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The Lewin Group Presents “McCain and Obama Health Policies: Cost and Coverage Compared” Analysis

October 08, 2008

WASHINGTON, D.C. – October 8, 2008 – The Lewin Group released an independent comparative analysis of the proposed McCain and Obama health care reform plans today at the National Press Club in Washington, D.C. The report is posted on The Lewin Group Web site at www.lewin.com.

The firm is nationally known for its work in designing and evaluating health care system reform proposals on coverage and costs for the federal government, state governments, private employers and households. Key study findings include:

  • Lewin projects that by 2010, there will be 48.9 million people without health insurance under current law. The McCain health plan would reduce the number of uninsured by 21.1 million people while the Obama plan would reduce the number of uninsured by 26.6 million people.
  • Both plans result in large, new public costs for the federal government. The McCain plan would cost $2.05 trillion over the 2010 through 2019 period. The Obama plan would result in a net federal cost of $1.17 trillion. Neither candidate provides specifics on how to fund this net federal cost.

The candidates have decidedly different visions for the future of health care in the U.S. The McCain plan focuses on expanding private insurance coverage while the Obama plan would expand coverage under public programs. Findings include:

  • The McCain plan increases private coverage by 26.5 million people by providing refundable tax credits ($2,500 single; $5,000 family) for the purchase of private insurance, including individuals purchasing non-group coverage. Public coverage would fall under the McCain plan by 5.4 million people as Medicaid enrollees become covered under private insurance.   
  • The Obama plan increases the number of people with public insurance by 48.3 million people by expanding Medicaid for low-income adults and creating a new national plan. Private insurance coverage would decline by 21.6 million people under the Obama proposal, as employers and individuals shift to a new lower-cost national plan.
  • Under the McCain plan, families will save an average of $1,411 per year, reflecting that the tax credit will generally be larger than the income taxes paid on employer sponsored benefits. Families will save an average of $426 per year under the Obama Plan. 
The candidates’ plans differ sharply on the regulation of insurance. The Obama plan requires insurers to offer guaranteed issue coverage for all applicants and prohibits the use of health status in setting premiums for employers and individuals. The McCain plan enables individuals and employers to purchase coverage from a state permitting the use of health status in setting premiums, even though they live in a state that now limits or prohibits the practice. The McCain plan then provides federal subsidies for high-risk pools that would be available to those denied coverage due to health status. 

                        The Lewin Group Compares Key Findings of the Candidates’ Plans 

                                                                                                   McCain                Obama 
        Reduction in Uninsured (2010)                                          21.1 million            26.6 million 
        Percent Reduction in Uninsured (2010)                             43.1%                   54.4% 
        Total Federal Net Expenditures (2010-2019)                     $2.05 trillion          $1.17 trillion 
        State Net Expenditures (2010-2019)                                 -$535.3 billion       -$353.5 billion 
        Change in Employer Health Spending (2010)                    -$40.2 billion         $2.0 billion 
        Change in Privately Insured (2010)                                   26.5 million             -21.6 million 
        Change in Public Coverage (2010)                                    -5.4 million            48.3 million 
        Change in Annual Family Health Spending (2010)             -$1,411                -$426

“Both candidates’ plans have features designed to reduce health care costs,” John Sheils, senior vice president of The Lewin Group, explained. “Senator McCain’s plan allows people to purchase coverage without state mandated benefits by permitting the sale of insurance across state lines and increases incentives to purchase lower cost health plans by eliminating the income tax exclusion for employer-sponsored health benefits.” Sheils added, “The Obama health care reform plan establishes a minimum standard of covered benefits and requires the use of proven care coordination of services for the chronically ill in Medicare and other federal programs.”

Lewin estimates also reflect the effect of other important provisions in these plans. The coverage and cost estimate for the Obama plan reflect his proposed small employer tax credit for insurance and a new federally subsidized reinsurance program to cover catastrophic health expenses in employer plans. The McCain plan estimates also reflect the new high-risk pools and a new option for states to cover Medicaid participants under private insurance with the help of the new tax credit.  

The Lewin analysis makes no judgment as to which candidate’s plan is better. Lewin’s goal was to supply a detailed breakdown of the effects of the plans, giving sufficient information to allow each reader to come to his or her own conclusion. An extensive discussion of the effects of each plan provision studied is available with the report.

Lisa Chimento, executive vice president of The Lewin Group, explained the methodology that Sheils used to ensure that the Lewin study was intended to be unbiased. “All of the data was gathered from official campaign materials and statements available in the public domain,” Chimento said. “Additionally, we invited each campaign to provide Lewin with copies of any information they felt was relevant to the analysis and to attend this news conference. Yesterday we sent them preview copies of the report.”

The McCain and Obama health care proposals were compared using a well-validated proprietary model, the Health Benefits Simulation Model (HBSM).  Lewin analyses are primarily based upon this model of the U.S. health care system, which has been continually refined since 1989, when it was first used to estimate the cost of alternative universal coverage proposals for the Bipartisan Congressional Commission on Health Care.  Since then, the model has been used to analyze a broad range of health reform proposals at the state and federal levels.  A detailed description of the HBSM is available on the Lewin website at www.lewin.com.

About The Lewin Group

The Lewin Group is a premier national health care and human services consulting firm with more than 35 years’ experience finding answers and solving problems for leading organizations in the public, nonprofit, and private sectors. With its industry experience and knowledge, The Lewin Group provides its clients with high-quality products and insightful support to help them maximize the delivery of programs and services that make a difference in the lives of their constituents.  For more information on The Lewin Group, visit http://www.lewin.com.

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