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Finally, Mike McFadden offers details on his health-care views

The Republican candidate for U.S. Senate has definitely gone beyond the almost cartoonish non-positions he had taken previously.

This is one in an occasional series of articles about the policy positions of U.S. Senate candidates Mike McFadden and Al Franken.

McFadden unifies GOP with convention win
MinnPost file photo by Brian Halliday
McFadden speaking at the 2014 GOP

Until now, I’ve been portraying Mike McFadden as a U.S. Senate candidate who either couldn’t or wouldn’t level with Minnesotans about where he stood on a wide range policy questions. He also hadn’t agreed to my several requests for an interview.

Now he has. After a reasonably long interview last week, which I appreciate, McFadden has definitely gone beyond the almost cartoonish non-positions he had taken previously in the “issues” section of his website, but also during debates and in many of the interviews that he had granted.

Possibly his willingness to talk more about policy reflects a new stage of the campaign, now that he is the Republican endorsee, has the nomination almost locked up and is perhaps less concerned about alienating the Tea Party/Liberty wings of the Repub coalition. That’s just a guess.

It’s harder and harder to convince oneself that a political campaign, such as this one for the U.S. Senate, is a contest between competing visions of the best public policies. But we still gotta try, don’t we?

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So, based on the interview, here’s a deeper (but not totally satisfying) treatment of McFadden’s thinking on a major issue, health care:

In his general rhetoric and on his website, McFadden has railed against Obamacare (what Republican hasn’t). He calls it the “Unaffordable Care Act”  and says he wants to “repeal and replace” it with something that would be better for everyone, more “patient-centered” and “market-based,” cost less and still extend coverage at a reasonable price to those with pre-existing conditions.

I fear there may be some magical thinking in there, but who knows? At least in our interview I asked him to define “patient-centered” and “market-based” and got him to specify which of the provisions of Obamacare he would keep and which he would ditch.

The answers:

‘Patient centered’ and ‘market-based’

“Patient centered,” according to McFadden, means “I want patients to be able to make decisions and have optionality.”

The U.S. health-care system was already “broken” before Obamacare, McFadden says, but “Obamacare is a step in the wrong direction…When you have a 140,000 Minnesotans who lost their insurance  — that takes away patient centeredness.”

That figure refers to the number of Minnesotans who reportedly had to change from one insurance policy to another as a result of the Affordable Care Act. Republicans emphasize this group in part because of President Obama’s false promise that those who liked their insurance could keep their insurance. But most of those who had to change health plans nonetheless ended up insured. Millions of Americans  who were uninsured before the Obamacare law took effect, now have insurance because of various provisions of the law. The overall number of Minnesotans who actually lack insurance has fallen by roughly half, according to the most recent numbers.

“Market-based” means treating health insurance more like other products and services that consumers buy. McFadden wants more transparency. “Markets can’t work unless you have price discovery,” he said, which means consumers have to be able to compare prices. If you are going for a knee replacement or buying prescription drugs, the current system makes it functionally impossible for a consumer to find out what different providers are charging.

This sounds good, but would make little difference for many of us, if we have good insurance, because our insurer is probably paying for our knee replacement and has an incentive to get the best price. McFadden’s team emphasized that patients could benefit from price comparison on their co-pays and deductible and other out-of-pocket expenses. Under Obamacare, McFadden’s spokester said, the average deductible for a bronze plan is 42 percent higher this year than a comparable plan last year.

Another element of market-based, McFadden said, is that he “would like individuals to be able to buy insurance across state lines.”

Currently, health insurers have to be licensed by the state of Minnesota to sell to Minnesotans. United Health Care, a very profitable Minnesota-headquartered giant in the national health-insurance market, isn’t licensed to insure Minnesotans. McFadden thinks that’s ridiculous.

I asked him whether someone needs to set standards so that unscrupulous insurers can’t sell bad policies to Minnesotans. He said he assumed the federal government would set some standards (which is interesting, because, in general, McFadden seems to favor state autonomy where possible).

Another big idea

McFadden has one more really big idea about the health-insurance market. He would like to extend to individuals who buy their own health insurance the tax deduction that is currently enjoyed only by employers when buying health insurance for their employees.

The United States health-insurance picture is quite odd, compared to most of the world because of its heavy reliance on employer-subsidized group policies. That is by far the most common source of health insurance for Americans, a tradition that traces strangely back to wage-and-price controls imposed during World War II, but now provides what McFadden called “a strong incentive for someone to get their insurance through their place of employment,” even though some people might come out ahead buying an individual insurance policy, especially with the extra benefit of deductibility for the premiums.

This would be big. It would be a big plus for those whose current employer doesn’t offer health insurance, and maybe even for younger, healthier workers who do have access to a group plan through their employment — especially if the employer was offering extra pay in exchange for the savings to the employer of not having to insure them, (McFadden didn’t say, in our interview, whether he envisions that such a raise in pay should be required.)

