Obama McCain health care plans fact checked.

Most of the last two years we've seen Obama talk about his health care plan that he says would lower people's insurance premiums by $2500 a year. We watched him first discusses his plan in debates with Hillary, who had a slightly different proposal. Now it is time to put his plan and McCain’s under the microscope.

Obama's health care plan, that he says will lower premiums $2500 dollars a year per person, sounds wonderful. I as an individual pay about 6000 dollars per year for my health care plan. So, taking $2500 dollars off would be great. The key question of course is how to do this. If the government simply gave everybody $2500 dollars a year, for every man woman and child in the country, we would be talking about a yearly expenditure that exceeds the much talked about trillion dollar bailout plan.

As it turns out his plan simply involves the automation of medical records and other paperwork currently in the healthcare industry. An examination of his plan by factcheck.org shows some surprising results. His plan would in fact, lower health care costs, but by nowhere near the percentage he is talking about, and it would take 10 years to accomplish. In addition, there are upfront costs to implement the plan, which someone has to pay for. So the net savings in an Obama first-term would be negligible. In addition, when inflation in health care costs is taken in consideration, and the growth in health care costs usually exceeds the inflation rate, the most conservative inflation estimates would show that Obama’s plan at best, would slightly slow the increase in health care costs for a short time and result in no actual decreases at all.

I often wonder why Hillary and Obama, both in the Senate, simply didn't put forth a plan that would lower everybody's cost of insurance by 2500 dollars year. If it were so easy the plan would have pasted in the Senate a hundred to nothing. But there is no free lunch, and as Obama himself said previously in his debates with Hillary, if fixing health care were easy, it would've already been done. So unless Obama has some great secret strategy and again, if he's got some great secret strategy to do this why have we not heard about it in the Senate? Perhaps the conclusion has to be that he himself knows his plan will not work when put under the microscope of a Senate hearing. If there was an easy solution, he's right, it would have already been done.

McCain’s health care program is based around the elimination of what has been since World War II, the employer-based health care plan. Employers began to increase the benefits to their employees, like health care, because they couldn't legally raise wages. This system has developed over time into one in which most people rely on employers for their health insurance. McCain's plan would allow more individuals and not their employers to choose their own health care plans and to help pay for it, a 5000 dollar tax credit. The problem with this plan, is that most individuals are completely unqualified to compare one health care plan to another. These plans have page after page after page of fine print with exclusions on things that are paid for or not paid for. It is almost impossible for most people to make a reasonable choice of a health care plan without hiring a lawyer to look over the contracts and see exactly what is covered and what is not. Even if you could determine what's covered in each plan and what's not covered under each plan then you have to guess what illness you're going to get to be able to make any kind of reasonable decision on which health care plan was actually better for you. John McCain's plan depends on the free market to lower rates. The problem with this approach is that the free market lowers rates by putting those very exclusions of treatment into their contracts to lower their costs and therefore offer a plan that sounds good but costs less, so people will buy it. They'll find out that the plan doesn't cover whatever it is they needed for it to cover when they are in the hospital and it's too late.

Before consumers can reasonably be able to shop for health care plans, a major problem in the insurance industry needs to be addressed. If anyone is ever going to hope to be able to make a reasonable choice between competing health care plans, there must be some standards that all health care plans must meet. There must be a national minimal coverage standard so that everyone knows if they purchase an insurance policy, that policy will cover everything in those standards. Insurance companies could add benefits, like John McCain's debate mention of hair transplants, cosmetic procedures, etc, and sell premium or super premium plans at additional cost. But the consumer must know that if you purchased a health care plan, all basic health care needs are covered. People must be able to trust that if they purchase something in this country called a health insurance policy, and they get sick and go to the doctor then that is covered.

There must also be some standardization as to how insurance companies calculate deductibles, co-pays and maximum out-of-pocket expenses. These three items are the key to choosing a policy. Once you understand what a health care policy is, i.e. one that meets the minimum national standards to be called a health care policy, the next question that you have to ask is what you're co-pays are, what you deductible is and what your maximum out-of-pocket expenses are. These standards would tell a customer that a policy that has a $1500 deductible is, in fact, a better policy than one has a $2500 deductible. They would not have to hunt for some fine print containing coverage exclusions, or something else that makes what appears to be a better policy in actuality a worse policy for the consumer. The basics contained in a health care policy must be standardized. There must also be standardization in how insurance companies list and advertise the three basic components that can be used to compare plans, i.e. co-pays and deductibles and maximum yearly out-of-pocket expenses. Ever try to read the small print on the bottom of your TV screen during an insurance commercial? This standardization would let people look at a short summary and determine which health care plan is really best for them. Insurance companies would compete on the basis of their own internal efficiencies or inefficiencies, their level of customer service and the efficiencies or inefficiencies of their network of health care providers they contracted with to provide the services, but not on which services are covered and which are not in the standard plan.

Once the deductibles, doctor co-pays and out of pocket expenses are standardized and the minimum coverage is standardized, you can make a rational decision with a one-page sheet of information of which plan is actually better for you. Do you want a plan that has higher premiums but a lower deductible so that once you budged for your monthly premiums; your health care is covered? Or do you consider yourself a healthy person that wants to pay lower premiums with higher deductibles so that you would use your insurance for the worst illnesses and pay for more routine visits out of pocket?

