prescriptions for change as compared to the radical approach from Sen. McCain.

While the employer-based system isn’t perfect, it plays a crucial role in connecting Americans to coverage by encouraging risk pooling through employer policies and guarding against adverse selection. Ending that employee tax deduction without additional reforms—reforms opposed by Sen. McCain—will weaken our health care system. Sen. McCain’s health care plan is based on ultra-conservative ideology: give every American a flat, “one-size-fits-all” tax credit; end government oversight of insurance companies; force people to buy insurance on their own; and, let the market run, no matter the consequences on real people. Even former Federal Reserve Chairman Alan Greenspan has now conceded that lazzie-fare economics is a failed belief.

In the Health Affairs article cited by the Journal in making their flawed argument, Furman himself makes the case against a McCain-type plan. A plan like that proposed by Sen. McCain could “cause a large number of employers to drop coverage . . . the number of uninsured people would rise.” What are Furman’s suggestions for reforms to be paired with a change in the tax code?

- Expanding Medicaid and SCHIP

- Creating an insurance exchange

- Reinsurance

- Allowing people to buy into public plans

Sound familiar? Yes, those would all be the core elements of the Obama health care plan. Read more

Our guest blogger is James Kvaal, a Senior Fellow at the Center for American Progress Action Fund.

How much will Sen. John McCain cut from Medicare and Medicaid to pay for his new tax credits? McCain advisor Douglas Holtz-Eakin said that our estimate of $1.3 trillion – based on the work of the Tax Policy Center – is “false.” But he has refused to provide his own number or to endorse any of the independent estimates.

Holtz-Eakin also claimed that he could save “on the order of $2.6 trillion over 10 years” by cutting wasteful Medicare spending, without affecting benefits at all. If that’s true, than Obama’s plan – which costs $1.6 trillion – could provide universal health care coverage while saving $1 trillion.

There are only 10 days until the election. If the McCain campaign successfully avoids all the difficult questions on who, exactly, is paying for its trillions in tax breaks, than no future presidential candidate will have any reason to be honest in their budgeting. And if McCain actually becomes president, then he will have learned that he can put out whatever numbers he wants, or not, and leave all of us guessing about his true policies.

For more on this, read the new analysis released yesterday by the Center for American Progress Action Fund.

Sarah Palin delivered her first major policy address today, promising to care for “children with special needs [who] have been set apart and excluded” and to “fully fund the Individuals with Disabilities Education Act.”

Like most Palin events, it was difficult to watch. Gone were the baseless political smears and innuendos, but the deception remained. And while Palin’s devotion to special needs education and care is genuine, her speech betrayed intellectual dishonesty and opportunism.

McCain’s health care plan excludes millions of Americans with preexisting conditions or disabilities from coverage. It fractures employer-based risk pools and leads individuals into a wrestling match with insurance companies. It undermines in-state consumer protections that guarantee coverage for mental health parity, general mental health, well-child care, home health care and autism. It leaves the parents of disabled children to seek-out an insurance company willing to take-on a child who will require a tremendous amount of care and treatment.

But what hope is there that an autistic child will find coverage in the individual market if 7-month old baby Cecilia was denied insurance because she spit up milk? Nine out of ten Americans can’t find affordable insurance when they subject themselves to the rigorous process of medical underwriting, to say nothing of disabled Americans who require more expensive treatments and care. They are the true-uninsurables who, in not contributing to an insurance company’s bottom line, are typically denied coverage.

Palin is a confident and compelling spokesperson for special needs children. But what the campaign gains in charisma, it loses in credibility. Palin promised to “fully fund the Individuals with Disabilities Education Act,” explaining that “this is a matter of how we prioritize the money that we spend”:

We’ve got a three trillion dollar budget, and Congress spends some 18 billion dollars a year on earmarks for political pet projects. That’s more than the shortfall to fully fund the IDEA. And where does a lot of that earmark money end up? It goes to projects having little or nothing to do with the public good — things like fruit fly research in Paris, France, or a public policy center named for the guy who got the earmark. In our administration, we’re going to reform and refocus. We’re going to get our federal priorities straight, and fulfill our country’s commitment to give every child opportunity and hope in life.

