The McCain Health Tax, Round 2

By: vesilv
Published On: 9/16/2008 9:27:52 AM

Following up on my post last week on the absurd, radical and regressive McCain healthcare tax hike, ($1500 by 2013 for a family making $60,000 in VA) I wanted to point out that a hidden, time-bomb middle class tax increase isn't the only strange gift the McCain campaign is bearing this season.

What else is there?  20 million Americans forced out of their employer-based insurance.

Of these, after 5 years, only 15 million will be able to find independent, "nongroup" insurance (at higher costs, with worse coverage).  

The remaining 5 million - yes, 5 million Americans - will be left without health insurance altogether.

This information comes from Health Affairs, a very well-regarded (if somewhat technical) academic journal.  The article in question appears here.  The cause of this disaster is the same as the cause of the tax hike: McCain's plan to tax employer health benefits as though they were income for the employee.  He proposes a tax credit to cover the costs, but in many states it's insufficient from the start.  And since it grows only at the speed of inflation, the tax credit grows over three times more slowly than the cost of healthcare does.  As the cost of care goes up, the tax grows, and so does the number of uninsured.  From the article:

Achieving Senator McCain's vision would radically transform the U.S. health insurance system...We estimate that twenty million Americans-about one in every eight people with job-based coverage-would lose their current coverage as a result of the change in the tax treatment of coverage. Initially, this loss of job-based coverage would be offset by an increase in coverage in the nongroup market (although not necessarily for the same individuals).  Within five years, however, the net effect of the plan is expected to be a net reduction in coverage...The decline of job-based coverage would force millions of Americans into the weakest segment of the private insurance system-the nongroup market-where cost sharing is high and covered services are limited. Senator McCain's proposal to deregulate this market would mean that people in it would lose protections they now have. These changes would diminish the security of coverage for most Americans, especially those who are not-or someday will not be-in perfect health.

Thanks but no thanks, John McCain.


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