McCain's Health Care Plan May Make You Sick

Are you one of the 158 million Americans who are covered by a health care plan by your employer?

Have you heard that John McCain wants to impose a tax on that benefit, based upon what premium your employer pays for you, while simultaneously providing a refundable annual tax credit of $2500 for an individual, or $5000 for a family, that may, or may not, cover the tax increase? But there's more: the real possibility that your employer may terminate your company's health care plan, under the pretense that the workers will be better off choosing a plan on their own, partially paid for by that tax credit.

On July 6, 2008, USATODAY.com carried an Associated Press article entitled, "McCain's health plan: A threat to employer plans?" It describes McCain's plan and its possible side-effects:

"There's a great unknown about Sen. John McCain's health plan: How many employers would drop insurance coverage for their workers because of his tax policies?

The Republican presidential nominee-in-waiting has proposed that everyone buying health insurance get a refundable tax credit, $2,500 for individuals and $5,000 for families. At the same time, he would treat employer contributions toward health insurance like income, meaning workers would have to pay income, but not payroll, taxes on it.

McCain's Democratic rival, Barack Obama, says the plan would "shred" the employer-based system that provides health insurance to about 158 million workers.

Most health analysts won't go that far, but both liberals and conservatives say McCain's approach would strengthen the individual and small-group insurance market. And by strengthening that market, it will pull in workers now covered through their jobs.

The workers most inclined to make that transition will be younger, healthier ones who most likely will be able to buy a policy on the individual market for less than their tax credit, said Paul Fronstin, a senior research associate at the Employee Benefit Research Institute, which studies employee benefits.

To the degree that happens, the employer-based market will become less healthy as sicker, older workers stay with their employer-based coverage while more of the healthier workers move to the individual market.

"What you'll see happening is average cost in the employer-market will go up and average cost in the individual market will go down," Fronstin said. "You'll start to get into a cycle where people at the margin start to leave employer coverage for individual coverage. At some point, employers will start to ask: Why am I doing this if my workers don't value it anymore? If I don't need to do this to be competitive in the labor market, why should I do it?"

Hence, the disincentive for employers to maintain their own health plans. Why put up with the headaches, and expense, of health care when they can let their employees fend for themselves, as individuals, in the health plan market. But these workers will have the buying power of one, instead of the buying power of hundreds, thousands, or tens of thousands as exists today in employer-provided plans.

The free-market pundits will tout this as a great leap forward in choice. They will say that the marketplace will work its wonders in a more competitive fashion. Yet that freedom exists today. Any person can apply for health care coverage on their own. The only change, under a President McCain, will be that this person will get a $2500 federal government credit to help pay for that plan. Oh yeah, in this brave new world of individuals seeking their own coverage, you better get educated, really fast, on all the minutiae of every illness you might get, and what level of coverage, deductibles, maximum payouts, et cetera that your new prospective health care plan will provide, negotiate with them over those areas that are especially important to you, and then hope, if they haven't already rejected you outright as a result of pre-existing conditions like diabetes, high blood pressure, high cholesterol, history of heart problems, or if you are a cancer survivor, that the premium is covered by McCain's $2500. John McCain himself falls into the category of cancer survivors, so he may be excluded, but oh yes, as a Senator, he already has a government health care plan - but I thought that government health care plans are socialistic and therefore especially toxic to Republican Party karma... oh well, do as I say, not as I do, right John?

Health care costs are stifling both our country's economy and our family's budgets. We need reforms, and McCain's health care program has some promising ideas: promoting the availability of smoking cessation programs, lowering drug prices by bringing greater competition to drug markets through safe re-importation of drugs and faster introduction of generic drugs, and making insurance more portable from job to job. But his main proposal, concerning the taxing of individuals for their employer-provided health care plan coverage, is unacceptable.