Prioritization aside, in his 28 years in the senate, McCain has repeatedly voted against IDEA funding and other special needs initiatives. In fact, according to the National Education Association, McCain’s plan to freeze discretionary spending would reduce authorized federal grants for Special Education by $12,525,218,429. Mark Schmitt points out that “fully funding IDEA, while implementing a spending freeze on that category would require cutting every other domestic program by an average of 6.4 percent. That would include Pell Grants, the Low-Income Home Energy Assistance Program, WIC, clean-energy research, Section 8 housing — dozens and dozens of programs.” Moreover, his recent call for Medicaid cuts will surely have a negative impact as states grapple with budget shortfalls.

Palin’s dismissal of all earmarks is similarly disingenuous. In fact, a simple search of Office of Management and Budget website revealed at least 19 autism-related projects in the 2009 budget:

- $100K to Marywood University, Scranton, PA, for campus-based autism education programs

- $250K to Parents as Teachers National Center, St. Louis, MO, to develop research-based materials and training for home visiting professionals for families of children with autism

- $200K for Southern Penobscot Regional Program for Children with Exceptionalities, Bangor, ME, for services for families with autistic children

All earmarks are not created equal, and neither are priorities. McCain and Palin routinely run around the country scaring Americans about the dangers of expanding SCHIP and Medicaid for poor and sick children, but the great threat of socialism is avoided when the government funds medical research or other special needs initiatives.

In short, Palin’s rhetoric is tough to square with her record, McCain’s individual market-centric health care plan, and penchant for gutting all forms of government programs.

Pat Garofalo points out that after numerous denials, McCain’s senior policy adviser Douglas Holtz-Eakin finally admitted that temporarily cutting the capital gains tax would overwhelmingly benefit millionaires. But Holz-Eakin’s truth-telling didn’t end there. During the segment on health care, McCain’s aide conceded that McCain’s health care tax credit wouldn’t cover the entire cost of a comprehensive health plan and would only allow some Americans to buy insurance in the individual market:

Now, the McCain plan does in fact have a $5000 credit…It doesn’t pay for the full cost of insurance. It provides a subsidy to the private entity — sector. And while it will allow some people to buy insurance, the average policy nationwide for a family plan in the individual market is something like $5100.

Watch it:

The Wonk Room has long argued that McCain’s plan would give you a $5,000 credit to buy a $12,680 plan and force you to find a sub prime health care plan with fewer benefits and higher costs. Yesterday, the McCain campaign agreed!

UPDATE: More on the campaign’s confused health care rhetoric here.

Sen. John McCain’s health care plan leaves too many Americans behind. Individuals with pre-existing conditions, women, baby boomers and children will have a harder time finding affordable health insurance under McCain’s proposal to move individuals from large employer-risk pools — where the risk and cost of health insurance are spread across a large group of people — into unregulated individual plans.

In fact, a new report from First Focus concludes that McCain’s $5,000 one-size-fits-all tax credit discriminates against families with children. “A family will get the same $5,000 tax credit regardless of the number of children they have. Based on this design, families are penalized for every child,” the report concludes.

And it only gets worse. Since McCain deregulates insurers and allows companies to cherry pick the healthiest individuals, 19 million children “currently with employer coverage could be barred from insurance” in the individual market place “due to pre-existing conditions.” Children who require autism care, well care visits, or lead poisoning treatments could “lose the protection of having guaranteed benefits” once companies can relocate to states without consumer protections:

McCain’s proposed cuts to Medicaid and his lack of support for maintaining SCHIP — combined, the two programs cover approximately 26.4 percent of all children under 19 — would also erode the safety net programs that families rely on to keep their kids healthy.

During last night’s senatorial debate in New Hampshire, Sen. John Sununu (R-NH) falsely suggested that his Making Health Care More Affordable Act of 2008 (S.3072) “wouldn’t discriminate against people with preexisting conditions”:

And I wouldn’t discriminate against people with preexisting conditions, no one should be for that. In fact, we have a health care affordability act at the federal level that prevents exactly that kind of discrimination.

Watch it:

Given the toughness of his campaign, Sununu may not have had time to read his own bill, for it legitimizes the very same kind of discrimination he condemns.

