Fact Checking the Fact Checkers: The Washington Post Gets its Pinocchios Dead Wrong on Biden, Palin and Health Care

As a policy wonk who has long been involved in presidential campaigns, I greatly appreciate the role that independent fact checkers play in keeping all the candidates on the facts and keeping the debate focused on the issues. In general, you can count me as a fan of the work that Michael Dobbs and the Washington Post do with their already famous "Pinocchio" rating. But their awarding of two "Pinocchios" -- for "significant omissions or exaggerations" -- to Joe Biden for his health care exchange with Governor Palin in last night's debate was just plain off the mark.

Full disclosure: I advise the Obama campaign and in that role had a chance to offer my two cents to Senator Biden's team in preparation for last Thursday's debate. But the facts below make clear that from any perspective, Senator Biden was precise and accurate in his statements Thursday night. In fact, while the Washington Post unfairly criticizes Joe Biden, they remain inexplicably silent over the repeated and significant omissions from Governor Palin and John McCain on their health care plan.

Let's start at the beginning. The McCain health plan calls for completely eliminating the current tax exemption for employer-provided health care. Viewed alone, it would raise as much as $3.6 trillion in tax revenues. Yet, the McCain plan uses the revenues to provide a $5,000 tax credit for families and a $2,500 credit for singles as a replacement for the current exemption. The McCain team has consistently argued -- and Sarah Palin last night reinforced -- that their plan is "budget" or "revenue" neutral.

As with any revenue neutral tax reform, the McCain plan creates both a group that benefit and another group that would be worse off. While virtually every American would be better off with the Obama plan as opposed to the McCain plan, it is the case that there are some -- such as young, healthy and currently uninsured workers -- who would be better off under the McCain plan than under the status quo. The fact that a tax reform proposal leaves some people worse off should not, of course, automatically doom the idea. But it is fair to ask those making such proposals to be transparent and clear about its impact. Unfortunately, during the entire campaign the McCain-Palin ticket has gotten away with describing only the sugar in their plan and never the medicine. Even when pressed, Senator McCain tries to suggest that those paying higher taxes would just be the well-off with "Cadillac plans." But the truth is that even in the short run, his plan would likely raise taxes on millions of middle class families who live in high-cost areas or who negotiated to give up higher wages for good insurance with low deductibles and co-payments. Virtually every analysis shows that over time, health inflation will move millions and millions more middle class families into the 'tax increase' category.

There is another downside to the McCain plan that even its serious advocates should acknowledge. If you end the tax exemption for workers for health care provided by their employer, it becomes less attractive for employers to keep providing it. Moreover, as young and healthy workers move into the individual market, the remaining pool for employers to cover becomes even more costly to insure and expensive for employers to cover. A study by several economists in Health Affairs found that 20 million people will be dropped under McCain's plan. An earlier study from the Journal of Public Economics found that a plan similar to McCain's would lead to 28 million people being dropped.

This is a real problem for two reasons. One, only in the idealized world of economic modeling would employers who drop coverage for workers make up the difference by instantly handing over big raises to those workers -- especially in the midst of such a weak labor market. The 20-28 million who would see their employer provided coverage dropped would thus be left to try buying the $12,680 family health care (the national average) policy they previously had in the individual market with only a $5,000 tax credit.

Two, without the rock-solid proposals to eliminate discrimination due to illness that Obama has proposed, families who are dropped and who have a child or spouse with a pre-existing condition face a real danger of being shut-out from insurance altogether or be forced to choose coverage at extremely high premiums. Even experts who support proposals like McCain's acknowledge that without strong and bold new reforms of our unforgiving, wasteful and discriminatory individual market for health care, the results for families with pre-existing conditions could be devastating.

In this context, let's review what the candidates said on health care in Thursday's debate. Governor Palin said McCain is "proposing a $5,000 tax credit for families so that they can get out there and they can purchase their own health care coverage." This is the McCain Campaign's consistent line. It gives anyone watching the clear impression that this credit is free. There is not a word of recognition that the new credit will be offset by eliminating the tax exemption for employer provided health care. Not a word of recognition that for at least 20 million families, this proposal will mean they no longer have the choice of receiving health care through their employer. Yet on these rather remarkable omissions -- the Washington Post is silent.

So what did Joe Biden say? He first asked:

"Do you know how John McCain pays for his $5,000 tax credit you're going to get, a family will get?"

In this initial sentence Biden acknowledged that families would get a tax credit under McCain. He simply asked what the McCain and Palin never wants to answer -- how they propose to pay for it. Thus, Biden, unlike Palin, was willing to talk about both the benefits and pain of the McCain health proposal.

