There are many differences in the health care plans of Sens. Obama and McCain. McCain’s plans concentrates on giving Americans choices in health care coverage and ensuring that the health care industry stays competitive in order to reduce costs and increase quality.

Obama’s plans concentrate more on making sure that nobody is without health care insurance and that everyone is treated equally.

At the heart of Obama’s health care plan is the creation of a National Health Insurance Exchange, which is a public, government funded, health care plan with affordable prices. What this means is that if people’s premiums don’t cover the insurance payouts — they won’t because of moral hazard — you will have to make up the difference with your taxes. (Moral hazard is the idea that when you insure a risk, people are more likely to engage in risky behavior because the potential negative effects of that risk are reduced.)

What Obama doesn’t seem to understand is that if you subsidize something by having someone else pay for it — for example, having the government pay the majority of your health care costs — you are guaranteed to raise the price of the subsidized commodity.

This happens because the price to the consumer is lowered when the third party pays part of the costs, allowing health care providers to raise those prices back to the level, or near the level that the consumer was willing to pay in the first place. This means that the overall price will be raised, with the extra being paid in the form of higher taxes or insurance premiums.

He will also require companies that don’t offer coverage to pay a tax toward the government-run system. This will compel more employers to provide health insurance, even when it would be preferable to allocate that money toward the wages of their employees, which will reduce competition in the private insurance market.

In addition, Obama plans to require insurance companies to cover pre-existing conditions, which will only drive up insurance premiums by forcing these companies to take risks that they know will not pay off. But Obama seems to think that he knows more about risk assessment than companies based solely around assessing risks.

In fact, the entire Obama plan is based on the fact that he believes that the federal government — which has no incentives to cut costs — can provide health care more efficiently than an insurance company that has profit motive on its side.

— Blake Hasenmiller is a senior in industrial engineering and economics from De Witt