The Making Health Care More Affordable Act of 2008 creates Association Health Care Plans that are exempt from state insurance regulations and consumer protections. Like the McCain plan, the Sununu proposal allows insurance companies “to be licensed in the state of their choice and sell policies to people in other states without adhering to the standards that would otherwise apply to them in each state.”

By relocating to the states with the least regulation, insurance companies could cherry-pick the most profitable risk pool (young and healthy workers), leaving older and sicker people behind. State-regulated health care plans would be left with a disproportionate number of older and sicker employees who are more expensive to cover. As a result, if enacted, this bill will result in higher premiums for four out of five small employers, the Congressional Budget Office estimates.

Small business groups, like the National Small Business Association, oppose Sununu’s bill:

AHP legislation would likely increase premiums for small employers and their workers, and make it much harder, if not impossible, for small business owners with older sicker workers to get access to affordable health coverage.

Sununu allows insurers to circumvent existing consumer protections, without establishing “any new national standards with which the plans must comply.” Thus, not only does his plan not prevent companies from discriminating against people with preexisting conditions, it practically encourages them to deny coverage to all but the healthiest Americans.

Yesterday, during a roundtable discussion at the Council on Foreign Relations, Austan Goolsbee, Senior Economic Adviser to the Obama campaign asked McCain spokesperson Douglas Holtz-Eakin if McCain’s plan to give every American a refundable tax credit to purchase health insurance was “socialism”:

What about the health care credit which is not tied to work, and is refundable, and goes to all the very people? Is that socialism? Are you a Muslim?

Watch it:

All kidding aside, Goolsbee has a point. For while McCain has regularly attacked Obama’s model of comprehensive health care reform as government-run or socialistic, McCain’s tax credits and Guaranteed Access Plan to cover uninsurables allows the government to redistribute the wealth to those who chose to purchase health coverage or the sickest Americans who can’t afford or find plans in the unregulated individual market. (The latter group would need about $100 billion.)

In fact, just yesterday, during an interview in Orlando, Florida, McCain explained that the government would fund, regulate and approve plans in the G.A.P. initiative:

To start with we will give every family in America a $5,000 refundable tax credit so they can go any place in America and get the health insurance they need. Second, if Carolyn is not able to qualify for any health insurance policy, we will establish government approved plans to give them the health insurance they need.

More importantly, Goosbee’s exchange with Holtz-Eakin underscores the government’s role in helping Americans find affordable health insurance coverage. A pragmatic approach to health care reform would expand the group health market and improve public programs, thus giving Americans the choice of staying in employer coverage or joining a private or public plan.

In the final weeks and months of this campaign, the McCain campaign has adopted a patchwork-like approach to selling its ever-evolving health care proposal.

In the video compilation below, McCain admits that his health care plan would increase taxes on some Americans. Campaign advisers Tucker Bounds, Nancy Pfotenhauer and even running mate Sarah Palin, disagree:

Indeed, McCain’s health insurance plan gives you $5,000 (the size of McCain’s tax credit) but takes away $12,000 (the average cost of a plan in the employer market). By equalizing the tax treatment of employer and individual plans and enticing healthy workers to buy cheaper but less substantive insurance in the individual market place, McCain’s tax reform would increase costs for sicker workers and may force some workers to opt out entirely.

As James Kvaal explains, a middle-class family paying 25 percent in income taxes and 5 percent in state taxes would experience an immediate tax increase under McCain’s plan if they paid more than $16,700 in health care premiums. Moreover, since McCain’s credits diminish in proportion to growing health care premiums, by 2014, a middle-class family (who is in the 25 percent tax bracket and pays average premiums) would pay $300 more in taxes.

But the McCain campaign is talking out of both sides of its mouth, misrepresenting its plan and consistantly contradicting the candidate.

Our report showing that McCain’s health care plan would lead to Medicare and Medicaid cuts has come under criticism. Our defense of the paper’s methodology and conclusions can be found here, here and here. Below is our response to the McCain campaign.

The McCain campaign is playing a shell game, and we are surprised at how uncritically it has been treated by the media. The onus is on the McCain campaign to make its policies square with the facts. That a discrepancy exists between the two reveals a problem with their policy positions, not our analysis.

