McCain's Brain

I think you said-correct me if I'm wrong-that a 10 percent individual income-tax cut would result in a $1.24 trillion revenue loss over 10 years.
That was the CBO [Congressional Budget Office] study? ... I don't remember the details of the study, but that certainly sounds about right.

So the basic argument is that you have to do something about the entitlement programs, correct?
Yes.

So what does Senator McCain propose? I don't think he is willing to raise the cap on payroll taxes, or undertake any other major initiatives that would really address the issue. Is that incorrect?
There's Social Security, and then there's the health programs: Medicare and Medicaid. On Social Security he's said that you can fix it, [that] you can fix it without raising taxes, and that the real obstacle is political. He has not put forth a plan, because he doesn't want to somehow make it harder to get the political consensus done. He's going to ask Congress to solve it, and if they don't, he's going to send them a plan and ask for an up-or-down vote.

What kind of a plan?
He hasn't put out a plan, it's true. But if you look at the menu of things that are out there-the thing called "Pozen price indexing," which slows the benefits at the upper end [of the income scale], or if you raise the normal retirement age from 67 to 68 ... a combination of things easily brings the system into balance over the long term. This is not rocket science. There are a lot of options. He knows that, so rather than dictate a solution that will run into political problems, he's saying, "Look, I know we can do this. It's a political issue to get it done. I'll call on the Congress to do it the minute I'm president."

OK. And then on Medicare and Medicaid?
We have a big health-reform plan that includes changes in the Medicare payment system. There are some Medicare payment reforms; there are some insurance market reforms, tax reforms-a $5,000 refundable tax credit. Taken as a package, that will address the growth in health-care spending, which is really the driving issue. We've gotten to where 16 percent of our national income is spent on health care.

So he's saying he can get better care at a lower cost.
I think everyone recognizes this. If you look at a very common procedure-say a cardiac bypass-[there are] enormous variations in cost [in different parts of the country] for the same outcome. So all of the health analysts now recognize that we have big regional differences in cost. There's got to be a way to get those same outcomes with less money.

Would McCain, given his experience with skin cancer, be able to buy an individual private insurance plan under his proposal?
Yes, but he wouldn't be able to do it just on the basis of the tax credit. I really want to emphasize that it's a big mischaracterization to suggest that somehow John McCain's health-care reform [amounts to] "Here, take a $2,500 tax credit and go and solve your health-care problems." You have to change the practice of medicine so it's not based on fee-per-service, but instead spending on making people well. That's step one. Step two, you have to improve the insurance market. The current individual insurance market is terrible.

Just to go back to the specific question: he'd be able to go out, with his record of skin cancer, and be able to buy an individual insurance plan? There would be a company that would be willing to insure him at reasonable rates?
In the post-reform, fully implemented world, yes. That would be the goal.

And how would that happen?
It would require a lot of changes.

But why would a private company want to go out and provide insurance to somebody like him?
In any insurance room, you have to distinguish between people who are potentially high-risk, which is an insurance risk, and people who are simply high-cost, because [a disease has] already happened. John McCain has already had cancer, so it's already happened. That's not a risk issue, it's a cost issue. And higher-cost patients will have to have more money, and the tax credit would be supplemented for high-cost patients. So once it's already happened, it's not a risk that an insurance company has to manage. It's a fact. And you have to pay for it. That should be acknowledged. You also want to lower the cost of care for such patients. That should be part of the goal, so the insurance isn't as expensive, either.

Senator McCain supports government-sponsored personal retirement accounts to supplement Social Security savings. Is that correct?
To supplement Social Security-but he's emphasized that it's not a substitute for coming to grips with the financial problems of the system.