This standardization would also greatly reduce costs to health care providers. They spent an enormous amount of time and resources trying to determine what procedures are covered, and getting paid for them by the insurance companies, for each of their patients and they’re many different plans. The enormous amount of paperwork involved in this today is a part of what Obama’s plan would computerize or otherwise automate. But why not eliminate it instead of automating it? Your doctor should spend his time deciding how to treat you illness, not on how to classify it so it’s covered by your health care plan.

Economic and Energy crisis, the real 3 a.m. call for Obama and McCain.

Lehman Brothers fails today. Falling values for homes continues to affect financial institutions all across the country. The real truth is that the crisis in the economy and the energy crisis are really one and the same. As the price of energy, and everything else has soared, this has a ripple effect throughout the entire economy. Gas cost more, so you have less to spend on other things and all the people that work in the stores that sold you those things now have a lower income. They therefore cannot afford to buy things, like houses, and on and on down the line. Plus the cost of everything that you have to buy goes up. Everything in every store you ever visited got there by truck. Any energy prices are causing the cost of driving a truck to go up. There is an underlying energy cost in virtually every single product that you buy, be it houses, electronics or food. Farmers had to buy gas to plow their fields, plant their seeds, harvest the crops, and transport the crops to market and on and on.

The underlying economic problem in this country for quite some time is the very simple fact that we import more than we export. You can relate how this works to a household budget. Your imports are the amount that you spend your exports are the amount of income you earn and if you continuously spend more than you earn, you're not going to end up doing very well economically. For years, the biggest factor in our trade deficit has been the importation of oil. Decades ago when oil was cheaper, we decided to make a trade-off. That trade off was a willingness to spend money to import oil and produce less domestically, because it was dirty. The oil spills off the Gulf coasts and off the coast of California were an annoying problem for anyone who went to the beach. I am old enough to remember visiting the beach as a youngster, and at the steps of every hotel along the beach there was basically some rags in a bucket of kerosene or some similar solvent to clean your off the bottom of your feet so you wouldn't track oil back into the hotel. The technology has greatly advanced. Offshore wells now have shut off valves below the seafloor. They close automatically in an emergency to prevent large quantities of oil from leaking into the sea. As a side note, 80% of all the oil on the earth that’s ever been formed has already leaked to the surface. The amount of oil spilled into the ocean today by man is only a tiny fraction of natural leakage of oil. Oil is lighter than water or rock, and after enough rock builds up over the top of it, it gets squeezed and the pressure goes up. If there are any fissures or cracks in the rock, it rises to the surface. Bacteria consume it and it becomes part of the food chain. After all, crude oil is pure organic material; it only causes problems in high concentrations, like a major oil spill. There have been no major oil spills off the coasts as a result of offshore drilling in many years.

And most importantly, the economics of our decision to import oil instead of producing it domestically has changed. At current world prices, and especially their peak price reached a few months ago, we are spending hundreds and hundreds of billions of dollars to import oil. The cost of the Iraq war is also an economic drain but the economic drain of the Iraq war is only about 20 or 30% of the economic drain of importing oil. In 1973, the Arab oil embargo caused a similar economic crisis in our country. Of course the obvious effects were the gas lines and the increased price of filling up your car at the pump. But our entire economy suffered greatly. Inflation soared and jobs were lost. Pretty much the same thing that we're experiencing right now. It was because of the ripple effects of energy prices, which is an underlying cost to produce virtually everything we eat or use in our daily lives. This is somewhat mitigated however, if the energy that we are paying increased prices for comes from inside the US. Because the net wealth stays inside our country, increased income from producers of oil is used to purchase goods, products and services that everyone else depends on for their income. If the money flows outside of the United States it is a net loss of wealth.

Earlier this year, when the price of energy soared, that was the 3 a.m. wake-up call. It should have been easily foreseen by Obama and McCain and everyone else that the ripple effects of virtually doubling of energy prices would have throughout the economy. The fallout was going to be brutal and widespread. McCain reversed his earlier position, and the position of pretty much everyone else, and said it was time to open up the outer continental shelf, but not ANWR, for drilling. He made it part of the way but didn't really propose an all-out plan to increase production. Obama came out against offshore drilling. It's McCain that got a grade of “incomplete” and Obama, a grade of complete failure.

The real solution to both the energy and related economic crisis is to become energy independent. Either Obama or McCain could have said the following statement and passed their 3 a.m. test:

“We are in a national emergency. We must become energy independent. This emergency requires the concerted efforts of our most creative and hard-working people all across the country. We need to greatly increase our investments in alternative energy sources, especially carbon free sources, like nuclear, wind and solar. But we also must realize that the time has come to explore every resource we have available to us. We need to produce every additional alternative energy source we can produce, and we need to extract every last barrel of oil and cubic foot of natural gas on American soil that we can find in an environmentally sound way. And we need to do it very quickly. We are out of time.”

The question of course is which candidate will figure this out, and will they figure it out before it's too late.

Also see:
Obama vs McCain, who is really more of the same?
Democrats blocked Bush’s Fannie Mae and Freddie Mac Reforms.
Democrats created Fannie Mae and Freddie Mac mess then stopped reforms.