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Economy May Dictate the Kind of Health Care Reform to be Adopted

HealthDay News -- John McCain and Barack Obama have outlined ambitious health reform strategies that differ sharply along philosophical lines. But the shaky economy may be the ultimate arbiter as to whether either -- or neither -- will be undertaken.

While McCains plan focuses on expanding individual insurance coverage, Obama seeks to plug gaps in employer-based coverage by subsidizing people to buy into the same group insurance (administered by private health plans) offered and administered to federal employees. And while healthcare is among their top domestic policy goals, neither has articulated the perfect solution, health policy experts say.

The ideas of both senators have merit, according to John Sheils senior vice president of The Lewin Group, a consulting company that analyzed the programs.

Speaking at a recent meeting of the National Press Club in Washington, D.C, Sheils emphasized that both sides approached the health care problem creatively. "Some of these things are untested, but I dont hold that against anyone," Sheils said, "because the only thing we have thats tested is our current system, and people are pretty frustrated with that."

McCains plan would reduce the number of uninsured Americans projected to reach 48.9 million by 2010, according to Lewin -- by 21.1 million, while Obamas proposal would shave 26.6 million from the ranks of the uninsured.

Both plans would result in large new costs to the federal government, the analysis finds. From 2010 through 2019, McCains plan would result in a net increase in federal spending of $2.05 trillion, versus a net federal cost of $1.17 trillion under Obamas plan.

McCains plan calls for providing a tax credit of $2,500 for individuals and $5,000 for families as an incentive to purchase individual health insurance coverage. In turn, his plan would -- for the first time -- impose a tax on employer-sponsored health benefits. Individuals could purchase health insurance across state lines under McCain's plan.

Obamas plan has medium and large employers that do not offer employee health benefits paying a payroll tax to help finance expanded coverage. The plan calls for expanding eligibility for Medicaid and the Childrens Health Insurance Program and allowing individuals who dont have employer-sponsored health insurance or dont quality for other public programs to enroll in the Federal Employees Health Benefit Program or a public program modeled on Medicare.

Economists writing in Health Affairs cite significant problems with each plan. Under McCains plan, 20 million Americans would lose their current coverage because of the change in tax treatment, one group of economists writes. Obamas plan fails to address economic incentives that drive healthcare spending, the other group asserts.

"To me, the most critical of the issues we have to solve is finding ways to moderate spending," McCain campaign adviser Gail Wilensky, a senior fellow at Project HOPE, said at a recent roundtable discussion sponsored by the New England Journal of Medicine and the Harvard School of Public Health.

But how much might each candidate realistically achieve, given a $10 trillion deficit, a $700 billion commitment to bail out Wall Street and a sobering national recession?

David Cutler, health policy adviser to the Obama campaign and professor of economics at Harvard University, responded to the question during a recent Webcast sponsored by the Henry J. Kaiser Family Foundation. Aside from the financial crisis, the biggest threat to economic growth over the next decade is the rising cost of medical care and the breakdown of the medical care system, he said.

"And to me what this financial situation highlights is not how costly it is to do something, but how costly inaction has been."

October 22, 2008
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