FactCheck Gets It Wrong On McCain's Health Care Plan

Dear FactCheck,

I disagree with your most recent fact check, on an Obama commercial criticizing McCain’s health care plan.

Just to be upfront, I’m an Obama supporter. That said, I’ve usually agreed with FactCheck’s critiques of Obama’s ads.

You’re correct to say that when Senator McCain compared bank and health care deregulation, he was “referring narrowly to his proposal to allow people to purchase health insurance across state lines.” But in order for Obama’s commercial to have taken this statement “out of context,” as FactCheck claims, the commercial’s arguments would have to be inaccurate once McCain’s “full context” is understood. This is not the case. To the contrary, the Obama commercial correctly criticizes this exact aspect of McCain’s health care plan.

From a critique of McCain’s plan published in the journal Health Affairs (the four authors are professors specializing in health care and in economics):

Currently, the nongroup insurance market is regulated at the state level, and local insurers, often Blue Cross and Blue Shield plans, are major players. Senator McCain’s proposal envisions a relatively unregulated national market for nongroup insurance in which families would buy insurance on their own or as members of fluid, voluntary associations, such as churches or clubs. In this market, consumers could select insurers licensed in any state. With more choice and competition, he believes that costs would fall and service quality would increase.

Everything we know about nongroup insurance markets, however, suggests that this vision is wrong. Health care is the ultimate local good: it is provided face to face, between doctor and patient. Today, most health plans negotiate contracts with local providers, directly or through intermediaries. The only truly national plans are traditional indemnity plans that do not negotiate with local provider networks. Such plans were once the backbone of American health care. They lost out to more tailored plans, however, because they could not compete effectively. Without an informed local network, their prices were higher and quality was lower. There is no reason to think that this has changed.

The main effect of establishing a national market would be to undo state laws designed to establish minimum levels of coverage and protect consumers. In a national market where state licenses are not required, insurers will charter in places where regulations are scarce–much like credit card companies do today. As a result, people guaranteed basic benefits today would find those benefits eliminated under the McCain plan. People in most states would lose access to procedural protections, such as requirements that disputed decisions by managed care plans be subject to external review. People also would lose access to many benefit protections. For example, forty-seven states now require mental health parity, forty-nine states require coverage of breast cancer reconstructive surgery, and twenty-nine require coverage of cervical cancer screening. All of these requirements–as well as regulations in several states that limit the rates that can be charged to higher-cost consumers and that limit who can be excluded from a health plan–would be eliminated under the McCain plan. Without legal requirements in place, plans would no longer offer these benefits at all in many markets, even if many consumers want them.

It’s important to emphasize that the above quote represents a mainstream scholarly view of the likely effects of allowing insurance to be sold across state lines. It’s not a fringe view, or a view that only an Obama partisan would hold. (See, for example, this post on “The Health Care Blog,” written years before the current presidential campaign.) And it’s a view that is unacknowledged anywhere in your critique.

The Obama commercial said that McCain wants to “reduce oversight of the health insurance industry.” This is true — the effect of allowing insurance companies to compete across state lines, without adding national regulations stronger than what currently exists at the state level, would be reduced oversight. (“The nongroup insurance market is regulated at the state level.”)

The Obama commercial says that the result would be “Increasing costs and threatening coverage.” Again, this is true — these are expected effects of allowing insurance companies to compete across state lines (“regulations in several states that limit the rates that can be charged… would be eliminated.” “People in most states would lose access….”).

FactCheck’s critique should have acknowledged that the three substantive claims of Obama’s commercial — that allowing insurance companies to compete across state lines could lead to reduced oversight, increased costs and threatened coverage — are well-supported, and are responsive to McCain’s “proposal to allow people to purchase health insurance across state lines.” By not doing so, your critique inaccurately implies that the commercial’s substantive arguments rely on out of context quoting. Your critique also focuses on relatively trivial issues, such as dating, while not addressing more important policy claims about the likely effects of McCain’s health care proposal. I would encourage you to rectify this problem by updating your critique, perhaps by quoting from the Health Affairs article.

Thank you for the work you do. Although I disagreed with this particular critique, I read FactCheck regularly and find it a useful tool for understanding the presidential campaign.

Respectfully,

Barry Deutsch