Did You Know?
Sep 6th, 2008 at 6:16 am by Susie
That John McCain plans to tax health-care benefits so he can cut taxes on the rich?
He does offer a tax credit, but there’s a catch:
For most taxpayers, McCain’s tax credit quickly becomes a tax increase.
McCain’s new tax credit grows only at the rate of inflation (about 2 percent a year), while current tax subsidies keep up with health insurance premiums (about 7 percent a year).3 As a result, the value of the tax credit quickly falls behind rising health care costs, meaning most households with employer coverage today would soon see a tax increase. Families earning $40,000, for example, would receive a small tax cut in 2009, but by 2018 they will be paying over $2,800 more a year in taxes.
Many middle-class households under the McCain plan pay higher taxes immediately. Households with employer-sponsored coverage, higher incomes, and higher premiums are the most likely to see immediate tax increases. The largest tax increases fall on middle-class families, which pay the highest combined payroll and income tax rates.
This being the Republican party, there’s a long-term goal in sight:
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.
So what have we learned, class? That the GOP, as usual, is working to bring Big Business even cheaper, even more disposable labor!
This would be good information to share with your GOP-loving friends and family.
Of course, with another four years of a Republican president, there won’t be any jobs left, much less any that offer health benefits.
This fits perfectly with the Repub talking point that the cause of escalating health-care costs is that we all have “too much” coverage. Take it away, and “problem solved!”
It’s not that employers “might” exit health insurance under a McCain Plan (which is, essentially the Bush Plan that he laid out at last year’s State of the Union and which promptly died), it’s that they will. The plan is designed to push individuals into the individual market, in order to end the link between employment and healthcare… which, if you’ve examined our crazy-quilt system of coverage, is probably in the cards. The problem is that the individual market for private insurance is about the worst market for getting good coverage at a low price, and would probably force most people - certainly individuals, if not families - to skimp.
The GOP theory - which is thoroughly untested - is that “market competition” in the individual market would drive down rates, and broaden coverage, mainly by - as the employer market does, sort of - expanding the risk pool (that is, a mix of healthy and sicker people averaging out to lower premiums for many). There’s absolutely nothing to suggest that this would happen - healthy, younger workers might forego coverage altogether, while many of the poorest and sickest would probably be pushed into Medicaid (the elderly would still have Medicare). The GOP plan has no mandate requiring people to have any coverage.
In any case, the ‘McCain plan” isn’t an especially serious plan; Republicans have little understanding of the dimensions of the healthcare issues and have cobbled together this proposal mainly because they needed… something. It looks like tax cutting, it addresses the thing Democrats talk about - insurance access - and it has something to do with “free market principles.” But it’s about as crazy as a proposal could be - Democratic proposals like those from Edwards, Clinton, and Obama in the primaries, have all admitted a basic fact: Americans understand the “employment-based” insurance idea, and are loathe to see it changed. Any push to change the employer mandate has to be radual and has to look appealing, or workers - especially white color workers with good coverage - will be absolutely turned off and will punish the people proposing it.
I’ve been looking at this stuff for years: my mom used to teach it, my ex works within it (at an HMO). Most Americans really, still, don’t understand “the healthcare crisis.” And few, really, will take either proposal (Obama’s or McCain’s seriously). But as a jumping off point for raising awareness, I’d say Republicans should be scared to death: their proposal is thin, full of holes, and easily dismissed. And after that… they got nuthin.