The Candidates' Health Care Plans More Hype Than Tax-Payer Relief

During the last debate and thereafter, my colleagues and I became intrigued at whether or not Obama's or McCain's plans to overhaul the health care system were accurate. Our conclusion: yes and no.

They were both right in stating in so many words that the state of our health care system is in grave need of repair. McCain offers a $5,000 tax credit to help all insureds. Problem is, though, that he wants to tax the benefits received by an employee of an employer-sponsored plan. We thought he said moments earlier in the debate that he would impose no new taxes on the taxpayer -- guess he had some short term memory loss. His plan also envisions taking away the present tax deductible feature for employers that provides health care benefits. In addition, he also said that the average cost for a health care plan would be somewhere around $5,800; Obama pegs it at about $12,000. It turns out both may be right.

In a study completed by America's Health Insurance Plans, a DC based entity, and reported on recently by CNN (Sanjay Gupta, 10-17-08), the average plan can cost what McCain said it would but that would depend on your state of residence and whether or not the insured has any pre-existing medical condition. A healthy person/family may be able to get coverage for around $5,800 or less; otherwise, the cost is considerably higher. If someone belongs to an employer-sponsored plan, a family plan may cost upwards of the figure Obama uses. The reason for the latter, again according to the CNN reporting, is that employer plans are pooled together, taking into account ages of plan members as well as all pre-existing conditions. To "bottom line" all this, let's say it costs $12,000 on average for a group plan through one's employer. Tax on this, using a 30% tax bracket, is about $3,000. Using the $5,000 tax credit would mean a net savings of roughly $2,000. However, let's say the employer, because it loses the tax benefit of providing health coverage under the McCain plan, decides that the employee must get insurance on his own. To do this requires an outlay of, for purposes of the example, $12,000. Let's assume the same tax credit of $5,000. The taxpayer would have a net loss of $7,000. Consequently, the more digging one does into McCain plan, the worse off the taxpayer becomes.

My group and I were not entirely convinced about what Obama was offering either. His centerpiece is reducing the cost of existing health coverage by $2,500 by ensuring more use of electronic health care records, increasing the efficiency in the health care system, pushing for wellness programs, and ensuring that those that do not have health care could obtain the same plans as do our members of Congress. All this sounds nice and fine, but it is more easily said than accomplished. We questioned coverage like Obama and McCain has, because we could not figure out how such taxpayers could afford what our federal representatives receive when they could not even afford to obtain private sector insurance. We find it hard to figure out how Obama's plan would thus really save $2,500. But, we believe the piece of Obama's plan requiring that all children be covered to be admirable. However, given the recent experience in Hawaii -- where it can no longer afford its state-run program covering children, suggesting instead a national plan -- any plan to insure our youth probably will have to be funded on a national basis by taxpayers. Where would that money come from, given our current economic situation? We also found that McCain constantly saying Obama would impose a "fine" for those who do not insure their children to be political grandstanding -- like swiss cheese with holes in it. Obama's plan certainly does not include any fines for not providing coverage!

In the end, we all agreed that health care reform is a critical priority for the next administration; it is a must, no getting around this. Indeed, during the second debate, Obama placed health care second behind energy. But, while the elements of each plan provides some relief in isolation, when they are combined into one plan as proposed, there is more hype and political rhetoric than any real relief for the taxpayer. Perhaps what should be done is seriously consider some type floor of coverage for each and every American through government support; the employee and his or her employer would have to pay for any additional levels of protection. The employer would retain the present tax benefit as well, and any cost of coverage would not be a taxable event to the employee either. We have yet to see such proposals from either candidate. Perhaps now is the time that we did.

Comments

[libladyohio]

McCain's plan is a joke; Obama's is quite a bit better (it would have to be, that bar is incredibly low), but it is still just a band-aid for a major wound.

Universal single payer government run health care - yes socialized health care - is the only way to go, like almost all civilized nations now have, and have with lower cost and quite often, much, much better outcomes than we have.

I see it clearly as a moral issue, it's a public safety deal just like fire and police in my mind. Whether one lives or dies, what kind of quality of life one has, should in no way ever depend on the size of one's bank account. That it does in 2008 America is obscene.

People often get hysterical with the word "socialism" but democratic socialism is not evil - and the best senator we have now is a self described democratic socialist, Bernie Sanders.

[milesz]

Thank you for your comment; you are right on point!