John McCain’s Health Care Plan Would Raise Taxes For Middle-Class
There is an interesting relationship between John McCain's proposed health care plan and the taxes for the middle-class, but before we look into McCain's plan let's ask the following. If a person cannot afford health insurance for himself or his family (average cost of insurance is $12,000/year), will a refundable tax credit of $2,500 for an individual and $5,000 for a family make a difference? Can a person earning less than $40,000/year afford to pay $7,000 in insurance payments? The uninsured, many of them employed in low wage jobs, simply cannot afford the health insurance premiums.
John McCain says his proposed health care plan would provide health insurance coverage to more people at lower cost and he promises his plan would put “individuals and families back in charge.” But he also wants to open up a national market, free of state oversight where health insurance companies would continue to price people with pre-existing illnesses out of the market.
McCain’s tax credits are indexed to inflation, not to premiums. Since health care premiums are rising at a rate 2-3 times inflation, his proposal would actually cause a large tax increase for the middle class. Because his plan eliminates the tax exclusion for employer-provided insurance, workers will pay income and payroll taxes on their health benefits. The new credit will soon turn into a tax increase because of the rising health care costs.
Additionally, the tax credits are the same, either $2,500 for individuals or $5,000 for families, and this simplistic one-size-fits-all fails to recognize that some households must pay much higher premiums because of age, health, family size or even where they live. There is no provision in his plan to control costs. There is also no provision for patients to get public information on quality of care or costs of procedures.
The McCain Health Plan is also more costly than Obama’s plan for covering all Americans. The McCain plan would cost taxpayers $1.3 billion and the Brookings Institution Tax Policy Center estimated that McCain’s plan was seven times more expensive than Obama’s at covering the uninsured.
In a recent issue of the magazine of the American Academy of Actuaries, McCain is quoted, “Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade with banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.” What the free market has given us in the banking and finance industry can be repeated in health care? Where do we sign up?