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John McCain is willing to address the fundamental problem: the rapidly rising cost of U.S. health care. Bringing costs under control is the only way to stop the erosion of affordable health insurance, save Medicare and Medicaid, protect private health benefits for retirees, and allow our companies to effectively compete around the world.
But McCain's plan is designed to improve the health of corporate America's bottom line at the expense of working individuals and families. The goal is to shift the burden of an incredibly overpriced and inefficient health care system from employers and the government onto the backs of working people themselves -- to have them carry the load while doing very little to lighten it.
It's a continuation of the kind of compassionate conservatism that political scientist Jacob Hacker has dubbed "The Great Risk Shift." Hacker defines it simply as "the growing transfer of economic risks and responsibilities from employers and governments onto workers and their families."
When Senator John McCain unveiled his healthcare proposal last fall, a journalist asked whether the Arizona senator's battle against skin cancer would make him sympathetic to the idea of requiring that insurance companies provide coverage to people with preexisting conditions.
McCain flatly rejected the idea. "That would be mandating what the free enterprise system does," McCain said.
McCain, for example, has spoken in general terms about how he might help people with preexisting conditions. He has said he favors what he calls a "special provision including additional trust funds for Medicaid payments." The comment left even some of his aides unsure of his meaning. Medicaid funds are generally used to help lower-income Americans
Indeed, while McCain talks about having a comprehensive healthcare plan, many of the details are being debated within the campaign as aides try to determine how to pay for McCain's promises
But McCain's plan has no guarantee that people could get insurance, and no requirement for people to do so. McCain believes his plan would make insurance more affordable, which would bring it within reach of many more families. But many critics say that failing to require insurance companies to provide coverage could leave millions of people without affordable medical care.
McCain responded that the idea of imposing mandates on insurance companies was a simple answer, but one that he was not sure would be effective. McCain then spoke of the need for Americans to improve their physical condition and suggested some people with preexisting conditions could be put in what he called "high-risk pools." But McCain's bottom line was that he would not put requirements on insurance companies.
"The problem with McCain's approach - and it is a huge problem - is that McCain ventures so far toward total laissez-faire liberty that he risks leaving the poor and sick behind," the magazine said. "Anyone with cancer, diabetes, or other preexisting conditions will see their premiums multiply, too."
But the amount of the credit hasn't been determined, the possibility of extracting enough savings from Medicaid is debatable, and it is unclear whether a credit would be enough to persuade an insurance company to accept a person who would be likely to have large medical expenses.
McCain has frequently sought to downplay the oft-cited statistic that 47 million people do not have health insurance. He has said that a very large portion of them are healthy young Americans who simply choose not to get insurance. However, the American Medical Association has said that 8.3 million of the 47 million are between ages 18 and 24. A McCain aide said the senator was referring to a study that found about half of adults without health insurance are between 19 and 34. Democratic critics said that many younger Americans don't have health insurance because they can't afford it and their employers don't provide it.
McCain compared health insurance to buying a home, saying it was desirable but not required. "I think that one of our goals should be that every American own their own home," he said. "But I'm not going to mandate that every American own their home. If it's affordable and available, then it seems to be that it's a matter of choice amongst Americans."
McCain suggests that we junk all that. Say you're earning $100,000 a year and your company provides about $9,000 toward your $12,000 family premium, which is about average. Today you're taxed only on the $100,000. Under McCain's plan, you'd also pay on the $9,000. That could mean an extra $3,000 or so in federal taxes alone. To compensate for the extra levy, McCain would provide a $2,500 federal tax rebate for individuals and $5,000 per family, meaning a family would simply subtract $5,000 from its tax bill, the equivalent of a big cash payment.
"For his plan to work, McCain has to tell us how he would deal with the old and sick," says Jon Gruber, an MIT economist. "If McCain doesn't tax the healthy to pay for pre-existing conditions, as happens under community rating, he has to tax the taxpayer. That means his plan will require huge subsidies he's not talking about."
In the July 23 update of its analysis, TPC added a preliminary estimate of the candidates’ health care proposals. Because the campaigns did not provide complete plans, TPC assumed certain details. We conclude that the McCain plan, which would replace the current exclusion for employer-paid premiums with a refundable income tax credit of up to $5000 for anyone purchasing of health insurance and make other changes to the healthcare system, would increase the deficit by $1.3 trillion over 10 years and modestly trim the number of uninsured. The Obama plan, which would make relatively low-cost insurance available to everyone through non-group pools and subsidize premiums for low- and moderate-income households, would cost $1.6 trillion, but would also cover virtually all children and many currently uninsured adults.
TPC projects the McCain plan would trim the uninsured by 1 million in 2009 and nearly 5 million by 2013, although their numbers would slowly rise thereafter because the tax credit would fail to keep pace with premiums (see figure). Obama would reduce the uninsured by 18 million in 2009 and 34 million by 2018. Even under the Obama plan, however, 34 million Americans would still lack insurance in 2018.
To end the disadvantage to those who do not buy insurance through employers, Mr. McCain proposes to eliminate the exclusion of health benefits from taxable income. In exchange, he would provide refundable tax credits of $2,500 to single people and of $5,000 to families, with the goal of stoking competition in the individual insurance market. The elimination of the exclusion would generate $3.6 trillion over 10 years, according to the McCain campaign, and that money would pay for the tax credits.
With McCain's health care plan we will have choices though.....
Between 1970 and 1990 the overall tax burden rose by over ten percentage points and the growth was very low compared to most other countries in Western Europe. The marginal income tax for workers reached over 80%. Eventually government spent over half of the country's gross domestic product. Sweden steadily declined from its perennial top five GDP per capita ranking. Since the late 1970s, Sweden's economic policies were increasingly questioned by economists and Ministry of Finance officials.[