In recent days, Barack Obama’s campaign has intensified its attacks on John McCain’s proposal for reform of our health-insurance system. Based on a spate of recent radio and television ads, and on the line Joe Biden took in last week’s vice-presidential debate, McCain should expect some sharp attacks against his bold proposal in this tonight’s debate. He should be ready to respond, because the attacks are either false or grossly distorted, and his plan deserves to be defended and touted.
The McCain plan begins by addressing the fundamental health-care concern of the middle class: that insurance is too expensive, too rigid, and too insecure. Rising premiums are pushing down take-home wages, the choice of insurance plans is made by the company and not by the family, and leaving a job means losing coverage in uncertain times. The solution, McCain argues, is to put more control in the hands of families rather than holding them hostage to their employers’ plans.
Today, most Americans have only as many insurance options as their employer provides — which is usually one, take it or leave it. This is largely a function of bad government policy. Federal law says that if your employer buys your insurance, the money he spends (which is taken out of your wages) is not counted as part of your income, and so is not taxed. But if you buy your insurance yourself, you do pay taxes on the money you use. For six decades, this has provided an enormous incentive to opt for employer-provided health insurance and has kept a real market for individually purchased coverage from developing. This is an enormous disadvantage for those who don’t have the option of employer-based coverage or who have needs that aren’t met by their employer-based plans.
The McCain plan begins by erasing the distinction between employer-provided and individually purchased health insurance. It replaces the existing tax deduction with a tax credit of $2,500 per person (or $5,000 per family) offered to everyone, regardless of whether their employer offers health coverage.
If you now get insurance from work and want to continue to do so, what your employer pays for your coverage will now count as income, but the credit will more than cover your additional taxes — you keep your coverage, and even end up with a little more money in your pocket at tax time. If you now get insurance from work but would rather choose a different plan — or if are dropped from your current coverage — the wages your employer now takes out for insurance would become regular cash wages, and together with the new tax credit will let you buy the insurance you want independently. Again, you end up with more options and more money at the end of the day. If you don’t have insurance today, or are getting it on your own, the tax credit will help you better afford it. In every case, you end up with more money, more options, and more control over your own health insurance.
Meanwhile, the McCain plan also seeks to vastly increase options and reduce costs by allowing competition in the insurance industry across state lines, which would allow many who are now uninsured to get private coverage. It would help protect vulnerable patients with preexisting conditions by expanding risk pools and by providing subsidies for private coverage for those with low incomes.
The Obama campaign’s attacks on the plan have been astoundingly dishonest. In last week’s debate, Sen. Biden claimed McCain’s plan would raise taxes on middle-class families, when every independent assessment has shown it would lower their tax burden. He argued it was tantamount to what has sent Wall Street into a tailspin — but the more accurate analogy to the mess in our housing market is the Obama health-care plan, which would have the government compete with private insurers and distort the market by confusing politics with economics just as Fannie Mae and Freddie Mac have done.
Indeed, the Obama campaign’s increasingly fervent attacks serve mostly to take attention away from the details of their own health-care proposals, which would price private insurers out of business, subsidize a government-run alternative, levy a heavy new tax on employment, and misspend many hundreds of billions of dollars just as we are entering difficult economic times.
Long-term, Obama’s plan amounts to putting the whole country on Medicare, which would reduce the quality of care, empower bureaucrats over doctors and patients, and, quite possibly, bankrupt the federal government. McCain’s plan envisions instead a competitive market for health insurance, which would give patients more options and more control, leave taxpayers with more money in their pockets, and ensure our thriving biomedical research industry an opportunity to keep developing new treatments and technology.
The McCain plan deserves a defender and champion this week, and John McCain should finally step up and become one in tonight’s debate.