McCain’s Missing Cost-Containment Policy

Sen. McCain has said that he would cut Medicare spending without reducing benefits or enrollment. Again today, Sen. McCain’s campaign talked about policies like reducing health care payments, promoting IT, and taking other cost containment steps. Despite his assertions, Sen. McCain has not put forward a serious health care cost-containment policy. Moreover, it would take restraining Medicare spending to below the rate of medical inflation and population growth achieve $882 billion in savings. Translation: funding would be inadequate to provide Medicare beneficiaries with the same services they receive today. Massive premium increases or benefit cuts would be required.

But let’s consider Sen. McCain’s cost-containment policy. Over the summer, CAP-AF released a 50-page analysis of presidential cost-containment plans. After that review, there was only possible conclusion: Sen. McCain’s cost-containment plan is ineffective. Others have found that the McCain plan could raise costs, including Emory Professor Ken Thorpe in a new report.

So, why won’t John McCain’s cost-containment policies work? The primary reason is that the best form of cost-containment is having coverage for all Americans. Sen. McCain has said that he isn’t worried about covering all Americans — that the lack of health insurance in the US isn’t a major concern for him. But study after study shows that consistent access to health care is the best way to manage chronic disease. A noted Brookings economist has said that broadly expanding coverage is “a precondition for effective measures to limit overall health care spending.” On-again-off-again health insurance means that diabetics and asthmatics aren’t getting the treatment they need, and people end up back in the ER.

In fact, a recent study shows that the most expensive Medicare beneficiaries are the ones who were uninsured before entering the program. That’s a critical point because McCain’s focus on the individual market means that the near elderly will have a much harder time getting insurance (something else this blog has discussed extensively). One of the nation’s most respected health policy journals, Health Affairs, has noted that 20 million people will lose their employer-sponsored health insurance under Sen. McCain’s plan. When those newly uninsured try to obtain health insurance on the individual market, they will find it enormously expensive or simply not available to them at any price.


More than that, McCain’s cost-containment policy lacks any real details.

Heath IT: McCain has said that the marketplace will promote the expansion of information technology. Well, the existing health care marketplace got us to where we are at today: virtually the only modern industry that still relies on paper. McCain’s faith that something will change by itself without government leadership or support seems misplaced, at best.

Addressing Disparities in Chronic Disease: Some of the most significant health care costs are born by minorities because the disparities that exist in health care. Sen. McCain has not offered any policies whatsoever to address health care disparities directly.

Promoting Effective Care: McCain claims that he is going to improve quality care by using “technol­ogy to share information on ‘best practices’ in health care so every physician is up-to-date.” Again, McCain offers no details on how to do this — nor offers any support to doctors to help make this happen.

The last thing worth mentioning is how Sen. McCain will increase administrative costs. McCain is focused on growing the individual market. That is notoriously inefficient because you are selling policies to every family individually, as well as rating each policy based on health status so the insurance company knows what to charge (called underwriting). CAP-AF conservatively estimated earlier this year that growing the individual market will cost an additional $20 billion in paper work alone.