McCain suggests that his plan will “foster competition and drive down prices,” but the retail price of the average plan would have to drop from $12,100 per year to $8,300 in order for the average family to see no premium increase. In an era where medical premiums have nearly doubled in the last seven years, can anyone rationally expect that health insurance costs will drop 31% as a result of McCain’s plan? No.
While the promise of a $5,000 tax credit will sound like a great plan to many voters, it is nothing more than another device to shift the cost away from corporations and onto the backs of the working and middle-class. The McCain plan is a loser for ordinary Americans.
Cross posted from my blog, No Drumlins.
Please share widely!
Granted health care provided in MA is fantastic (my wife owes her life to MGH), but where exactly in this country of ours can we find full family coverage for $12,100? Our last goaround last fall with Blue Cross HMO Blue for our small company has the full cost of family at $18,200. And that isn’t a “cadillac” policy either.
But my understanding is that our Commonwealth is near the top of the highest cost standings.
The $12,100 average likely factors in low premium-high deductible plans, which can be significantly cheaper than HMOs, as well as regional differnces.
Created a Utopian paradise of cheap power for California. Wait, never mind, it created huge price spikes and rolling blackouts. I guess you can’t win ’em all.
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p>Seriously, companies are already struggling to provide ever more expensive care for their workers. This will surely push many of them over the edge. Employer health care is a much better deal than being forced to buy Health Insurance on the open market. McCain’s plan will make our already quite bad situation far worse.
is about all his plan would achieve. Real healthcare reform would require draconian measures.
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p>1) Getting the insurance companies out of the loop
2) Funding via a progressive system
3) Using incentives/disincentives to reform lifestyles
4) Re-thinking end of life care
A big factor in today’s market is that trying to purchase coverage on the open market as the consumer, rather than through an employer, is hideously expensive.
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p>An unstated assumption is that removing the employers from the equation eliminates this discrepancy, as individual buyers would have far more market power. I suppose that assumption is subject to question and testing, which is what the “Oh, no, a Republican said something; they must not care about people!” posts are getting at.
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p>It sure makes sense to get employers out of the mix, so I would view this as a good step. My firm is not consuming health care, I am, so I should be able to buy it myself, just as I do car insurance, without getting zapped for doing so.
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p>Makes more sense than governmentizing everything at once. I would be content (but skeptical) to allow Medicare to play in the market and prove that they can deliver quality coverage on the cheap, as long as their price isn’t determined by subsidy unavailable to the private players.
What about people with pre-existing conditions? They are not getting covered. McCain talks about throwing “some” money towards risk pools, but isn’t specific. You know that would be helpful. TNR has a great write up about Elizabeth Edwards who hammered him about those with pre-existing conditions, this is how McCain’s plan would effect some like Elizabeth:
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p>Great plan! It will just cost you on average $7000 more if you are healthy, if your not then you’ll have to sell your house.
here
Obviously the devil is always in the details.
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p>I’m not sure that this is an insurmountable problem, though. I guess it does make a sticky market by providing disincentives to skip in and out of plans. In that sense, it may be that it wouldn’t be all that different from the existing market for life insurance.
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p>In any event, a good question, and good for E. Edwards for pushing the question, even if I doubt I would be enthused by their preferred alternative.
… make any system of private insurers would would be regulatory in nature. Healthcare and insurance are a funny bug with regard to the free market. They really do have to be handled as an exception to free market rules that apply to other commodities and services.
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p>Ezra makes one good example here:
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p>and here:
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p>Why would eliminating large groups of people negotiating as a block (i.e. employers) result in more power to the people? Seems to me that this would actually result in higher prices and costs, because not only would each client have miniscule power, but the insurance companies would now have to service a lot more accounts.
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p>Plus, how much bargaining ability will a 60-year old person who has cancer have? Seems to me like the answer is “absolutely none”.
If everyone had to be an individual, and no one was part of a block, then the insurance companies would have to compete for individuals instead of for big companies. When they give a break to a big company to get that big company’s business (because otherwise that big company will go to another insurer) they have to make up for that break somewhere else, resulting in other people getting screwed.
