NCPA - National Center for Policy Analysis


September 18, 2008

According to critiques of Sens. John McCain and Barack Obama's health care plans, neither will solve the current and future problems of the health care system, says Health Affairs.

Under McCain's plan:

  • He would do away with income tax breaks for health insurance obtained through the workplace, instead treating the payments as taxable wages.
  • In exchange, he would give a $2,500 tax credit for individuals and a $5,000 tax credit for families to buy insurance through their employer or directly from insurers.
  • Workers would then be taxed for the portion of their workplace coverage insurance paid by their employers.

However, employers would be less likely to offer coverage if they knew their workers could get it elsewhere.  Analysts estimate that 20 million people would lose their employer-sponsored insurance under McCain's plan, while 21 million would gain coverage through the individual market.  Overall, McCain's plan won't lower the ranks of the uninsured.

Under Obama's plan:

  • He wants the government to subsidize the cost of health coverage for millions who otherwise would have trouble affording it on their own, and one choice would be a government-run plan.
  • No participating company could turn someone away because of preexisting conditions, nor would someone have to pay a higher monthly premium based on them.
  • The government would subsidize the cost for many who buy coverage through this exchange.

But using third parties to subsidize the cost of a product exacerbates health inflation, say analysts.

Obama's plan would require new, large and rapidly growing federal subsidies that are unlikely to be sustainable, fiscally or politically.  Initial gains in helping more people buy health insurance would eventually be undermined.

Source: Kevin Freking, "Proposals unlikely to solve problems, economists say," Dallas Morning News, September 16, 2008; based upon Jack Hadley, et al., "Covering the Uninsured in 2008: Current Costs, Sources of Payment, and Incremental Costs," Health Affairs, No. 5, August 2008.

For Health Affairs critique:


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