Time to Pay Attention! McCain's Health Plan is Radical!

With everything else in the news, you may not have had the time to pay attention to the differences between the Obama and McCain health plans. But converging with the bad financial news is new information about just how radical John McCain's health reform proposal is.

A new study by Thomas Buchmueller et al out in the prestigious journal Health Affairs notes that McCain's health plan could cause at least 20 million already insured Americans to lose their coverage. Yes, LOSE their coverage. Why is that? Because McCain proposes taxing employer-sponsored health coverage. Every week, workers who have health insurance coverage would find that they are now paying taxes on that coverage. No new taxes? This is one of the biggest and most radical tax increase proposals in twenty years.

But the story actually gets worse -- if an employer decided to drop their health insurance coverage, workers would be forced into the individual insurance market to find coverage on their own. McCain offers no real solution to either the costs of individual coverage or the fact that many people could not even get it at any price because of pre-existing conditions. It has been widely noted that even Senator McCain with his prior health conditions and Elizabeth Edwards would have trouble finding coverage in the individual market.

What does Obama offer? An article in the Wall Street Journal today by Obama's health adviser, David Cutler, points out five ways Obama's plan is better -- in short, Obama proposes to allow workers to keep their current benefits or join a public plan that would be modeled after the one Congress and federal workers have. And Obama includes features such as providing more access to preventive services, and paying providers for their performance not just for doing more.

With the stock market in decline and the economy faltering, we cannot afford McCain's risky and radical health plan.

Comments

[jeplanet]

Your health care system will be woefully flawed until insurance companies are removed from the equation. End of story.
Universal health care is the only way. But millions of dollars are spent every year trying to scare americans and make them believe that universal health care is a flawed ideal. You're told horror stories of not being able to pick your own doctor, having to pay more so others can benefit, and dying on some waiting list. They manage to convince you that all the skilled doctors will flee. LIES LIES LIES!! Every wealthy country in the world (and some very poor ones, too) has universal health care; yet the U.S. does not. Do you ever really ask yourselves "Why?".
An educated, healthy, and confident nation is harder to govern.

[PioneerKing]

McCain's health plan that would change employer sponsored health, dental and vision insurance plans from being tax exempt for employees.

McCain's health insurance plan is a paltry a tax credit of $5,000.00 for a family of four.
If you are a family of four try buying health, dental and vision insurance for $5,000.00 annual premium.

Americans need to be aware that they only get the tax credit AFTER they purchase insurance.

If any family of four finds coverage at $5,000.00 a year for the entire family then they would have a minimum of $25,000 annual deductible per person.

That's $100,000, out of pocket deductible, for a family of four before any type of insurance coverage would kick in for all of the family members.

These types of policies usually don't cover prescription discounts and rarely cover diagnostic exams such as CT scans, MRI or annual mammo grams or annual check ups and wellness visits.

http://www.huffingtonpost.com/harold-pollack/dog-bites-man-the-obama-h_b_107563.html

[Majus]

You are so right. I am a single man with no health conditions other than high cholesterol, yet my employer pays almost $6,000 a year in premiums for me -- and that's the very cheapest insurance he can get. We used to have better insurance but costs just kept escalating so now we have very basic insurance with very high deductibles.

$5,000 for a family of four is an insult.

[kavan]

McCain has the audacity to falsely claim Obama wants to raise taxes on the middle class, while he proposes a stealth tax increase. Not a surprise coming from a campaign that when confronted with their overt lies simply keeps repeating them.

[QualityCounts]

I find it truly remarkable that the McCain-Palin campaign has no compunctions about lying when it suits their purposes and yet chooses to advance a health reform proposal that contains massive increases in taxes and will deprive millions of currently insured working Americans of their health insurance. Does this proposal represent a sudden burst of honesty, or are they so devoid of economic insight that they really believe their agenda for change will make things better? I understand that their plan is presented as another victory for the free market economics that brought us the Wall Street meltdown, but do they really think they can spin this assult on working Americans into something the American people will actually buy. In the words of George W. Bush: "There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again."

[HAP]

Great post, Linda. TAxing employer-provided benefits without putting something in its place is an extremely foolish policy, that pushes people innto the nongroup market where they will not be treated well.

[tubette]

This is so serious. It needs to be headline news.

[fistbump]

Thanks for covering this undercovered story. McCain's proposal to TAX medical benefits is a new tax which will harm most people who are currently under a private plan. It also gives a lie that he will cut taxes for anyone except the very rich.

As expensive as health insurance is these days, tell the American family that their benefits will now be taxed. That will get people's attention.

[klo]

I work for a small company with locations in two states with employer paid healthcare. My company is very generous and our plan costs $700/m for singles and $1700/mo for families and this was the new plan with reduced benefits that we accepted last year.
Under the McCain plan, single staffers would have to pay taxes on $8,400 more dollars and staffers with families would have to pay taxes on an extra $20,400. Both of these amounts would put a staffer with an average wage of $50K in a different tax bracket.
And the credits McC is proposing probably wouldn't be applicable since most credits only apply to benefits you pay for yourself.
My first thought is that this is a joke. But I now realize that a guy who has never paid for quality healthcare or worried about how to get it can't possibly understand what taxes on an extra $20,000 would do to the average american family.
Another confirmation that McCain doesn't get it.

