NCPA - National Center for Policy Analysis


October 8, 2008

Sen. John McCain's (R-Ariz.) health reform plan is precisely the kind of plan that someone of Sen. Barack Obama's (D-Ill.) professed convictions ought to support, says the Wall Street Journal.

McCain's proposal is highly progressive:

  • He wants to readjust the subsidies that Congress channels into health coverage for business so that lower- and middle-wage workers aren't shortchanged, as they are now.
  • Currently, people who get insurance through their employers pay no income or payroll taxes on the value of the benefit; this is revenue the government forgoes to encourage certain behavior.
  • If those losses were direct spending, the tax exemption would have cost more than $246 billion in 2007.

All in all, workers would come out ahead with the McCain plan:

  • According to the left-leaning Tax Policy Center, the average taxpayer would see his tax bill drop by $1,241 in 2009.
  • On average, lower-wage workers have more limited coverage as part of their compensation, mostly from small- or medium-size businesses.
  • But the more generous the employer health plan, the more the tax subsidies increase. According to the Joint Committee on Taxation, the current employer benefit is only worth between $600 and $3,000 for people making under $100,000.
  • The upper-income brackets save between $4,000 and $5,000.

The most affluent -- i.e., the top quintile of earners -- would be slightly worse off after 2013 under the McCain plan, though they'd still have plenty of options.  Even as he routinely promises to raise taxes on "the rich," Obama is leaping to their unlikely defense here only to frighten everyone else.  The McCain plan is fairer than the status quo, which subsidizes the most expensive employer (and union) insurance plans, says the Journal.

Source: Editorial, "Obama and Health-Care Equity; Barack defends tax subsidies for the rich," Wall Street Journal, October 8, 2008.

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