Thursday, July 19 , 2018, 2:30 pm | Fair 76º


Harris Sherline: Comparing the Candidates’ Health-Care Plans

No matter who is elected president, health care is going to cost us more.

Whatever else Sen. Barack Obama may say about his health-care plan for all Americans, one thing is certain: If he has his way, it will ultimately be a single-payer, government-run plan. On Aug. 19 in Albuquerque, he told 1,800 supporters, “If I were designing a system from scratch, I would probably go ahead with a single-payer system.”

Harris Sherline
Harris Sherline
“Given that a lot of people work for insurance companies, a lot of people work for HMOs, you’ve got a whole system of institutions that have been set up,” he added. “So my attitude is let’s build up the system we got … maybe over time … decide that there are other ways for us to provide care more effectively.”

According to Robert Moffit, director of the Heritage Foundation’s Center for Health Policy Studies, Obama’s plan pretty well guarantees that health care will be run by the government. Among other things, it would require employers of a certain size to either provide health-care coverage or pay a tax that would be used to pay for the uninsured.

Like Obama’s health-care plan, Sen. John McCain’s proposal is long on promises and short on specifics. Their platforms are both laced with grandiose statements — about making insurance more portable, making health insurance available to those who are uninsured, guaranteeing access by making it easier for individuals and families to obtain insurance, etc.

McCain’s plan is more market-oriented. It taxes employees on the cost of the employer-paid insurance they receive but, to offset this, his proposal would give tax credits of $2,500 for individuals and $5,000 for families who buy their own health-care plans in the open market. However, Kaiser Health Care Foundation estimates the cost of health-care insurance would be much higher than the proposed tax credits.

The Democratic National Committee argues that McCain’s plan won’t take care of America’s 47 million uninsured, and Elizabeth Edwards, wife of former Democratic presidential candidate John Edwards, has said McCain is working with the insurance companies rather than standing up to them, and that “moving health care to the individual market will not make costs lower or make health care more accessible.”

Medicare is often cited as the model for a universal health-care plan, with low administrative costs and extensive coverage for seniors. However, it is not generally recognized that Medicare employs price controls on hospital and doctors’ fees for the services they provide.

For example, in the case of hospital inpatient care, the government determines, in its sole discretion, the price schedule for the complete range of hospital services — then pays only 80 percent of those amounts. Furthermore, they dictate the increase that is permitted each year for cost-if-living adjustments, which generally have been between 1.5 percent and 2.5 percent. The problem is that hospital costs have consistently increased annually to approximately 14 percent from 6 percent. With a cap on the prices hospitals can charge for services to Medicare patients and no limit on the increases in their costs, it’s easy to see why many hospitals have gone out of business since the system was established in 1984.

Price controls have never worked, ever, at any time in history. They were tried as early as 301 A.D. by a Roman emperor, Diocletian, who implemented price controls under penalty of death. But, even that didn’t work, and it hasn’t worked since.

With a single-payer plan, a government agency would establish the rules by which the program would operate, as is already the case with Medicare. It would set the premiums, co-payments, deductibles, etc., and would undoubtedly find it necessary to also define the rules for private plans to make sure the price schedules of the two systems are comparable. This would create centralized, federal standardization of health plans.

Another problem with single-payer health-care systems is the fact that they all involve rationing — of both facilities and medical care. The reason is simple economics: give something away and you can “sell” everything you have and more. Demand will always exceed supply, and if prices cannot be increased, the result will be shortages.

Every nationalized or socialized health-care system that has ever been tried has proven this, including Canada, England, Germany, Japan and the former Soviet Union. They all have or had shortages — of doctors, equipment and facilities, and shortages require that choices be made. That’s a form of rationing. The most obvious consequence of this is long waiting times — for doctor appointments, referrals to specialists, lab tests and other exams, such as X-Ray, CRT or MRI, and admittance to hospitals for anything from the simplest procedure to heart surgery. Conditions were so bad in the former Soviet Union that hospitals were forced to re-use needles.

When it comes to health care, it probably won’t matter a great deal whether Obama or McCain becomes the 44th president. Obama’s “pay or play” mandate will cost employers, which will affect employment, and McCain’s market-oriented proposal is likely to increase health-care costs for employees and create a maze of complex insurance proposals that most people will not be able to navigate without professional assistance. Either way, it means that solving the health-care problem is going to become far more costly than it already is.

Click here for more information on the McCain health-care plan. Click here for more information on the Obama health-care plan.

Harris R. Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital who has lived in Santa Barbara County for more than 30 years. He stays active writing opinion columns and his own blog,

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