His second sentence was.

"He taxes as income every one of you out there, every one of you listening who has a health care plan through your employer."

If the Washington Post or anyone can take issue with this sentence, I welcome their explanation. Biden clearly states that the tax is on those who have employer based coverage -- and not everyone. This is unquestionably true.

His third sentence states,

"That's how he raises $3.6 trillion, on your -- taxing your health care benefit to give you a $5,000 plan, which his Web site points out will go straight to the insurance company."

Again, Biden -- unlike Palin -- is painting the whole picture, acknowledging that families will get a tax credit while stating how McCain's own team describes how it is paid for. And it is hard to see how anyone in McCain's camp can complain here when his top economic advisor Doug Holtz Eakin is described as telling both the New York Times and McClatchy newspapers that "the government would save $3.6 trillion over the next decade by eliminating the tax break that currently goes to encourage employer-based health coverage" and that "[McCain's] tax measure would generate about $3.6 trillion over 10 years, which would pay for the tax credits, making the entire proposal budget-neutral."

Biden goes on:

"And then you're going to have to replace a $12,000 -- that's the average cost of the plan you get through your employer -- it costs $12,000. You're going to have to pay -- replace a $12,000 plan, because 20 million of you are going to be dropped. Twenty million of you will be dropped."

Contrary to the Washington Post's erroneous claim that Biden "gave the impression that most Americans would be worse off financially as a result of Sen. John McCain's health-care proposals," Biden said was careful and clear in stating -- twice -- that he was not referring to all Americans but as he said, the "20 million who would be dropped." Then he closed with:

"So you're going to have to place -- replace a $12,000 plan with a $5,000 check you just give to the insurance company. I call that the 'Ultimate Bridge to Nowhere.'"

I am hard-pressed to see how anyone analyzing this statement could find it anything other than a highly precise and accurate statement that deserved praise for its accuracy.

The Washington Post oddly also writes that Biden should have somehow noted that a Tax Policy Center study shows that McCain's plan would be a tax cut for middle class families on average. Yet, the Washington Post fact checkers fail to mention that this Tax Policy Center analysis assumes that the McCain plan costs $1.3 trillion over ten years -- on top of the trillions they have already committed to their corporate tax and upper income tax cuts that they have not offered any serious way to pay for. The McCain camp has for months been arguing as mentioned above that it "generate about $3.6 trillion over 10 years" to claim as Palin did in front of 70 million people that the proposal is "budget neutral." It is puzzling that the Washington Post would want to reward this 'a have it both ways' and "all gain-no pain" effort to flip-flop on their description of their health care plan by occasionally telling a reporter or someone doing a tax analysis that it is suddenly a tax cut that costs $1.3 trillion.

I do appreciate that the Post did state that "according to several studies, the McCain plan would lead to a modest increase in the number of people covered by health insurance in the first year but could lead to an increase in the number of uninsured over the long term" (emphasis added).

But to give Joe Biden any Pinocchios at all for such a narrowly-tailored, precise and factually accurate statement while giving the McCain-Palin team a free ride is baffling. They got the Pinocchios completely backwards in this case. As good fact checkers, I hope the Post will review their analysis and admit that they got this one wrong.

Comments

[imfedup]

Are you going to write an editorial correcting this? This is a very serious issue.

[Bushwillresign]

"As good fact checkers, I hope the Post will review their analysis and admit that they got this one wrong."
I'm sure the Post will admit they are wrong, on Nov. 5, 2008.
So, here are the talking points we learned are:

1. McCain / Palin will give a $5000.00 check to every American for their health care.
2. Obama / Biden are for Socialized health care.

[urweatherman]

Could you also please explain "the medicine" as you call it with the Obama tax relief for middle class plan? It would be fair, I think, if you were to publish an article on that as well to show fairness.

[Osprey3]

McCain would also like to solve the looming Social Security System shortfall by privatizing a portion of the payroll tax. This is the same position promoted by Bush, who along with a Republican-dominated Congress, squandered the Trust Fund surplus on unwarranted tax cuts (mainly for the wealthy) and on an unprovoked war of occupation in Iraq. In other words, these two jokers propose to make up the Trust Fund shortfall by removing even more revenues from it! McCain would also extend and make permanent the Bush tax cuts, as well as continue our costly occupation of Iraq indefinitely. Great idea!

[JonRaymond]

Great analysis. Thanks.

