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Bob Moon: The rising cost of gas continues to headline the presidential campaign. Democratic hopeful Barack Obama has called for tax credits and a second round of stimulus checks to help Americans absorb the expense. Presumptive Republican nominee John McCain touts his support of a gas tax holiday and offshore drilling.

All the focus might be on energy prices right now, but commentator and economist Glenn Hubbard says if we really want to understand each candidate’s economic platform, there’s a better issue to examine.

Pop Quiz: To determine our country’s long-term budget future, voters in November should focus most on (a) the annual cost of the Iraq war, (b) the cost of extending the 2001 and 2003 tax cuts or (c) the price of an MRI.

Answer: (c) The price of an MRI.

Keep that in mind as John McCain and Barack Obama roll out their spending priorities. Listen to what they say — or don’t say — about health care.

Rising health care costs will radically alter the nation’s budget outlook over the next generation. The cost of old-age entitlement programs could rise by 10 percentage points of GDP over that period. The large tax increases or spending reductions required to close this gap should be at the top of any policy agenda.

Most of the health care debate focuses on the level of government’s involvement in health care. Sen. Obama’s proposals call for a larger role for government. He wants to increase access to Medicaid and give individuals and businesses greater capacity to buy into a government plan. Sen. McCain’s plans embrace less government participation. His proposals would grant all Americans refundable tax credits to encourage them to sign up for private insurance. The Obama campaign estimates costs of $60 billion per year. The McCain campaign would use other tax reforms to pay for new spending.

But what will the plans do to health care costs? By encouraging higher deductibles and co-payments, the McCain plan will decrease health care spending. But it doesn’t answer how we can reform Medicare to reduce costs. The Obama proposal tries to reduce costs by steering individuals toward government plans. But the proposal does not address the cost of public subsidies to expand government programs or the potential for innovation-unfriendly price controls.

Is a large tax increase in our future? Will we be able to afford a strong national defense, promote education and support basic research?

The answer lies in health care policy.

Moon: Glenn Hubbard is the dean of the business school at Columbia University. He used to run the Council of Economic Advisors for President Bush.

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