McCain’s Healthcare Plan Taxes Employee Benefits, Aims to Force Individuals “onto Open Market”
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Sen. John McCain’s campaign has begun to launch personal attacks on Sen. Obama, who appears to have solidified leads in most “battleground states”. Meanwhile, Sen. Obama has said McCain’s campaign is “out of touch, out of ideas and running out of time”, and has assailed McCain’s healthcare plan for raising taxes on working people. McCain’s plan would tax employer-provided healthcare benefits, offering individuals a tax credit for buying their own healthcare. Obama says McCain’s tax credit is insufficient to cover private healthcare costs and will leave people struggling.
A recent study put the cost of a private healthcare plan covering an average family at over $12,600. John McCain’s plan for healthcare provides a maximum of $5,000 directed tax credit to individuals who pay to cover their family under a private insurance plan. The plan was called “radical” by Obama multiple times over the weekend, and the truth is, economic analysts have struggled to find the logic in proposing a tax on employer-sponsored healthcare, if your aim is to reduce Americans’ tax burden, spur business growth and move more Americans into private-sector healthcare.
Sen. John McCain’s surrogates have said Obama’s critique is untrue, that McCain’s tax credit is sufficient to cover the cost of replacing employer-sponsored healthcare. It is not. The plan is actually designed to drive individuals “onto the open market” for healthcare, and has been pitched by the campaign as such, along with the rosy analysis that this provides “choice” to individuals and families. The problem is, McCain gives significantly less money than would be needed to cover the cost of buying private coverage.
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The McCain campaign has actually lied about the numbers associated with McCain’s plan, in responding to Obama’s criticism. The campaign has claimed that an individual will only have to pay $3,300 to get private insurance, but will have a $5,000 credit with which to pay for it, giving them “savings”. The problem is that this commentary ignores almost every detail about the plan: in fact, an individual will get only $2,500, not enough to cover the $3,300. And, since it’s a directed tax credit, there is no extra money: the $2,500 can be used only for healthcare. The $5,000 can be used only for healthcare, and is reserved only for covering the cost of family healthcare plans.
In an environment where individuals and businesses are struggling, where banks are witholding credit and major banks are becoming insolvent overnight, McCain’s plan asks employers to pay taxes on employee health benefits. When they drop those costs, to avoid paying additional taxes, individuals and families will be left without coverage. Left without coverage, they will have to spend their own money to buy healthcare coverage, then hope they qualify for the McCain credit, which will cover a part of those costs. Individuals will be able to cover 75.75% of the costs, on average; families will be able to cover only 39.68% of the costs, with the tax credits McCain says he will offer.
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