Here are the facts: accounting for the tax exclusion rollback McCain has proposed, his health care plan has a budget hole of $1.3 trillion over ten years, according to highly-regarded independent analysts. McCain’s plan will be budget-neutral, according to the McCain campaign, and McCain will balance the budget in his first term, according to McCain’s own statements and his campaign’s website.

On October 6, the Wall Street Journal reported: “John McCain would pay for his health plan with major reductions to Medicare and Medicaid, a top aide said, in a move that independent analysts estimate could result in cuts of $1.3 trillion over 10 years to the government programs.” In fact, the cuts could be much larger if they are used to help pay for McCain’s corporate tax cuts, as a McCain aide told the Washington Post they would be back in July.
Read more

When Congress voted to make “cuts to the private Medicare Advantage program” in order to finance the deferment of a 10.6% physician fee cut for doctors who treat Medicare patients, McCain claimed that bringing Medicare Advantage reimbursements in line with traditional Medicare “places 2.3 million seniors at risk of losing the private health care coverage of their choice.”

But last week, when questioned about how to plug the budget hole in his health care plan, McCain reversed course and came out in support of parity. During a conference call with reporters, Holtz-Eakin said that cutting subsidies to insurers through Medicare Advantage would save $1 trillion over 10 years:

And in the context of a comprehensive reform of this type, where insurance is reformed, the subsidy to private insurance is reformed, Medicare payment polices are reform, we see no reason why the Medicare Advantage plans should continue to get a $15-billion-a-year subsidy. We’ll put them on a level playing field and save some money there….Equalizing M.A. payments: $150 billion. Over 10 years, that’s a trillion dollars.

Here, the campaign flipped and inflated, overstating the actual savings by billions and billions of dollars. According to the Congressional Budget Office, reducing payments to Medicare Advantage plans “would save $54 billion over the 2009-2012 period and $149 billion over the 2009-2017 period” — a far cry from Holtz-Eakin’s ‘trillion dollar’ estimate.

McCain has acted “mavericky” with numbers before. In April, after CAPAF Senior Fellow Elizabeth Edwards suggested that neither she nor McCain would find coverage under his individual-market-centric health proposal, the campaign unveiled their Guaranteed Access Plan to offer so-called uninsurables government subsidized insurance though state-run high risk pools.

The campaign’s initial funding estimates of $7-10 billion elicited laughter from serious analysts who claimed that McCain would have to allocate approximately $100 billion to cover everyone his plan leaves behind. Holtz-Eakin responded by claiming that budget hawk McCain would actually allocate as much as necessary to “get the job done“:

So his 7 to 10 estimate, it was a ballpark estimate. It could be higher. The commitment is to get the job done…It could be $20 billion and you could make it work if you do the rest of the reforms in the McCain plan.

True to form, with just fourteen days until the election, the McCain campaign is throwing out a plethora of contradictory ideas and hoping something sticks. Unfortunately, their patchwork proposal won’t benefit the majority of Americans.

In a purported “fact check,” FactCheck.org is making the bogus claim that the Center for American Progress Action Fund is “twisting facts to scare seniors” about McCain’s proposal to cut $1.3 trillion from Medicare and Medicaid to finance his tax care health credits.

These claims are false and are based on the denials of McCain senior policy adviser Douglas Holtz-Eakin, who “states unequivocally that no benefit cuts are envisioned.” Since McCain and his aides have promised to reduce Medicare and Medicaid spending to pay for their health care plan, have not proposed a realistic cost-containment proposal, and have refused to offer specific budget numbers and estimates, CAPAF concluded that McCain could only make up the budget shortfall by cutting benefits. Given the schizophrenic nature of McCain’s health care proposal, we’re skeptical that McCain can deliver the savings he promises, and see no basis for Fact Check to accuse CAPAF of “scaring seniors.”

FactCheck.org began misrepresenting McCain’s health care plan in a post released on September 22, 2008 and followed up on their efforts in another post last week. In both cases, the organization relies on the denials of the McCain campaign and fails to conduct a through analysis of the implications of McCain’s proposals.

In its latest post, FactCheck.org claimed that McCain has never proposed to cut Medicare or Medicaid benefits, and argued that CAPAF’s analysis twisted McCain’s financing-mechanism by claiming that he would be forced to make “cuts in benefits, eligibility, or both.”

