Dissecting McCain's Medicaid Trust Fund


As John McCain prepares to flesh out his health-reform policies during a Tuesday speech in Tampa, Fla., Democrats see pre-existing conditions as his Achilles' heel.

Unlike plans offered by Democrats Barack Obama and Hillary Clinton, McCain would not require insurance companies to cover individuals without regard to pre-existing conditions.

Instead, he is proposing to create a subsidized high-risk insurance pool.

"We're not leaving anybody behind," McCain recently told ABC News' "This Week with George Stephanopoulos." "We will, as part of our plan, have a special Medicaid trust fund set up to help care for those people who have pre-existing conditions."

Although McCain refers to his proposal as a "Medicaid trust fund," he is not proposing to enroll people with pre-existing conditions in the federal-state program for the poor.

His plan, according to his senior policy adviser, is to "improve the kinds of backstops" that exist in some states but not all.

"The key is to make sure there is more money on the table in this contract between the insurer in this higher cost risk pool and the individual," McCain senior policy adviser Douglas Holtz-Eakin told ABC News. "Whether that money comes first to the individual and then heads over to the insurer, or if the federal government simply directly gives it to the insurer, is an administrative detail," he added.

While McCain has begun to outline his plan for Americans with pre-existing conditions, he has not made a final decision as to who would qualify for help.

"The senator is still working through the details of the exact cut-offs and eligibility requirements," said Holtz-Eakin. "The senator is going to make his final decision on eligibility criteria coming up in the next couple of months."

Funding for McCain's trust fund depends on savings being produced under Medicaid.

"McCain's proposal will be to use some of the savings that would come out of the Medicaid program, because people are now in private insurance, and to develop a federal backstop -- a program that would give high cost individuals an insurance policy," said Holtz-Eakin. "Insurers that participate in the program would receive higher premiums."

It is unclear whether the Medicaid savings McCain envisions would put enough "money on the table" to persuade insurers to accept those with pre-existing conditions at an affordable price.

"Regardless of how you set up the trust fund you have to fund it appropriately and for me that will be the biggest issue," said Mohit Ghose, a spokesman for America's Health Insurance Plans, a trade group representing insurers. "There has to be some money as an upfront investment."

Clinton Bags Easley:

Hillary Clinton's North Carolina campaign received a major boost on Monday when the A.P. reported that Gov. Mike Easley (D) plans to throw his support to the former first lady.

Easley's Tuesday endorsement, which will be delivered in Raleigh, N.C., comes on the same day that the North Carolina GOP plans to launch a television ad tarring the two Democrats hoping to succeed Easley by connecting them to the Rev. Jeremiah Wright.

Easley, who is termed out this year, is a Democratic superdelegate who was elected in 2000.

Watch the North Carolina GOP's ad here.

Monday TiVo alert:

Louisiana Gov. Bobby Jindal (R) appears on NBC's "Tonight Show with Jay Leno."

The kicker:

"I think certainly what the last three days indicate is that we're not coordinating with him."

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