John McCain's health Insurance plan more revolutionary, per Dallas Morning News
18 08 08 - 12:28
McCain's health insurance plan: More radical than Democrats'?
By JASON ROBERSON / The Dallas Morning News
Democratic health care proposals may have gotten more attention during the primaries, but Republican John McCain's plan just might be more revolutionary.
The GOP nominee-to-be wants to tax workers on the value of the insurance they receive from employers.
At the same time, everyone would be offered a federal tax credit to help them pay for insurance – whether a company plan or one purchased on their own. Buyers could subtract up to $5,000 from their federal tax tab come April 15. Or they could simply sign over the credit to an insurer in order to purchase coverage.
The goal, Mr. McCain said, is to give those without company-provided health insurance the same tax advantages as those with coverage through work. It would also encourage individuals to shop for less expensive insurance, his supporters say, pushing prices down.
In contrast, Democratic presidential contender Barack Obama says he wants to expand Medicaid, the government health care program for the poor, and require employers to either provide health insurance to their workers or contribute to a newly created public insurance program.
North Texas employers are not saying they would drop employee coverage altogether if Mr. McCain's plan were enacted.
But some do say the plan, which Mr. McCain detailed in July, would encourage young and healthy workers to forgo company coverage, purchasing insurance on their own rather than paying income taxes on the benefit. That would leave employers with only the costly sick workers to insure.
And that, they said, could eventually lead to the death of company-provided health plans.
"If health benefits became taxable income, yes, I do think that more people would opt out," said Andrew Webber, president and chief executive of the National Business Coalition on Health, a nonprofit group of employer-based health care coalitions, including the Dallas-Fort Worth Business Group on Health.
Bob Queyrouze, who oversees benefits for 1,200 workers at the Federal Reserve Bank of Dallas, calls Mr. McCain's plan "radical." "Long term, it would be destructive to the system," Mr. Queyrouze said.
He adds that he doesn't think the health insurance industry could respond quickly enough to handle a large influx of individuals looking to buy their own, more affordable policies.
Joe Zubretsky, chief financial officer of Hartford, Conn.-based Aetna Inc., said the insurer will be ready regardless of who becomes president or if either of the proposals is implemented. However, he added, "We believe conventional wisdom will prevail and the employer-based system will prevail."
Last year, the employer-paid portion of a family plan averaged $8,824 per employee, according to Kaiser Family Foundation, a nonprofit health research group. Workers kicked in an additional $3,785 for such family coverage, the group said.
That means, under Mr. McCain's plan, an employee with a taxable income of, say, $50,000 last year, would have instead paid taxes on $58,824, after the company-paid premium amount was added on.
The McCain plan would at the same time offer a $5,000 tax credit for family coverage ($2,500 for individual coverage). Those whose policy cost less could save the remainder in a Health Savings Account to cover future health costs.
Mr. McCain said the new tax on the employer-provided portion of coverage would pay for the tax credits – essentially rerouting $200 billion in existing tax subsidies.
Critics question whether individuals – especially those with chronic or pre-existing medical conditions – would be able to find health plans they could afford.
Mr. McCain addresses this question by saying he would create a federally supported plan to insure those denied coverage.
Opponents also say the amount of the tax credit will not be enough to purchase comprehensive coverage.
McCain supporters say the tax credits were intentionally set lower than the amount typically spent on employer-provided health plans. That is to encourage individuals as well as employers to shop for less expensive policies, said John Goodman, president of the Dallas-based National Center for Policy Analysis, a conservative think tank, and a health policy adviser to Mr. McCain's campaign.
This would help rein in the nation's ballooning health care costs, Mr. Goodman argued. Last year's average total premium of $12,106 for family coverage was up 88 percent from 2000, according to the Kaiser foundation.
The tax credit "would not subsidize bells and whistles [marriage counseling, acupuncture, etc.] as the current system does," Mr. Goodman said in an e-mail.
While most company plans do not cover marriage counseling or acupuncture, many do cover such costly services as infertility treatments and psychiatric analysis sessions. Presumably, those who did not need such treatments would be able to save by buying a more streamlined plan.
Most Americans now get their health care coverage through work. In Texas, it's an estimated 52 percent, or 12 million people, according to the state Department of Insurance.
Lawrence Louie, a 40-year-old Plano telecommunications worker, is one of those. He doubts the McCain tax credit will be large enough to buy insurance on the open market for himself and his wife.
"Basically, I would be forced to choose between paying the increased taxes [on the company-paid premium], or pay at least $4,000 out-of-pocket per year for private insurance, after adjusting for the value of the tax credit," he said.
"Anyone with good insurance is not going to find this acceptable."
THE PLANS
John McCain: Proposes a $2,500 refundable tax credit for individuals, $5,000 for families to make health insurance more affordable. In gaining the credit, workers would be taxed for the portion of their workplace coverage insurance paid by their employers. Would offer federal assistance for states to create high-risk pools that would contract with insurers to cover consumers who have been rejected on the open market.
Barack Obama: Would require coverage for children but not adults. Would require employers to provide insurance or contribute to the cost but would exempt the smallest businesses. Would offer health plans similar to the one available to federal government employees. For people who do not qualify for Medicaid, he would offer a subsidy to buy into the public plan or purchase a private insurance plan. Would also expand the children's health insurance program.
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