Wednesday, October 29, 2008

Not Even A Good Hack

The other day, I noted a recent example of McCain domestic policy adviser and (formerly?) respected economist Doug Holtz-Eakin's dishonest and shameful behavior.

One of the few good things about Holtz-Eakin's embarrassing performance in this campaign is that in the process of sullying his reputation, he's managed to repeatedly undermine John McCain's own arguments. 

For example, there was that whole thing with the earmarks, when Holtz-Eakin undermined the silly claim that McCain can cut taxes by hundreds of billions of dollars a year and pay for it by cutting a few billion dollars in unnamed earmarks (for details, see my post or Ben Smith's). 

And who can forget Holtz-Eakin's claim that John McCain invented the Blackberry? (The great part of that Holtz-Eakin stroke of genius is that it was his serious answer to being asked a serious question, "what work John McCain did as chairman of the Senate Commerce Committee that helped him understand the financial markets"; that's all Holtz-Eakin could come up with.)

And yesterday, Holtz-Eakin struck again. The McCain campaign has claimed that its health plan will leave basically everyone better off (see this post and those to which it links for a discussion of that claim). Meanwhile, many economists worry that by eliminating the income-tax subsidy for employer-provided health insurance without providing universal coverage, McCain's plan will induce serious adverse selection problems: if younger and healthier workers opt out of employer plans whose premiums are based on pooling over a relatively representative workforce, then some employer plans will collapse, leaving others in the pool exposed to very high-cost individual plans. Here's how Doug Holtz-Eakin seeks to allay these worries:

Younger, healthier workers likely wouldn't abandon their company-sponsored plans, said Douglas Holtz-Eakin, McCain's senior economic policy adviser.
"Why would they leave?" said Holtz-Eakin. "What they are getting from their employer is way better than what they could get with the credit." [original source here.]
Employer-group plans typically don't (never?) price as a function of age or projected health risks (holding constant family size and leaving aside pre-existing conditions). This means that younger, healthier workers cross-subsidize everyone else in a group plan. So in any such plan, these workers are the ones getting the least benefit from a group insurance plan. Now Holtz-Eakin tells us that such plans are "way better" than what these workers could get with McCain's credit. Logic implies that this claim must therefore be true for all workers. 

So, Holtz-Eakin has just told CNN that the McCain health plan will make workers worse off.

Doug Holtz-Eakin: Not just a hack. Not a good hack, either.

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