But it raises many issues, most of which McFadden didn’t cover in our interview nor anywhere else that I can find. When you subsidize anything through a straightforward tax deduction, it is worth more to the rich than the middle-class or poor. So that’s an equity issue. If younger, healthier workers dropped out of the employee pool because they have lower health concerns and would pay lower premiums in an individual plan, what would that do to the cost of insuring the older, sicker worker pool left behind? How many employers would seize the opportunity to get out of the insurance-middleman role altogether?

Maybe these changes would eventually net out favorably for many people, maybe not, but there’s a lot more in play than just a broadening of a tax deduction. I asked McFadden whether his idea could undermine the whole employment-based part of the system (which might turn out fine, but would be a very big deal and would need to be thought and argued all the way through.) He didn’t like that word “undermine,” and he didn’t think it would, but he didn’t say much about why.

McFadden doesn’t believe that providing a tax deduction for those who buy their own insurance would have much impact on those who already get their insurance through their employees. In a follow-up exchange through his spokester, Tom Erickson, McFadden said:

“Expanding the tax exclusion to individuals does not change any incentives for employers to offer insurance. It changes the incentives for those on the individual market because it makes health insurance relatively cheaper for those who did not have employer-provided insurance.”

To summarize…

Yikes, forgive me, this is getting pretty long. Allow me, if you would, to quickly summarize the provisions of Obamacare that McFadden would keep and those he would drop, if he was in charge of writing the law that would “repeal and replace” Obamacare:

The two that he would keep are the one that would require insurers to insure those with pre-existing conditions (at a rate that would not take into account those conditions) and the one that would allow kids younger than 26 to stay on their parents’ insurance policies.

The first one, the pre-existing conditions one, is something McFadden has been saying for a while. He acknowledges that if the government is to mandate this provision, it will require a subsidy to the insurers and “we should look at what’s the most cost-effective way to subsidize this high-risk pool, and there might be a federal role in that in terms of providing some of that subsidy.”

Where to find that money, when he is also emphasizing the need to restrain federal spending? “I don’t have the perfect solution,” he acknowledged, it would require “sitting down at the table” with all of the stakeholders, but he would not be opposed to “some transference of dollars from the federal government.”

The second one — the letting the 20-somethings stay on their parents’ policies — is new, at least to me, in McFadden’s post-Obamacare position. He said he’s been hearing from quite a few parents about how much they like that idea. Unlike the pre-existing condition one, he said, it shouldn’t necessarily require any subsidy.

The four or five provisions above constitute what could be called McFadden positive proposals on health care, meaning changes he would like to make (or keep, from the otherwise-repealed Obamacare). I asked him about several of the major aspects of the Affordable Care Act. The ones below are those he would repeal and not replace:

Repeal and not replace

The Medicaid expansion: Of all the Obamacare provisions, this one — which basically raises the level of income a family can have, up to 133 percent of the federal poverty level, and still qualify for Medicaid — is probably the one that moves the largest chunk of the population from uninsured to insured, even though most Republican-dominated states have declined to accept the expanded benefit.

“I don’t know if that’s the most effective way to provide insurance,” McFadden said of the Medicaid expansion. He would prefer to leave it up to the states — and to the states’ taxpayers — to decide what they wanted to do along these lines, and to keep the feds out of it. If some states did nothing, that would just be federalism at work, McFadden said, “I just don’t think that’s the federal government’s role… I believe the states are laboratories for experimentation.” [An earlier version of this post said that McFadden would repeal the Medicaid expansion. He never explicitly said he favored repealing it, although his comments about the provision, reflected above, were negative or skeptical.]

The employer mandate: Obamacare requires large employers — those with 50 or more employees when the provision is fully phased in — to provide them with a health insurance program or pay a penalty. McFadden would repeal that one. “I don’t think the federal government should be mandating that,” he said.

The individual mandate: Unsurprisingly, McFadden is against that. He also predicts that supporters of Obamacare will be in for a disappointment when they find out how many young, healthy people are rejecting the mandate and declining to sign up.

“The actuarial costs are not adding up,” he said. He added that Obama (and McFadden’s Democratic opponent, Sen. Al Franken) are guilty of “hiding the ball,” because they are aware of the bad numbers. When the bad numbers become clear to everyone, “either premiums are going to go up, and I think they’re going to go up significantly, or you’re going to see bailouts of insurance companies,” he said.

The state-level health exchanges that have been created under Obamacare is another feature that McFadden would not keep, at least to the extent that they are mandatory. (States are free to set up their own exchanges if they choose, but if they do not, the feds operate an exchange to provide the same features within that state.)

McFadden would preserve the Obamacare feature that bars insurers from including a “lifetime limit” on the amount that a person can collect in health benefits over his or her lifetime.

Because he is running against Franken, I asked him about the Obamacare provision widely credited to Franken, the so-called “medical loss ratio,” which requires health insurers to spend at least 80-85 percent of what they collect in premiums on actual health services for their customers, as opposed to administrative costs, profits, marketing or CEO salaries. Companies that violate the provision are required to send rebates to their customers. McFadden said that provision, which he considers “price controls,” would not be left standing if he has his way.

McFadden also said he would definitely repeal the tax on medical-device manufacturers that is part of Obamacare, in part because it hits Minnesota-based companies.

Friday: McFadden on the federal debt and economic growth.