McCain vs. Obama on the Economy: Who Will Be Better for Your Personal Finances? Health Care Edition

After taking a bit of a break from the John McCain v. Barack Obama economic policies posts, I'm ready to dive back in.

One of the biggies in personal finances is health care costs. How much you pay for your premium, and how much you pay out of pocket, can represent huge portions of your spending. I know that my insurance premiums have gone up regularly, even though my family and I are relatively healthy and rarely need to make use of insurance beyond yearly checkups. Yet this year the monthly premium is going up $70 (last year it was $100, so I guess I should be grateful). This means that I will pay $840 more this year for probably the same services I got last year.

CNN Money offers this basic analysis of McCain v. Obama in health care:

When it comes to reforming health care, McCain would rely more on individual efforts and market forces to drive down costs. Obama would rely more on government and establish health insurance mandates for companies and individuals to make coverage more affordable.

But, of course, we need to have a further breakdown. So here it is.

John McCain and health care

John McCain is all about individual efforts. No insurance will be required, but individuals would be able to get a tax credit. But here's the catch, now, individuals would be taxed on the subsidy they receive from their employers' plans (they aren't taxed on it now). SO, individual income tax is increased, and then offset by a credit. McCain wants to encourage people to look for lower priced health plans with this idea, trusting that "free market" forces will then take over to lower health care costs. (I'm skeptical of this, since allowing "free market competition" hasn't done anything to keep health care costs down so far.)

The people that would probably benefit most from this arrangement are those that already buy individual insurance (like me). Since I don't get a subsidy for my insurance premium, a tax credit (beyond the deduction i get for the self-employed health insurance) would be helpful. But for those already working and getting insurance through their employer, this just means that the costs are offset, but nothing really significant is changed.

I do like that McCain would abolish the idea that you can only buy insurance within a state -- insurance could be bought across state lines, allowing increased competition for lower prices. It is also nice that McCain would allow federal funding for state insurance plans that provide subsidies for the uninsured and underinsured.

Barack Obama and health care

Barack Obama has a different idea. He isn't for making health care completely universal. He does want coverage mandatory for all children, though. He would boost aid to programs that provide health care for children. What a great idea. Help children.

For adults, there is help as well. Obama recognizes that there is a growing number of people in the Middle Class who are unable to afford health care costs, but do not qualify for government aid through programs like Medicaid. He would add a subsidy for those in this position to the subsidy for those covered at work. A National Health Insurance Exchange would also be used, so that people could choose between public (he wants "regular folks" to have access to the same plan our Congressional folks get) and private plans. This would benefit the Middle Class, small business and others who are struggling to pay health care costs.

Obama offers employers a choice: offer a health care plan to employees or contribute to health care costs. Or give some money to support the health exchange.

Obama's plan would be a big help to many in the Middle Class. I like that it still allows for competition, but injects the government in to make for the obvious (and gaping) hole that is present in a health care system that is so focused on the private sector. Heck, Obama's plan makes the government a competitor in the health care game. Obviously, this would need to be paid for somehow, and would most likely be done through Obama's tax policy.

McCain's plan, though it has some elements that are beneficial to the individual, mostly helps insurance companies. It gets rid of some of the regulations, and it encourages people to buy more insurance from the private sector, without really providing a significant reduction in costs for the Middle Class. Unless, of course, health care providers and insurance companies lower prices in response to market forces. Good luck with that.

Read about taxes and Social Security.






Tags: health care, health insurance premiums, Barack Obama health care, John McCain health care, personal finances, health care costs, universal health care