Playing Doctor: McCain, Obama Propose Very Different Solutions to America's Health Care Woes

John McCain and Barack Obama see the same symptoms in America's health-care sickness: Premium costs are too high, the system is too reactive and some 47 million Americans lack health insurance.

But how each candidate would address these systemic problems offers one of their sharpest philosophical clashes.

McCain's plan offers a $2500 tax credit for individuals, and $5000 for families, to purchase health care, and proposes eliminating the tax deduction Americans get on the health benefits their employers provide.

This set-up is designed to foster competition and creativity among health insurers, according to Douglas Holtz-Eakin, an economist and former chief of the Congressional Budget Office now serving as McCain's top domestic policy adviser.

Holtz-Eakin says the plan would cause insurers to focus on long-term health. Insurers, he said, "[are] going to make sure [they] do the cheap things that are effective over the long term. Well, that's exactly what the research literature says we should do: Let's do some prevention, let's pay for wellness."

• Click here to see more on the candidate's health care plans.

Obama advocates a different approach. His "new national health plan" would give Americans the choice to remain with a private insurer or enter a new government-created health care plan — similar to Medicare but not limited to the poor or the elderly.

David Cutler, Obama's senior health care adviser and an economist at Harvard, says the new program would be regulated by a National Health Insurance Exchange and offer Americans a benefits package roughly equal to the one members of Congress receive through the Federal Employees Health Benefits Program.

"What the national health insurance exchanges are all about is bringing the benefits of big firms to individuals and to small firms," Cutler told FOX News. "The insurer can't decide that they're not going to cover something just because you happen to have been born a particular way or develop a particular illness."

Because the candidates must specify how they plan to pay for their proposals, however, the debate over health care ultimately becomes a debate over tax policy.

The McCain campaign says that Obama will have to raise taxes dramatically to cover costs; the Obama camp says the McCain plan will extend President Bush's tax cuts, leaving the uninsured uncovered and do nothing to reduce premiums for those who are already covered.

Cutler says that not extending the Bush tax cuts would free up between $70 and $75 billion a year. Cutler said that Obama "believes a better use of that money … is to use it to provide tax credits so that low- and middle-income families across the country can afford health insurance."

But the McCain campaign said that Obama's plan would cost taxpayers $350 billion a year — providing the nearly 50 million uninsured Americans the same $7,000-a-year insurance that members of Congress receive.

"Where will you get the money?" said Holtz-Eakin. "And more importantly, once … [prices keep] going up and up and up, how are you going to afford it?"

Research literature shows that although Americans spend some $2.5 trillion a year on health care — more, on a per capita basis, than any other industrialized nation — the U.S. lags behind in vital categories like infant mortality, medical recovery rates and life expectancy.

Dan Magder, an independent economist not affiliated with either campaign, praised both candidates for focusing on what health care analysts call "outcomes": the results achieved by doctors, hospitals, and insurers on behalf of American patients.

Both campaigns, he said, are applying a “pay-for-performance” model to improve patient care.

"The idea there is to say, 'We're not just we're going to pay a doctor every time he sees a patient; we're going to pay him based on how healthy his patient is,'" Magder said.

"Now that's a lot easier to do in theory than it is to do in practice. But it's shifting the focus from just, 'What are patients doing?' to 'What is a doctor doing?'"