McCain Healthcare Criticism

The following article is a slanted but informative criticism of the McCain healthcare program.

http://www.tnr.com/politics/story.html?id=7e9b013b-2fb7-45c7-91cb-e05218063a33

The summation is that McCain would incentivize the country to move to individual insurance (and away from employer-based insurance) via tax credits.

The disconnect in the McCain proposal is that without Govt intervention, there is no reason to think that the free-market will come up with a solution for individuals that have pre-existing conditions. Think about an analogy to auto insurance ... the cost of a policy for someone with a history of accidents can be an order of magnitude higher than for someone with a spotless record. Extrapolating that to health care, a high-risk family might be paying $4000/month if a healthy family pays $400/month. Obviously that cost would be prohibitively expensive for most high-risk families.

Continuing my auto insurance analogy, would it make sense for an insurer to offer auto insurance that didn't take driving record into account? Obviously the answer is no, there is nothing like that on the market. Why? Because good drivers would always opt for the lower cost insurance that they get because they are low risk. A risk-independent insurance market is equivalent to a high-risk insurance market.

For the health insurers to make money AND maintain costs to an affordable level for individuals, the healthy have to pay for the sick. In our current system, healty individuals effectively split the costs of sick individuals with employers.

So the bottom line on the McCain plan is that it's unsustainable as proposed. Practically speaking, such a plan could never produce legislation without significant modification. Ultimately it could only result in no action and thus status quo, or perhaps it is trying to remove the employer contributions and thus put the entire cost burden on individuals.