But in fact, FactCheck.org’s claim is based on a false reading of McCain’s proposed financing mechanism, amplified by McCain aides’ own one-sided, partisan denial that piles McCain’s confusion about his health care plan atop misinterpretation.

Here’s how FactCheck.org cooked up its bogus claim.

CAPAF’s analysis was based on the McCain campaign’s repeated assertions that its health care plan is budget neutral. During the vice presidential debate, for instance, Gov. Sarah Palin explained McCain’s health care plan as “budget neutral. That doesn’t cost the government anything…But a $5,000 health care credit through our income tax that’s budget neutral.”

However, McCain’s plan to tax health benefits would fall $1.3 trillion short of paying for his plan. According to the Wall Street Journal, McCain plans to fill this gap with Medicare and Medicaid savings.

In short, after McCain revealed that he would finance his budget-neutral health care proposal by cutting Medicare/Medicaid (and not exposing health care benefits to income and payroll taxes, as the campaign has previously implied), CAPAF tried to explain the consequences of McCain’s newfound funding mechanism. As it turns out, McCain’s reduction does not keep up with medical inflation and enrollment rates and would require McCain to cut benefits, eligibility or both.

For instance, in 2013, McCain promises to cut $68 billion from Medicare, $14 billion more than the Congressional Budget Office says will be paid to doctors from the Medicare physician free schedule and more than Medicare will collect for all Part B Premiums. Thus, CAPAF concluded that McCain’s suggestion that Medicare’s waste and inefficiency exceeds what the program will pay doctors was wholly inaccurate.

Nevertheless, a so-called non-partisan “fact checking organization” quickly twisted CAPAF’s analysis into a post with a headline stating that CAPAF’s analysis was wrong. The tone of the piece smeared CAPAF analysts as partisan hacks, while failing to question McCain’s numbers or asking the McCain campaign for its own budget estimates. Rather, the author bent over backwards to give the McCain campaign the benefit of the doubt.

For the record, the McCain campaign said, after its health care plan was released, that it did plan to “reduce the growth in Medicare spending.” McCain has a long record of voting to cut Medicare and just this weekend, McCain advisers said the senator would force Congress to “control the growth” of Medicare spending.

Interestingly, FactCheck.org trusts the statements of a campaign whose health care plan changes on odd calender days:

- The McCain campaign claimed it would finance its plan by exposing health benefits to income and payroll taxes … After analysts argued that doing so would result in a massive tax increase on the middle class, the campaign flipped and said McCain would finance the plan by weeding out $1.3 trillion worth of waste from Medicare and Medicaid over 10 years.

- McCain has said that he would not raise taxes … during an interview with ABC’s George Stephanopoulos, McCain admitted that his health care plan would increase taxes on individuals with “Cadillac health care” … Despite McCain’s admission, Gov. Sarah Palin continues to insist that McCain’s plan would not raise taxes on anyone.

- On at least two occasions, McCain admitted that his health care plan would deregulate the health insurance industry … On Thursday, McCain policy adviser Jay Khosla argued that “what Senator McCain has proposed has nothing to do with deregulation.”

- During the fight over Medicare physician reimbursement rates, McCain claimed that bringing Medicare Advantage reimbursements in line with traditional Medicare “places 2.3 million seniors at risk of losing the private health care coverage of their choice” … During a conference call with reporters on Friday, Holtz-Eakin explained that McCain would pay for his health plan by eliminating government subsidies for private Medicare Advantage plans.

As regular readers of WonkRoom.org are aware, McCain has repeatedly promised to balance the budget by the end of his first term. We’re skeptical of the campaign’s ability to both balance the budget and finance their $1.3 trillion budget gap.

But achievable or not, FactCheck.org is unwilling to question the McCain campaign’s competing assertions — that their proposal is budget neutral, does not raise taxes for most or all taxpayers, and does not cut Medicare or Medicaid benefits. It’s a rank distortion for FactCheck.org to claim that CAPAF’s analysis twists McCain’s plan, when all it does is try to analyze the consequences of $1.3 trillion in cuts to Medicare and Medicaid.