Will McCain's Health Plan Lower Prices? A key element of John McCain's health plan, would allow people to buy insurance from other states — that's currently prohibited. The GOP presidential hopeful says it would open markets and bring prices down. But critics say it has the potential to drive up prices dramatically for sick people and deprive patients of important consumer protections.
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Will McCain's Health Plan Lower Prices?

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Will McCain's Health Plan Lower Prices?

Will McCain's Health Plan Lower Prices?

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This is Morning Edition from NPR News. I'm Renee Montagne, good morning. The focus on the troubled economy has kept the focus on a related concern, the high price of health care. We turn now to a central feature of John McCain's health care plan. It would let individuals buy health insurance from other states. That's not allowed now. Senator McCain and his backers say that could help lower premiums. But as NPR's Julie Rovner reports, critics say it could also cause lots of problems.

JULIE ROVNER: Much has been made of John McCain's plan to give every American a tax credit to help them buy insurance. Less discussed is what they might do with that money. McCain himself talked about it during the debate last week in Nashville.

Senator JOHN MCCAIN (Republican, Arizona; Republican Presidential Candidate): I wanted to give every American a $5,000 refundable tax credit they can take anywhere across state lines. Why not? Don't we go across state lines when we purchase other things in America? Of course it's OK to go across state lines, because in Arizona they may offer a better plan that suits you best than it does here in Tennessee.

ROVNER: Right now, large employers can buy plans that are sold nationwide. But health plans sold to individuals and small businesses are regulated state by state. Most states require that health insurers cover specific benefits, and not only are those benefits expensive, but some buyers may not see them as necessary says Michael Cannon of the libertarian Cato Institute.

Mr. MICHAEL CANNON (Director of Health Policy Studies, Cato Institute): That will include things like chiropractic coverage, in-vitro fertilization, which is very expensive and a lot of people find morally objectionable, but a lot of states require that.

ROVNER: So the idea is to let people shop around the country to find plans that don't have as many rules attached. McCain actually picked up the idea from his home state colleague, Arizona Republican Congressman John Shadegg, who's been pushing a bill to allow such sales for several years now.

Mr. CANNON: By allowing people to buy health insurance across state lines, or essentially to allow an insurance company to qualify in one state and then sell in your state, you're going to increase competition and you going to allow them to bring a policy into your state that will cover basic services but might not cover hair prosthesis, might not cover aromatherapy, might not cover acupuncture. That means that policy will cost less money and enable people to be able to afford it.

ROVNER: But while the bill has kicked around Congress for years, it hasn't passed because there's been a lot of opposition, some from state insurance commissioners like Susan Voss of Iowa. She's worried about how she'd suddenly handle having to help residents of her state who are having problems with plans purchased from around the country.

Ms. SUSAN VOSS (State Insurance Commissioner, Iowa): And if I had to explain to, you know, a 45-year-old in Humboldt, Iowa, that there is nothing I can do, but be more than happy to call the state regulator in New York, how does that work?

ROVNER: There are more system-wide worries about the proposal as well. Len Nichols heads the Health Policy Program at the New America Foundation. He's been working with centrist politicians from both parties. He says allowing people to buy policies from other states could undermine the entire insurance system.

Mr. LEN NICHOLS (Director, Health Policy Program, New America Foundation): Fundamentally what this kind of policy does is make it extremely attractive to insure the healthy, and it in fact requires insurers to be aggressive. Otherwise, they will be driven out of business by those who are more aggressive.

ROVNER: In other words, insurers will rush to set up in states with relatively few regulations and few specific benefit requirements. That way, they can create plans that are cheap and attractive to healthy people. But then what happens, Nichols says...

Mr. NICHOLS: If everyone who's healthy chooses one kind of policy and everyone who's sick, because they have the condition, choose a policy that covers that condition, then the healthy pool in the more scaled-back policy will be way cheaper, and a policy that covers the condition - like cancer or maternity or anything that's actually concrete and serious - will cost a lot.

ROVNER: And while that will be a good deal for the young and healthy at first...

Mr. NICHOLS: It turns out we all will get sick. We all will age. We all will have health problems, and then we will be on the out.

ROVNER: McCain and his allies acknowledge that people with health problems might have more trouble getting coverage in a more open market. So they're proposing special plans specifically for those with pre-existing health problems. But critics say it would take billions more to fund those plans than McCain is offering. Julie Rovner, NPR News, Washington.

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