Reply #9: Both are better than McCain’s Health Care Plan: Higher Taxes, Less Coverage [View All]

[Omaha Steve]

http://blog.aflcio.org/2008/02/21/mccains-health-care-plan-higher-taxes-less-coverage/

by Seth Michaels, Feb 21, 2008



In a time of uncertainty and economic risk, people are more and more concerned about whether they’ll be covered in the event of a medical problem. As we’ve seen from the responses to the AFL-CIO’s 2008 Health Care for America Survey, those of you who have secure health care through your jobs know how lucky you are—and those whose employers have cut health care benefits are facing serious challenges.

Mary Anne, in Greenfield, Wis., has seen this dynamic firsthand:

As the Benefit Administrator in a midsized organization for many years, I have seen health insurance issues balloon into a truly ugly monster. Today, health insurance premiums are second only to wages in employer expenses. The premium costs to employers has skyrocketed, which in turn, has caused employers to pass on those huge increases to their employees by having the employee pay a percentage of the monthly cost. Not only have premiums increased dramatically, the benefits have decreased. Now employees must pay out-of-pocket expenses which can run into the thousands. These are the best-case scenarios. These are the lucky folks. I know many Americans who can afford little or no health insurance; they work; they have jobs, but are not covered by their employer. We need a change and soon.

(Click here to fill out the survey and tell your health care story. You can vote here on the stories you think make the most impact.)

Democratic Sens. Hillary Clinton (N.Y.) and Barack Obama (Ill.) have proposed solutions to the nation’s health care crisis that would go a long way toward addressing the needs of working families. (You can download a side-by-side comparison of the presidential candidates’ health care plans here.) Yet, the Republican presidential frontrunner, Sen. John McCain (R-Ariz.), is backing a plan that would make health care even more out of reach for most of us.

McCain is pledging “no new taxes,” but his own health care plan might represent a massive tax increase for working families, according to the Tax Policy Center and the Kaiser Family Foundation.

onsider McCain’s health care proposal. He says he would treat employer-sponsored health benefits as taxable income, while giving individuals a tax credit for the insurance they buy. On its own, taxing employer insurance just like wages would be a huge tax increase—OMB estimates in the neighborhood of $1 trillion from 2009–2013.

For union members with good health care plans, the tax increase would be even bigger. An employee whose health benefits are worth $15,000 would have to pay taxes on an extra $15,000 in income.

McCain’s plan theoretically compensates for this tax hike by offering tax credits for workers to pay for their health care. Unfortunately, according to studies by the Kaiser Family Foundation, these tax credits would cover less than half of the average cost of a health insurance premium—meaning employers would have less incentive to cover their employees, pushing workers out of employer-based systems and into the private insurance market.

All of this comes in the face of evidence that employees need good benefit plans, or they’ll wind up uninsured. A study by the Urban Institute shows that as employers stop providing coverage, employees can’t keep up with the costs of health care on their own. Deteriorating coverage, the study shows, means more people are left without coverage altogether.

Leaving working families on their own, at the mercy of private companies, won’t cut costs and won’t increase coverage. Instead, it exposes people to more risks.

That’s no way to solve our health care crisis. When it comes to the economic issues facing working families, McCain just doesn’t get it.

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