Healthy Wealthy and Wise

Vice Presidential hopeful Sarah Palin had the biggest coming out party that any former-beauty pageant contestant could imagine at the Republican National Convention last week. Despite some who noted that Alaska is close to Canada and Russia, it is quite obvious that Governor Palin was not chosen for her foreign policy expertise -- Senator McCain has that pretty much taken care of, thank you very much.

Ms. Palin was added to the ticket to serve a number of purposes: she is a woman, which may help win over some more conservative Hillary supporters; like McCain, she is considered a maverick, willing to take on even her own party; she appeals to the conservative base on social issues; and she may be able to draw the “Sam’s Club Republicans” into the GOP tent. (To read more about this valuable voting group, see the 9/4/08 article -http://www.strategicpoint.com/spov/article_viewer.jsp?articlePath=/docman/Companies/SPIA00/webcontent/guest/spov/articles/2008/09/spov09042008.xml It is the “Sam’s Club Republicans” that interest me most.

Obama’s campaign is going after the 80% of Americans who earn less than $118,000 per year by advocating a middle-class tax cut. But in my non-scientific analysis (mostly conducted on an East coast beach), I have found that many folks who earn $100K or so are not wowed by Obama. While they do not want to pay more in taxes, that is not their hot button issue. Rather health care, energy policy and general fiscal discipline seemed to dominate their priority list, which is another way to say that people want to be healthy, wealthy and wise. I think that McCain may be able to bring over some Sam’s Club Republicans, Democrats and Independents with simple and direct solutions.

Every American agrees on one point: we need our health care system to operate better. Obama’s approach is to expand government-provided health care and create a form of “managed competition”. Obama supports expanding SCHIP and Medicaid eligibility, but does not support a health insurance mandate for adults (he does support a mandate for children and young adults 25 or under). Obama’s plan would be centered on a “pay-or-play” mandate, where all but the smallest employers would be required to provide health insurance and those who didn’t would be compelled to pay into a national fund covering these uninsured workers.

McCain wants to move towards more individually-provided health insurance, rather than expansion of government participation. His main policy initiative is a $2,500 health insurance refundable tax credit for individuals ($5,000 for families). The goal is to make health insurance more affordable, but make individuals incur the full cost of “better” health insurance at the margin. McCain is also considering risk-rating these vouchers so that individuals with severe health problems will receive a larger voucher. McCain would also allow individuals to buy health insurance from any state.

It appears Obama’s proposals will decrease insurance choice, increase regulation, and increase public funding of healthcare, which means it will be far more expensive than McCain’s, which would shift to individual–rather than employer-provided–health insurance accompanied by a decrease in regulation. That said, if it were to work, it would probably be a more comprehensive and lasting solution. The problem that I see is that most people do not have the patience to dig through the differences and so if McCain can present his plan as a simple “next step”, that may be enough for now.

On energy, McCain favors a gas-tax holiday, while Obama notes that it is a gimmick that most economists agree would not have any long-term effect. Palin’s addition to the ticket could help McCain because she lives in an oil-rich state that has negotiated both with big oil and environmentalists. Palin has advocated drilling in the Arctic National Wildlife Refuge, which has been a popular solution among Americans, although McCain had previously opposed drilling there.

The differences between the two on energy policy are clear: McCain would mandate reductions in greenhouse gasses, then largely rely on the free market to spur conservation, while Obama would tax oil companies and use the money to help low income people. He would also restrict greenhouse gasses, but charge more for companies to pollute and use the money to fund renewable energy research.

Finally, on the wisdom of politicians to spend more wisely, both parties have failed miserably over the past eight years. As always, in the campaign, both sides will argue that we need more discipline, but success will be determined after-the-fact, so don’t even try to guess who will stick to this promise.