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VP Candidates Debate Health Plans; Biden Uses Data From Health Affairs

October 3rd, 2008

In the vice presidential debate last night, Democratic VP candidate Sen. Joe Biden (DE) cited an estimate from a recent article in Health Affairs that 20 million Americans would lose their employer-sponsored coverage under the health reform plan advanced by Republican presidential candidate Sen. John McCain (AZ).

The Health Affairs article, a critique of McCain’s health plan by Thomas Buchmueller of the University of Michigan and coauthors, was part of a three-article online package. Also included were a critique of the Obama health plan by Joe Antos of the American Enterprise Institute and coauthors and an outline of a possible compromise blend of both candidates’ plans by Wharton’s Mark Pauly [all three papers are free access online through the election]. The package was followed on the Health Affairs Blog by a roundtable among authors of the three papers and responses to the critiques of the McCain and Obama plans by Tom Miller of the American Enterprise Institute (an unpaid McCain adviser) and David Cutler of Harvard (an unpaid Obama adviser).

Senator McCain has proposed ending the tax exclusion for employer-sponsored coverage and replacing it with a tax credit of $2,500 for individuals and $5,000 for families. The Washington Post took Sen. Biden to task for failing to mention that Buchmueller and coauthors also estimated that 21 million Americans would gain individual coverage through the credit (including those now uninsured and some who would lose employer-based coverage), making McCain’s plan essentially a coverage wash in the short term.

However, as the Post mentions later and the Wall Street Journal’s Health Blog also points out, Buchmueller and his colleagues also said that within five years, five million more people could lose coverage under McCain’s plan. That stems from the fact that McCain’s proposed tax credit would not be indexed to health care costs and so would lose purchasing power over time.

In the authors roundtable on the Health Affairs Blog, Gail Wilensky of Project HOPE, an unpaid adviser to the McCain campaign, explained that McCain’s tax credit is purposefully not indexed to health care costs in order to create some incentive to restrain health spending:

[The credit] is intended to be indexed to the consumer price inflation, but we know what happens if all we do is increase funding to match increased spending. You certainly can’t have it remain a constant-dollar amount, unindexed over time, but indexing it to health expenditures is too much capitulation in the fight to moderate spending.

The roundtable also included Kathy Swartz of Harvard, one of Buchmueller’s coauthors, and Pauly. Wilensky was a coauthor of the article critiquing Obama’s plan.

In the roundtable, Wilensky and Pauly argued that ending the tax exclusion for employer-sponsored benefits would not necessarily drive Americans into the individual market in droves. Except for the very smallest employers, which are already dropping coverage, firms “are going to continue to offer insurance as a strategy to attract good employees,” Wilensky said.

But Swartz warned that “employers would see the removal of the tax treatment of employer payments for coverage as a green light to stop paying for coverage, since it will be the employees who will pay the premiums and get the tax credit.” She added:

Employers that will still sponsor and pay for employee coverage will be employers that either are in a very tight labor market or are going after highly skilled people who assume they will get health insurance from their employer. Other workers, I think, are going to be in trouble.

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1 Trackback for “VP Candidates Debate Health Plans; Biden Uses Data From Health Affairs

  1. Health Care BS
    October 3rd, 2008 at 2:12 pm

2 Responses to “VP Candidates Debate Health Plans; Biden Uses Data From Health Affairs

  1. acavale Says:

    Not being particularly convinced by either party’s health care proposals, I would prefer someone who completely ignores the details (Palin) to someone who deliberately picks and chooses what is a convenient sound bite (Biden). Enough of lawyer-talk, I feel.

    Unfortunately none of the forums are conducive to detailed discussion about details of any proposal. Since the vast majority of viewing public only cares for soundbites, I suppose that’s what they get, and they cannot complain about it.

    I cannot understand why health insurance mandates on employers is expected to work (like the Obama folks would make us believe). Of course one would have to be an employer to understand why I feel this way (Washington, DC economic experts don’t get this concept). All these analyses are a good beginning, but have the real potential of being cherry picked in televised debates.

  2. Michael D. Miller, MD Says:

    Apparently Sarah Palin didn’t read any of the Health Affairs articles, and only referred to her campaign’s talking points, since she stated: “Barack Obama’s plan to mandate health coverage and have universal government run program and unless you’re pleased with the way the federal government has been running things lately, I don’t think that it’s going to be real pleasing for Americans to consider health care being taken over by the feds.” [Transcript text taken from]

    Anyone who has looked at the Obama plan knows that it is not “health care being taken over by the fed.” That is just campaign rhetoric designed to scare people. Maybe that’s how hockey Mom’s intimidate the mothers of the opposing team, but it is shameless for someone who claims to be qualified for national office.

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