Recently, health-care has resurfaced as a prominent issue in the presidential campaign largely because the Democratic candidates, Senators Barack Obama and Joe Biden, have launched a coordinated and sustained assault on Senator John McCain’s proposal to expand health insurance coverage with refundable tax credits.
In several campaign ads, such as this one, and during the televised debates, the Democratic ticket has tried to scare voters by suggesting the McCain plan would increase their costs and “unravel” job-based coverage for millions of workers. And during Tuesday night’s debate, Senator Obama again claimed that his plan would allow workers to stay with their employer plan if they like it and that households who already have insurance coverage would save, on average, $2,500 per year from his plan.
The aggressive attacks on the McCain plan have certainly dispelled the notion that Democratic presidential candidates engage only in positive campaigning. But what’s really remarkable about the Democratic assault is that their claims and charges are demonstrably false. And it’s not just the McCain campaign saying so.
Over the past month, three independent assessments of the candidates’ plans have been issued from nonpartisan organizations: the Tax Policy Center, jointly run by the Urban Institute and the Brookings Institution (full report available here
); The Lewin Group health consulting firm (full report available here
); and Health Systems Innovation, another consulting practice (two separate studies available here
Neither the Tax Policy Center nor Lewin is known for being friendly to market-based health-care reforms. Still, even their findings expose the Obama-Biden health-care assertions as deceptive at best.
For starters, the Obama-Biden campaign has tried to create the impression that the McCain plan would leave households worse off than they are today. Their ads mention that the McCain plan would “tax health benefits for the first time ever.” Senator Biden took it a step further, stating during the debate between the vice presidential candidates that the McCain plan “would replace a $12,000 health plan with a $5,000 check.”
This statement is of course intended to leave voters with the impression that they would lose $7,000 under the McCain plan, which is a complete distortion. Today, when an employer pays $9,500 for family health coverage (which is closer to the true average), that’s $9,500 that can’t be paid to the worker as cash wages. Exempting that $9,500 health premium payment from federal income tax is worth a lot less than $5,000 for most workers. For instance, for a couple in the 25 percent marginal tax bracket, it’s worth $2,375. The McCain plan would give that couple $5,000 instead of $2,375. Moreover, with the tax credit in place, it doesn’t matter if the employer continues to pay for premiums or gives the worker cash income instead. Either way, the worker will come out ahead. The Tax Policy Center estimates that the average household would enjoy a $1,200 boost in income from the McCain plan.
Then there’s the accusation that McCain’s plan would unravel job-based insurance coverage. All three recent studies show the McCain plan reducing the number of uninsured even as coverage through the workplace remains the norm.
HSI estimates the McCain plan would expand insurance coverage to more than 27 million people, or more than half of those currently uninsured. Much of this coverage would come from individuals using the tax credit to buy into the non-group market, but HSI believes even employer-sponsored coverage would expand, not contract. Lewin does forecast job-based coverage would decline by about 9 million people, but that would still leave nearly 150 million American in job-based plans under McCain’s reform plan — a far cry from “unraveling.” Lewin expects the McCain plan would lead to a net reduction in the uninsured of over 21 million people.