NCPA - National Center for Policy Analysis


August 18, 2008

Democratic health care proposals may have gotten more attention during the primaries, but Republican John McCain's plan just might be more revolutionary, says the Dallas Morning News.

How would the McCain plan work?

  • It would tax workers on the value of the insurance they receive from employers.
  • At the same time, everyone would be offered a federal tax credit to help them pay for insurance -- whether a company plan or one purchased on their own.
  • Buyers could subtract up to $5,000 from their federal tax tab come April 15.
  • Or they could simply sign over the credit to an insurer in order to purchase coverage.

According to McCain:

  • The goal is to give those without company-provided health insurance the same tax advantages as those with coverage through work and to encourage individuals to shop for less expensive insurance, pushing prices down.
  • The new tax on the employer-provided portion of coverage would pay for the tax credits -- essentially rerouting $200 billion in existing tax subsidies.

McCain supporters say the tax credits were intentionally set lower than the amount typically spent on employer-provided health plans.  That is to encourage individuals as well as employers to shop for less expensive policies, says John Goodman, president of the National Center for Policy Analysis.

This would help rein in the nation's ballooning health care costs, Goodman argued.  Last year's average total premium of $12,106 for family coverage was up 88 percent from 2000, according to the Kaiser foundation.

The tax credit "would not subsidize bells and whistles (marriage counseling, acupuncture, etc.) as the current system does," says Goodman.

Source: Jason Roberson, "McCain's health insurance plan: More radical than Democrats'?" Dallas Morning News, August 16, 2008.


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