Assuming that the country’s banks don’t all fail in the next few weeks, sooner or later the conversation will come around to the issue that’s most threatening to working Americans: Health Care. Those lucky enough to have insurance are seeing non-covered medical costs soar, along with premiums and ever increasing deductibles. Costs have risen to the point where the uninsured are simply not seeking treatment because they cannot afford it.
In the last Friday’s presidential debate, Candidate McCain argued that he wants every family “to have a $5,000 refundable tax credit so they can go out and purchase their own health care.” To which Obama later responded: “… you may end up getting a $5,000 tax credit. Here’s the only problem: Your employer now has to pay taxes on the health care that you’re getting from your employer. And if you end up losing your health care from your employer, you’ve got to go out on the open market and try to buy it.”
The 140 million American who get health care through their employers jobs do not pay income taxes on the costs of that benefit. This exclusion from taxation on health insurance dates back to World War Two, when war-time price and wage freezes were the law of the land. The McCain plan ends that exclusion, and thus becomes a $3.6 trillion tax increase over 10 years on workers. What was a tax-free part of your compensation is now taxable income. You’ll pay income tax on it and employers will pay payroll taxes. Once that happens, experts estimate that around 20 million people will lose employer coverage. In California that number is estimated to be 2.4 million people.
But don’t worry, the fun’s just starting. McCain will take that revenue from the tax increase, and give it back as a tax credit, so you can go buy health care on the open market. The fact that there is a rather large gap between that tax credit ($5000 for families) and the current price of insurance ($12,000, roughly) and, from a strictly cash flow point of view, Americans will be shelling out for those premiums for a year before any credit takes effect, doesn’t seem to concern the Senator from Arizona.
The central focus of the McCain plan is to get families out of employer-paid coverage and into the health insurance marketplace, where “free market” competition is supposed to take care of all ills. The mere mention of “free market” from a Republican in light of our current economic crisis should be all the warning that you need. Taxation of employer provided health benefits will have a great impact in industries where trade unions have been active in negotiating in an increasingly hostile environment for those benefits, so you can pretty much take it to the bank (if it’s still open) that there is an anti-union agenda woven into all this “free market” nonsense.
Then we get to the part about buying health insurance on the open market: it’s not for the faint of heart, both figuratively and literally. Those with pre-existing conditions and riskier socio-economic status will find insurance difficult, if not impossible to purchase. Senator McCain has promised to address what he calls “the deep flaws in today’s non-group market” by proposing state-based high-risk pools for the sick (called Guaranteed Access Plans). These high-risk pools would need much more than the $7 billion to $10 billion that Senator McCain proposes spending, meaning that coverage significant numbers of the uninsured will be assured of remaining that way.
Senator McCain’s populist sloganeering on the issue is: “I believe the key to real reform is to restore control over our health care system to the patients themselves.” The disturbing reality is that his commitment to ridding the market of these “needless and costly” insurance regulations is right out of the right-wing Republicans’ ideological playbook: fewer regulations; let the market decide; and gouge the already shrinking middle class paychecks while the fat cat insurance CEO’s shovel cash into their off-shore bank accounts.
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