[foxbat]

Thanks for a deeper analysis of the tax plan. Too many people are hearing the pitch from the salesman and signing the contract without reading it. I noted in another post that, ASSUMING that the McCain plan was a breakeven at best in the way that they propose it, which it isn't, there's still ANOTHER longer term issue. McCain's plan has an annual increase of roughly 2%, but medical/insurance costs are rising at 7%+ annually. Even in the original breakeven status, which again it isn't, the plan would fall behind in each subsequent year. It would be like taking your family of four to their favorite restaurant with a free single dessert coupon. The problem is that you have to pay $2 for soft drinks that normally come free with the meal AND for each extra person on the bill beyond the one that uses the coupon, there's an extra 75 cent surcharge. It ends up working out to a free $8 dessert for one person in the family, and an overall wash between the drinks and the dessert, but the family bill ends up being higher in using the coupon than it would have been had they not used it.

[Bizpsych]

I wonder why there is not more discussion of the other aspect of the McCain plan that is so troubling. When individuals are forced into buying solo policies, the insurance companies have no incentive to decrease costs because an individual has no bargaining power. The reason that large companies have lower insurance rates is that they can bargain on the economy of scale. This plan is going to make a lot of insurance companies rich. And the individual polices will not be found for the average rates that employers pay, they will cost much more.

[shepherdlady]

In addition to it costing more, many more people will be denied health insurance period, when they are forced to purchase as an individual vs. a group market. As with cost, an individual has no leverage in terms of being accepted into a plan. The underwriters of most of these plans have a long list of "pre-existing" conditions for which an individual can be denied, including such benign conditions as hay fever. If your state has a high risk pool, you have even less leverage, since insurance companies have no obligation to cover you. The HIPAA laws that mandate these companies to insure you do not apply to individuals or if you have access to a high risk pool. I am a 55 year old woman in a high income bracket who was denied individual insurance (even though I could easily afford it) due to asymptomatic fibroids found in a routine exam. I have perfect blood pressure and cholesterol, do not smoke, am not overweight, have never had surgery, and have no health problems. I take no medication. I would like to see more discussion of this issue of trying to get insurance without the leverage of the group market, since even benign conditions with no symptoms are considered "pre-existing" by underwriters. McCain makes it sound so warm and fuzzy, that individuals can have the "choice" of selecting their own plan. Good luck....

[erinker]

Very true. Last year, disgusted with the rising premiums and decreasing coverage of my work plan, I checked into individual coverage. I was denied because of my weight, If it is taken away (because of tax burden), I am SOL. Thanks, McCain!

[Phaedrus21]

Could McCain's attempts to cow the Washington Post be working?

[Sanity 2008]

Having been dropping red flags and flashing alarms about McCain's healthcare proposal in my posts for the past month, I'm utterly delighted this vulnerability is now being seriously addressed by the Obama campaign and gaining wide publicity. Here are additional points:

* However you spin it, this is a NEW TAX on the "middle class" (worker) - credits can dwindle, but taxes tend to be forever. Obama proposes no such tax.

* Most voters probably don't realize just how much health insurance premiums really cost - $2,500 is nothing. Until I qualified for Medicare 2 years ago, my personal insurance ran over $600/month with a $2,500 deductible. Premium over $7,200/year vs. McCain credit of $2,500 - thinkaboudit. My spouse (still with personal private insurance) is now in worse situation.

* Given the above, McCain's proposal would almost surely mean vast numbers of people would just forgo health insurance.

* Would self-employed lose premium deduction on income tax? Can of worms here - putting GOP bureaucrats in charge of rules.

* What happens to people whose income is so low they pay no taxes at all? No credit, so no insurance?

* Per my first point... tax rates rise annually - but what happpens to the $2500-5000 credit?

[CaptainObvious]

Is it really any surprise that the mainstream propaganda machine would be in full damage-control mode after last night? Have you heard any more of their I analyses?

[kfdan]

For anyone who has seen "Sicko" by Michael Moore there is little doubt that the McCain plan will have HMOs and other insurance providers salivating over the excessive profits they can make. I believe it's about time America joined the ranks of developed societies and recognize that privatizing everything is not a good road to travel. We've been giving over public policy and governance to private institutions who's main concern is profit ... that has to end !!!

[urweatherman]

I hope that, if Obamas plan goes into effect, that you will need to see a doctor, and the government forces you to see an underpaid quack....then we'll see how you like it!

[OneLiberalLady]

Obama is not proposing that the government EMPLOY the doctors, nor will his plan deprive a patient of the ability to see the doctor of choice.

