A First Look at How McCain and Obama's Policies Would Affect the States

A First Look at How McCain and Obama's Policies Would Affect the States

There are stark differences between the two presidential campaigns' approaches to federal-state relationships.  Differences range from the amount of funding appropriated for programs run by the states to whether the candidates would strengthen or weaken state regulatory authority.

In the current economic crisis, a key difference between Sen. Obama and Sen. McCain can be seen in their proposals to revive the economy.  Earlier in the year, Sen. Obama proposed sending $50 billion to the states to pump up the economy: $25 billion for fiscally ailing states and $25 billion to help states build and fix highways, roads, bridges, airports and rail systems.  Sen. McCain has said little on the subject but he opposed a recent bipartisan proposal by two governors, California’s Arnold Schwarzenegger (R) and Pennsylvania’s Ed Rendell (D), for a stimulus package devoted entirely to helping states rebuild infrastructure.  With Congress preparing a second stimulus package, in the order of $100 billion to $150 billion, the debate on help for the states could determine whether we are able to weather the financial storm without making massive cuts in state programs like education and Medicaid.

The continuing debate around economic stimulus is just one example of the campaigns' very different approaches to federalism.  This Dispatch will examine how the candidates' health care plans differ from a state perspective, followed by how Sen. Obama and Sen. McCain would affect energy, infrastructure and other pressing issues.


Obama and McCain - Miles Apart on Health Care and the States

Sen. McCain and Sen. Obama have struck markedly different tones on health care reform and on the role of state governments in the health care field.  Sen. Obama would build on the strengths of the current employer-based and public/private health care system, including current state regulatory authority, while Sen. McCain would largely eliminate both the existing health care system and state regulations that currently protect consumers, favoring instead the deregulation of insurance markets. 

Funding Medicaid and SCHIP:    Broadly, Sen. Obama would increase eligibility and funding to states for Medicaid and the State Children's Health Insurance Program (SCHIP), while McCain would cut funding.  This difference was exemplified when earlier this year Congress passed a five-year $35 billion expansion of SCHIP; Obama supported the SCHIP expansion while McCain opposed it.  The measure was vetoed by President Bush. 

Sen. McCain's health care plan would gut federal Medicaid spending by $419 billion over ten years, forcing states to roll-back their Medicaid programs or require them to come up with alternative funding to replace depleted federal matching funds.  In a time of recession, such cuts would be devastating for state economies-- for example, a new report from the New Mexico Fiscal Policy Project shows that state Medicaid/SCHIP programs "created an estimated $3.36 billion in economic activity, 43,639 jobs, and almost $1.53 billion in wages and salaries for New Mexicans" that would be undermined by such cuts.

Maintaining vs. Undermining Employer-Based Coverage:  Sen. Obama's plan would require large employers to offer health insurance to their employees or contribute to the cost of coverage programs.  Small businesses would be eligible for tax credits to offset the costs of premiums and families would be eligible for income-based premium subsidies.   

Conversely, Sen. McCain's plan would seek to replace employer-based coverage with a system of individual health care vouchers. 160 million Americans would have to pay income tax on their employer-provided health insurance, receiving instead a tax credit for the purchase of health insurance - $2,500 for individuals and $5,000 for families.  Many employers are likely to drop coverage, increasing the number of residents subscribing to state Medicaid and SCHIP rolls, increasing costs for the states.

Insurance Market Regulation versus Deregulation:  Small group and individual insurance plans are primarily regulated by the states, including requirements that companies cover necessary medical care, preventing insurers from denying coverage for a pre-existing condition, and requiring state approval of hikes in premiums to ensure that new rates are fair and justifiable. 

While Obama would protect most state regulation, McCain proposes to allow insurance companies to sell policies in any state, ignoring regulations in states outside their home state-- much as banks now make a home in low-regulation states and sell predatory loans all over the country.  Allowing the insurance market to promote lower premium coverage with poorer benefits would push workers and their families into insurance plans with fewer benefits and higher out of pocket costs.  Sen. McCain's defacto deregulation of state insurance markets would leave families vulnerable to the lowest standards found in the most unregulated state market.

High Risk Pools versus Public Plans:  For individuals who might find it hard to get insurance, Obama proposes the creation of a public health plan modeled after the coverage provided to federal employees and members of Congress.  Like recent proposals in Wisconsin and Connecticut, the idea is to create a broad-based plan guaranteeing affordable health insurance to anyone.  Furthermore, building on the Massachusetts Connector, Sen. Obama would create the National Health Insurance Exchange, offering a medley of private and public health plans to small businesses, the self-employed, and people without access to employer-based coverage. Insurers would be required to offer coverage to all applicants and would not be able to hike premiums based on health status. 

McCain's plan would instead herd consumers denied regular coverage by insurers into state high risk pools, funded by $7 billion to $10 billion in federal funds.  An Urban Institute analysis indicates that the tax increases and deregulation of insurance markets under Sen. McCain's plan would result in a run on high risk pools as older and sicker Americans seek coverage after being denied in the individual market or in the face of exorbitant premiums.  To meet the demand, funding needs for the high risk pools would approach $100 billion, far above what Sen. McCain has indicated.

Overall Effectiveness: While spending similar amounts of money, the Tax Policy Center estimates that Sen. Obama's plan would reduce the uninsured by 34 million people over ten years while McCain would reduce the uninsured by only 2 million people.  And while states would preserve crucial regulatory tools to rein in insurance company abuses under Obama's plan, they would lose most of their regulatory authority under McCain's deregulatory approach.

