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Candidates’ healthcare fixes: tax credits vs. more federal spending

The US spends twice as much on healthcare per capita than other nations but still trails in access to care.

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Many individuals and families in the United States are uninsured because they have preexisting health conditions that insurers refuse to cover because of the anticipated cost. Mindy Hedges is one of them. She owned her own advertising company here in Delaware for 18 years, but as a result of the economic downturn it’s been forced to close. Though it was a challenge, she had always helped to provide coverage for as many as 14 employees.

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Ms. Hedges has been diagnosed with what doctors call “Type 1 Diabetes,” for which they sometimes prescribe expensive treatments. That made it hard to get insurance for her small company in the first place. But she managed to find a policy.

When her business closed, she was stunned to discover that small businesses of 25 or fewer employees don’t qualify for COBRA (Consolidated Omnibus Budget Reconciliation Act), the federal rule that allows people who have lost or changed jobs to continue buying their company insurance plan for 18 months. She and her husband have been uninsured since July.

“For the first time in my life, I don’t have insurance,” says Hedges. “It makes me cry.”

Each candidate’s plan would attempt to provide Hedges with access to care.

The McCain plan relies on his tax credits of $5,000 per family and allowing people to buy health insurance across state lines, to drive down overall costs and help people find the coverage they need.

If they still can’t find a plan, McCain calls for the expansion of state-run high-risk pools that would be required to take people with preexisting conditions, but he doesn’t put any limit on how much those insurance plans could charge individuals.

The Obama plan would require health insurance companies to cover people with preexisting conditions “at fair, stable premiums.” The idea is that if every health plan had to cover everyone, those with healthcare needs as well as those without, the average cost of insurance would go down.

National insurance exchange offered

Individuals like Hedges could also buy an insurance plan from the proposed National Health Insurance Exchange. While Obama would require large businesses to provide coverage or pay into a kitty to help subsidize the uninsured, that requirement does not apply to small and medium-sized companies.

Hedges favors the Obama plan, primarily because of her experience trying to find an individual health policy she can afford on her own.

Most insurance companies she contacted didn’t return her calls for a quote when they learned she had a preexisting condition, she says.

AARP (formerly known as the American Association of Retired Persons), which she joined just so she could buy its health insurance, did return her call – but only to turn her down. She did receive a few quotes of between $2,500 a month and $5,000 a month for comprehensive health plans, but she’s currently unemployed and couldn’t afford that.

The experience has made her an adamant opponent of the McCain plan.

“What McCain is offering is not even a plan – for $5,000 I can buy two or three months’ worth of health insurance, and then what do I do?” she says.

McCain’s advisers argue that expanding the current state-run high-risk pools would allow people like Hedges to buy insurance. They admit there would be no cap on how much those plans could charge, but contend that by allowing insurance companies to sell their policies across state lines, people like Hedges could find a suitable policy in another state.