[pearl89]

This is one of the things that concerns me the most about the McCain plan. I am retired after working 30 yrs which means I get employer covered health. There is no way I could replace the coverage I now have for $2,500. Heck, even with the coverage I have now it is hard on a fixed income to pay the deductibles and the copays. Plus on top of this McCain wants to add taxes.

I would like to know how this plan will effect people who are retired. It seems that McCain's plan would be a good excuse for employers to drop their retirees from their health coverage plans.

[notthistime]

I hope you sent this information to Washington Post and request that they correct it. Thanks for looking out for all of us because we really cannot allow those lunatics to get anywhere near winning the election on Nov 4.

Go Obama/Biden/We the People 08

[Matt7]

Many people wonder how McCain/Palin can have any credibility left with American voters. This article shows how:

1. The McCain camp doesn't give straight talk/whole truth about their plans/policies.
2. General mainstream and internet media is partisan & doesn't report in depth on the pros and cons of various issues. (In their defense, most people won't read/listen to/understand them, so ratings/viewership would decline). A capitalistic no-no.
3. We've become a microwave, sound-bite society; any attempts to explain complex issues are rejected as "boring" or "senatorial" or "overpowering." So we leave comprehension and interpretation to our pundits of choice, to tell us what we think.
4. The debate format, as a way of comparing and contrasting policies/plans/platforms is dysfunctional, ineffective, a total joke; but we’re the real punch line.
5. Americans are apparently much more concerned about who "won" a debate, i.e. focusing on popularity, style, wardrobe, "got'cha" ratios, who got in the best zingers, etc., far more than substance or handling of issues.

Thanks for calling out the Post. But you call us out, too. When a Party can exploit and play into our fears, say all the nasty things we'd like to say, and keep us tranquilized with soothing words of "I'm just like you, I'll get out there and fight the boogy man for you," it's easier to swallow THAT than to exercise personal responsibility.

Dumbing down, lack of accountability, abdicating responsibility. God help us.

[frontstreet]

This issue is very confusing for voters. Most media reports focus almost exclusively on the issue of cost, without realizing that there is a more fundamental problem with the health insurance system, which is that most people will eventually become uninsurable. Almost all chronic conditions, serious accidents, and illnesses, even if survivable, render you uninsurable in most states. Employer-based health insurance has been a safe harbor for the uninsurable because workers can enroll regardless of pre-existing conditions. McCain acknowledges that by making employer-provided health insurance premiums (about $12K) taxable income, his plan will force workers to go out and buy private insurance. That's fine, provided the employee is insurable. If the employee is not, he's stuck with the employer plan, and the cost of that plan will increase dramatically as insurable workers move into the private market. In the end, those who can't move to the private market will pay more in taxes and more for health insurance. Even worse, those who choose private plans and later become uninsurable are stuck in those plans because any attempt to change plans, even within the same insurance company, triggers a health inquiry which results in denial. As rates in the private plan increase over time, insurable people will move on to other plans, but the uninsurable won't have that choice. They will be stuck paying exorbitant premiums until the plan becomes completely unaffordable. That's how most people lose their insurance. McCain's plan is a disaster.

[CitizenoftheRepublic]

I believe your statement that 'employer provided health care plans cover pre-existing conditions" is incorrect. I am an employer... with 40+ employees and here is how the system works in Texas. You must pay your INCREASED monthly payment for the pre-existing condition, but that dependent gets ZERO benefits until 18 months later. That's a year and a half of INCREASED premiums for ZERO coverage, it's called deregulation. As far as I'm concerned it's called THEFT, FRAUD and COERSION. I cannot as an employer continue to offer above average wages across the board for my employees and provide lousy health insurance. I want a CITIZEN FUNDED, AMA developed and run health care system that takes profit out of the picture and re-installs patient wellness as it's primary method of operation. Any CITIZEN that supports an illegal TRILLION DOLLAR WAR and TRILLION DOLLAR IMMORAL BAILOUT, yet no healthcare for every AMERICAN should consider relocating to CHAD!

[frontstreet]

You are correct that it the real safe harbors for those with pre-existing conditions are usually large employers. In addition state laws vary, and Texas's state laws are the product of really bad ideologically driven Republican policy The bottom line is that Republicans like McCain will NEVER offer a solution to this crisis because they are driven by a free market/deregulation ideology. In health care that means coninuing to allow insurers to deny coverage to people who have or have had illnesses or accidents. When you combine that with a hostility toward ANY government insurance program, the result is deadly. Literally. Ask yourself how many senior citizens would have health care insurance if Medicare did not exist.