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Clean Energy, Transportation and Broadband

For this section, we borrow heavily from the comparison made by our allies at the Apollo Alliance, who have highlighted what the Presidential candidates' plans mean for achieving energy independence and green jobs for American workers.

Climate Change:  While both campaigns support some version of "cap-and-trade" reductions in emissions, as pioneered in the states, Obama's plan is considered more aggressive and emphasizes solar, win and clean vehicles, while McCain puts more emphasis on nuclear and so-called "clean carbon" technologies.  More broadly, Obama supports strong federal government incentives to utilities and individuals to use alternative energy and alternative-fuel vehicles.  Obama would condition state funding on meeting energy conservation and "smart growth" goals, while McCain has not proposed a policy in this area.  

Transportation:  Obama supports reforming federal transportation policy to direct more funds to states for clean energy transportation infrastructure, while McCain has no clean energy transportation objectives.  Overall, McCain's focus on cutting earmarks means he has historically fought many transportation bills funding state projects; he was one of only four Senators to vote against the current transportation legislation, SAFETEA-LU. While Obama supports expanded support for mass transit and inter-city train systems, McCain has called for the "privatization" of Amtrak and cutting federal financial support.

Offshore Drilling:  Obama supported the recent compromise legislation that would allow some offshore drilling between 50 and 100 miles off the coast, but only with the agreement of state governments.  McCain, on the other hand, opposed the plan in favor of even broader mandates for offshore drilling, leaving it unclear whether states would have any voice in whether drilling happened off their shores in a McCain administration.

High-Speed Broadband Deployment:  Obama 's technology plan calls for reform of the Universal Service Fund to support broadband deployment in the states, better use of the nation’s wireless spectrum, promotion of next-generation facilities, technologies and applications, and new tax and loan incentives, to increase wide-spread broadband adoption.  McCain's policy promotes a "market" approach to deployment with a few tax incentives for delivering services to rural and poor neighborhoods.

Although Internet services provided by local governments have run into opposition in many state legislatures because they are seen as competition to private providers, both candidates support community-based and municipal broadband efforts.

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Other Key Issues

Workers Rights: Obama and McCain sharply differ on federal labor policy, with Obama supporting policies to increase the freedom of workers to form unions, including conditioning money for states on supporting prevailing wages, while McCain has generally opposed policies that do so. McCain also has a history of not only opposing the minimum wage but of supporting amendments that would void state minimum wage laws in certain cases. 

Education: With states complaining about unfunded mandates in the No Child Left Behind law, Obama proposes more funds to cover states’ expenses and would increase federal education spending by about $18 billion, with much of the money going to pre-kindergarten programs, teacher training and mentoring programs.  Instead of increasing help for states to improve schools, McCain supports vouchers to allow parents to send their children to private schools, a plan that would likely further reduce money for public schools.

Immigration:  While Obama and McCain both support comprehensive immigration reform at the federal level, Obama has more recently emphasized strong enforcement of federal laws, combined with financial support for states to encourage citizenship and giving states the freedom to provide drivers licenses to undocumented immigrants.   McCain has emphasized criminal enforcement almost exclusively before moving to any kind of comprehensive reform.

Paid Family Leave:  Obama would encourage each state to adopt a paid leave system for parents to stay home with a child or to care for a sick family member.  He would provide $1.5 billion to help states start paid sick day initiatives, as well as to offset the cost to employees and employers.  McCain called Obama's proposal to expand family and medical leave a "big-government solution" and said sick days should be negotiated between management and labor.

Abortion and Reproductive Rights: Sen. Obama has said he's committed to upholding Roe v. Wade, which restricts state regulations of abortion in favor of court protection of reproductive rights.  On the other hand, Obama supports federal funding for contraception and teen pregnancy prevention programs to lessen the number of abortions.  Obama also supports the funding for states and local community groups in the Violence Against Women Act (VAWA).

Conversely, Sen. McCain advocates overturning Roe v. Wade and restoring the ability of states to ban abortions across-the-board, but he has generally opposed federal funding for contraception and pregnancy prevention.  McCain has voted in the past against VAWA.

Gay Rights:  Both Obama and McCain, in 2006, voted against a proposed federal constitutional ban on gay marriage.  Further, both say the issue should be left up to the states.  At the state level, McCain has supported state constitutional bans on gay marriage, while Obama, although not advocating for gay marriage, has opposed anti-gay marriage amendments.

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Obama and McCain - Miles Apart on Health Care and the States

Center for American Progress - McCain's Latest Health Care Strategy
Commonwealth Fund - The 2008 Presidential Candidates' Health Reform Proposals: Choices for America
Families USA - Premiums Versus Paychecks: A Growing Burden for Workers
Urban Institute - An Analysis of the McCain Health Care Proposal
Urban Institute - An Analysis of the Obama Health Care Proposal
Urban Institute - Can a Public Insurance Plan Increase Competition and Lower the Costs of Health Reform?
Kaiser Commission on Medicaid and the Uninsured - Headed for a Crunch: An Update on Medicaid Spending, Coverage and Policy Heading into an Economic Downturn

Clean Energy, Transportation and Broadband, McCain vs. Obama: The difference for states
Apollo Alliance, Comparing Energy Plans: The New Apollo Program, New Energy For America, The Lexington Project
Brookings Institution, Candidates on Transportation

Other Key Issues, What would an Obama win mean for states?, McCain vs. Obama: The difference for states
Family and Work Institute, First Ever Presidential Platforms on Work Life Issues