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GOP Health Reform: Less Coverage at Twice the Cost

Defenders of the Affordable Care Act, including Matt Miller and yours truly, have suggested that the Republicans who favor repeal have no alternatives that would cover as many people at such a low cost. On Friday, Washington Post blogger Jennifer Rubin posted a lengthy response, in which she insisted the Republicans do have such alternatives. And one statement in particular caught my eye:

But now we get to the plans. There are conservative plans that would provide for very large number of Americans to gain coverage at much less cost. Take the plan put out by Sen. John McCain (R-Ariz.) in 2008 that would have covered 27.5 million people at an annual cost of $287 billion.

Is this really the argument Rubin wants to make? Let's compare the McCain plan to the Affordable Care Act. In 2016, the first year insurance subsidies and expansion of Medicaid will reach their maximum effect, the Affordable Care Act will require the federal government to make $161 billion in additional outlays, according to the Congressional Budget Office. And, as a result of these expenditures, 31 million more people will have health insurance.

In other words, the McCain plan will actually cover fewer people for nearly twice the cost. What a bargain!

But wait, it's actually worse than that. I took the 2016 figures for the Affordable Care Act but used a 2008 figure for the McCain plan. That means I didn't even account for the effect of health care inflation over the intervening eight years, an effect that would have made the McCain plan even more expensive.

How much more expensive I can't really say. The centerpiece of the McCain plan was a tax credit, available to all Americans, for the purchase of health insurance. But, as I recall, the McCain campaign was always very vague about how quickly their tax credit would grow.

I imagine that's because if they had given specifics, they would exposed themselves politically. If the tax credit grew fast enough to keep providing people with good insurance, it would have cost a lot more. If the tax credit grew more slowly, to reduce the cost, individuals would have been left struggling to get decent insurance.

Of course, all of this assumes that the estimate of McCain's plan cited by Rubin was accurate. I doubt it was. The McCain plan would have destabilized existing group insurance without providing a viable alternative; the financial assistance it would have provided would have been too small for many people to get coverage. As a result, my impression was always that it might end up costing a little less than what the Affordable Care Act ultimately will, but only because it would do a lot less.

And that wasn't just my opinion. Back in 2008, the Urban Institute's Linda Blumberg  who's been doing this for years and is respected by people of all ideological stripes, also examined the McCain plan. Her conclusion:

Stated simply, the McCain plan would (1) dramatically change the way Americans purchase health insurance; (2) incur a large budget cost, at least in the early years; and (3) barely reduce the number of people that are uninsured ... decrease access to insurance for those with higher-than-average medical needs and those at risk of higher medical costs due to their age or past health problems. ... it is possible that the combination of increased risk segmentation and limited financial assistance to the low-income population would lead to an increase in the number of uninsured." [emphasis in original] 

Confused? Well, don't feel bad. It's confusing stuff. But there is a broader lesson here about how politically difficult any kind of health care reform is--and why the Affordable Care Act, notwithstanding its many flaws, still represents a remarkable achievement.

(More on that soon...)