[LeftRight]

Actually, to be fair, the only increase in taxes that you would see under the mccain plan are on the portion that you are paying for. In other words, your plan that costs $1700/mo for families consists of two parts. The first is the part paid by the employer. Say, for example that they are paying $1200/mo. This would leave $500/mo to be paid by you. Under mccain's plan you would see an increase in tax based not on $20,400 ($1700*12) but rather on $6,000 ($500*12).

To offset this, mccain would offer a $5,000 tax credit. I'm not sure if this means that he would reduce your taxes by $5,000 or if he would reduce your taxable income by $5,000. If it's the former, then it makes some sense to offer it. If, however, he means the latter choice (which I think is the case) then he's ALREADY increasing your taxes, since he is reducing your taxable income by $5,000, while increasing it by $6,000, a net increase, obviously, of $1,000.

[vivisel]

One other aspect of this is that the McCain healthcare tax is hidden by the tax credit he proposes to offset the costs of his new tax: he wants to give families $5000 and individuals $2500 to make up for his tax on employer benefits. In a lot of places, that's not enough money to cover the costs of healthcare already - but it gets worse because the tax credit only grows with inflation (~2%/year), but the cost of healthcare grows more than three times faster! (~7%/year)

http://www.americanprogressaction.org/issues/2008/mccaintax//)

What a disaster.

[mikecraud]

Thank you for your well-crafted article. It really magnifies the differences between these two plans.

One question though: When will Obama and Biden begin to hammer away at this? 40+ million people are currently without health care. Obama's plan helps cover the uninsured in a rational way, and it offers those of us who are insured a variety of options to choose from, including staying with the employer's plan.

This issue is very, very personal! McCain's plan could potentially remove health care coverage from all people like me who are currently insured. In other words, my employer could drop me from coverage and I'd have to fend for myself on the open market - and with a pittance tossed my way. If there's one thing that I have in common with many workers (blue and white collar alike) is the health care we have through our employer.

For the sake of my health and that of millions and millions of others, we must do everything possible to avert the election of McCain. We must all, Obama, Biden and the rest of us, continue to speak out against this retrogressive plan that McCain will impose on us!

[snesich]

The bottom line for people like John McCain, Sarah Palin and their health-care adviser (and industry shill) Gail Wilensky is clear, as it has been for years: Health Care is a business. And the first priority is to protect the profits of that business and keep a good return coming to the investors. To do this, expenditures (i.e. treatment that helps people) must be absolutely minimized, like in any "business". The idea that health care should be first and foremost about treating people who need it is an alien concept to such shills.

So when you start with that premise, all Republican proposals for health care will focus on that one idea: How do we crush any idea of changing the health care system to one where private profits aren't the highest priority? What was true for Nixon, Reagan and both Bushes is true for McCain. The health of the nation's citizens is of little importance as long as the industry and our little circle of rich people is taken care of.

[ConcernedMD]

Thanks for writing this up Linda. It's ok for people to hold strong political views. But, I hope at least in this area that people are starting to realize just how much of a difference there is between the candidates.

As a physician, I'm just insulted by the McCain plan. If people don't want to take my word on it, they can take a look at Health Affairs, the NY Times, and the WSJ. Why would it be a good plan to move coverage to non-group plans, increase insurance revenues, and limit the number of people insured? I just don't get it.

[JenniferLee]

That's exactly it though. If your employer stopped offering you coverage, there's no guarantee you could find a decent plan that's affordable. Employers have the advantage of being able to negotiate for better rates with insurance companies. What incentive would insurers have to give one individual a break on their premiums? In fact, the average premium for a family of four in 2007 was $12,000. The McCain tax credit of $5,000 leaves a big painful gap.

[LeftRight]

And the Obama plan allows you to join into the same plans offered to federal employees!

[milo h minderbinder]

I just heard this this morning, it's absolutely scary the thought of losing health insurance.

The Obama campaign really needs to make this more widely known - McCain is proposing RAISING TAXES, something he keeps insisting he won't do.

Although this article doesn't mention that McCain's plan also includes a tax credit of 2500 for individuals or 5000 for families. They say that will lower taxes for most people, but I'm skeptical about that - if insurance costs go up (which I'm sure they will) it could definitely end up being higher taxes.

[LeftRight]

Right now, I'm paying close to $250-$300/month on my share of health insurance premiums. That alone adds up to $3,600. Add in the copays and other costs that I'm stuck with, and I'm ALREADY above the $5,000 for a family. And I've got a REALLY cheap plan with good benefits!

[edla]

Thank you, Linda for writing this post and for including the Health Affairs article. While I think there will be significant changes to the Federal Employees Health Benefit Plan if access is expanded like Obama proposes, it is absolutely a step in the right direction and a MUCH more sane approach than the radical version of health care reform advocated by McCain.

McCain's tax credit for indivuduals doesn't even come close to the true cost of coverage, especially for families. Not only would he send people out into the very confusing individual health care market, his plan would ensure that they pay more for the privilege of being fed to the wolves.