Two Roads Diverge in Health Care Reform: Which is More Radical?

08/07/2008 05:12 am ET | Updated May 25, 2011

John Goodman, an unpaid advisor to the McCain campaign, writing in the Wall Street Journal on July 30th, has asserted that McCain's health care reform proposal is a much bolder and more transformative proposal than Obama's.

According to Goodman, the McCain proposal, which would replace a tax break for employees who receive health insurance from employers with a refundable tax credit of as much as $2,500 for individuals and $5,000 for families to purchase private coverage, "would completely replace" the current health care system with a "fairer, more efficient system with a much better chance of insuring the uninsured and controlling health costs at the same time." In contrast, "Obama would leave" the current health system -- which is "extremely arbitrary" and "wasteful" -- "largely intact," he adds.

Let the debate really begin now. During the primary season, the focus was on the differences between Obama and Clinton. Those differences were relatively minor. The differences between Obama and McCain's proposals are, indeed, substantial, but not the way Goodman suggests.

The Kaiser Family Foundation compares the two candidate proposals in a nice concise table. The differences are easy to see. The two candidates reflect the philosophy of their parties -- McCain trusts the market to be the engine of reform; Obama does not reject market forces but builds in certain regulatory requirements meant to compensate for market failure.

McCain supports tax credits and tax reform, removal of the tax advantages for employer-sponsored health insurance, increased individual responsibility for the purchase and maintenance of health insurance, and market forces to encourage competition. These are not insignificant changes -- they would most likely eliminate the employer role in health insurance over time, and they shift responsibility for buying and monitoring health care from government and employers to individuals. But there is little chance that these changes would help the uninsured. Elizabeth Edwards has been among the most outspoken critics of McCain's plan, saying that the tax credits would do nothing to help those with pre-existing conditions who are refused coverage and that the $2500 credit is far short of what is needed to purchase insurance in the individual market. Elizabeth Edwards says this is not the type of change we should support.

Obama does not advocate tax credits or other tax related reforms and his plan does not rely on market forces alone to bring about cost containment. His proposal leaves much of the current employer-based system intact but proposes adding a public plan for people who do not have employment-based insurance, along with premium subsidies related to income. He also proposes mandatory health insurance for children, and there are hints he may be open to mandatory insurance for adults as well. McCain proposes to free the health insurance industry from restrictions so that policies can be sold across state lines; Obama proposes to crack down on the insurance industry and require them to provide "guaranteed issue", meaning that they cannot refuse coverage because of pre-existing conditions.

Despite the clear differences in their basic approach and policies, there are a few similarities: both candidates emphasize prevention, health education, increased use of health information technology (HIT), measuring performance of doctors and linking payment to that performance. These are the "apple pie" issues in health care reform that few oppose on either side of the aisle. It is pretty clear that McCain's approach is not purely a market one, and Obama's is not a government takeover of health care.

All of this may leave you with your eyes glazed over if you are not a total policy wonk. Who really represents change and how much change do Americans really want in their health care? During the Reagan Administration, Republicans tried to eliminate the tax favorability of employer-sponsored coverage and were roundly defeated. The failed Clinton health reform effort demonstrated pretty clearly that while Americans are disgusted with the health insurance industry, they do not want one-seventh of the economy to be restructured to accommodate that disgust. How much change can we believe in or tolerate? Do you want the radical change of McCain that dumps most of the responsibility for health care on you, the patient? Or do you want a more moderate and practical approach to change that the Obama plan represents? There will be plenty of challenges within each of the political parties to these approaches -- many Republicans will oppose eliminating the tax treatment of health benefits, and many Democrats will charge that Obama does not go far enough in his health reform proposal.

Despite internal disagreements in each camp, however, there are very real differences between the two candidates on this issue. These two roads are diverging and the one you choose will make all the difference.