McCain’s Health Coverage Plan - No One Benefits

As Joe Biden made note in the vice presidential debate last week, the McCain/Palin health care plan is largely dead on arrival and neither employees nor employers are happy with what can only be described as a bad plan. Of course McCain, married to an heiress, in addition to having the health care perks of a U. S. Senator is clueless on this real world issue. As for Sarah Palin, shes just plain clueless on all counts. Other than housing costs, health care costs are one of the biggest concerns for both employees who desperately need to keep their families with coverage and employers who must carry a portion of the coast burden. Now, the New York Times has a story looking at the deficiencies of the McCain proposal. It is noteworthy that McCain wants the private market place to be controlling - the same market place that has brought us the current financial catastrophe. Moreover, the tax credits McCain would offer go nowhere near offsetting the costs of coverage (as a small business owner, my family coverage cost nearly $16,000 last year). Lastly, the proposal completely ignores the fact that due to pre-existing conditions, many individuals cannot get coverage at any price. Here are some highlights:

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American business, typically a reliable Republican cheerleader, is decidedly lukewarm about Senator John McCain’s proposal to overhaul the health care system by revamping the tax treatment of health benefits, officials with leading trade groups say. The officials, with organizations like the U.S. Chamber of Commerce, the Business Roundtable and the National Federation of Independent Business, predicted in recent interviews that the McCain plan, which eliminates the exclusion of health benefits from income taxes, would accelerate the erosion of employer-sponsored health insurance and do little to reduce the number of uninsured from 45 million.

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That is largely the argument made in recent days by Mr. McCain’s opponent, Senator Barack Obama, who has revived a dormant campaign debate over health care with an intensified attack on the McCain plan. . . . . Over the weekend, Mr. Obama more accurately characterized the McCain plan as a swap but one that would work to the detriment of millions. Middle-class families, he said, would “watch the system they rely on begin to unravel before their eyes.” The business leaders said that was also their fear.

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The business leaders forecast that Mr. McCain’s free-market approach would impose particular burdens on small businesses and old-line manufacturers that are already struggling. “To some in the business community, this is very discomforting,” said R. Bruce Josten, executive vice president for government affairs at the Chamber of Commerce. “The private marketplace, in my opinion, is ill prepared today with an infrastructure for an individual-based health insurance system.”

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The centerpiece of Mr. McCain’s plan is the elimination of the provision that has, since 1954, excluded the value of employer-sponsored health benefits from a worker’s taxable income. The exclusion can be worth thousands of dollars for some workers. In its place, Mr. McCain would offer all Americans income tax credits of $2,500 per person or $5,000 per family for heath coverage, regardless of how they bought it.

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But with the average employer-sponsored family policy costing $12,680 this year, other workers would find the exchange a losing proposition. They would either have to spend more, reduce their coverage or persuade employers to make up the difference. Officials with eight business trade groups contacted by The New York Times predicted the McCain plan would raise costs and force some employers to stop providing health benefits.

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“There are huge questions about the $5,000 per family being an insufficient amount in terms of being able to purchase the same coverage,” said Mr. Josten with the Chamber of Commerce. Helen B. Darling, president of the National Business Group on Health, a coalition of 300 companies, agreed that many workers would face a net loss. “The last thing you want to do to the average working person, especially when you’re bailing out big financial companies, is take something they hold near and dear partially away,” Ms. Darling said.

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Economists forecast that the problem would worsen over time because Mr. McCain, according to advisers, would index his tax credits to overall inflation. Health insurance premiums have grown four times faster than inflation since 1999.