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p>Insurance should not come from your workplace, it makes it needlessly confusing, and if there is one single person who chose between two jobs based on the insurance being offered, first of all, good for them for having a goddamn choice of jobs, and, doesn’t that prove that it sucks to have to do chose jobs because of their insurance? Basically all it does is give great health plans to people who work for fatcat companies, precisely the people who can afford to pay the big copays and deductibles.
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p>I can’t understand why people here are in favor of work-based insurance plans, it is very regressive. I don’t know if a tax credit will work, though, because what if someone doesn’t work? I guess they’ll qualify for some sort of subsidy? But work-based (and marriage-based) insurance has got to go, people shouldn’t have to work at certain companies or get married to someone that does to get health care.
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p>Also, (though I shouldn’t put all of my concerns in this one comment, but what the hell) – how does work-based insurance help people with pre-existing conditions? Does the company simply insist on all new employees being covered by the same plan, and the insurance agency says OK to lure the company? Again, that sucks for people with pre-existing conditions, that they have to find a job with a company that has insurance them if they want to get insurance. It’s like a scheme to make people work for these grindhouse companies if they want to survive.
self-insure. May use an insurance company for admin, but not for costs.
Some overtly: Insurance companies in Massachusetts may impose a six-month waiting period for coverage. Companies may also exclude coverage for six months on pre-existing conditions if there has been a 2 month break in prior insurance.
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p>Some covertly, like choosing to not hiring women of child bearing age, screening out older, obese applicants, so forth….
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p>I can’t speak for everyone, but I’ll speak for myself.
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p>Company-sponsored health care is the status quo. In order to change the status quo, it better be a movement to something that is at least as good for most people.
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p>My annual compensation currently includes several thousand dollars in health care — I don’t have my latest benefits statement, but if I had to guess, maybe $15,000. I spend maybe another $5,000 from my salary towards that, and I’d estimate that there is probably another $5,000 gained by the fact that I’m not buying the insurance individually. Also, consider that the $15k that my employer pays on my behalf is essentially post-tax to me, since I’m not taxed on this benefit.
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p>That means in order for any new scheme to benefit me, I would need about a $32,000 pay increase — taking into account that I would have to cover $20k in additional expenses, plus the fact that I’d be paying around $12k in additional taxes from this raise.
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p>In addition, I would not want to be in a position where I am turned away for insurance, or charged substantially higher rates due to prior conditions. If I had cancer 10 years ago, I don’t want my premiums to double due to the “increased risk” of insuring me. The only reason my premiums should increase is if I’m engaged in optional risky behavior — driving a race car or something. And ideally, it should not be tied to occupation — or be prepared to start paying a lot more property taxes to compensate police and particularly firefighters. Otherwise you’re not going to attract someone to a $70k job if they have to spend $50k for health insurance.
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p>I would not be willing to trade in my company-based health care for what amounts to a $20k cut in salary, with the potential for even higher costs due to “individualized pricing”. I would only trade it in if my costs remained relatively the same, and my coverage remained relatively the same. I say “relatively” because I’d be willing to pay a bit more if there was a social benefit, like everyone being insured.
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p>I would also not like to see people given the option to “not buy health insurance”, because the social cost of people without health care is huge on everyone. Unless we, as a country, are prepared to take a “if you don’t buy, you die” approach, then we’re going to be paying a lot of money to help people who would have been cheaper to treat if their diseases were caught earlier.
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p>I don’t see where the “John McCain” program even comes close to this. He seems to be saying “get the government out of health care completely, except with regulations that prevent what amounts to “unionizing” by people (by having companies bargain for rates). This appears to be pure, NeoCon Kool-Aid — that “since the government screws everything up, we’ll just withdraw from anything having to do with health care”.
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p>I will agree that employer-based healthcare is not optimal, and is in fact regressive. I think that it would be a lot better if health care was not a consideration when taking a job. But the only way to take it out of the equation is to provide it for everyone as a basic government service. Otherwise it still is a factor, it’s just that even less people will have it because as a future hedge, insurance is easier to forgo than food, shelter, or even the “bling” incessantly marketed to us daily.
Your description is also the perfect example why McCain, Clinton or Obama will have an equally hard time changing the existing system. Three groups:
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p>1: The poor are covered via Medicaid or VA;
2: The elderly are covered via Medicare;
3: The middle class is relatively happy with the ‘status quo’.
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p>The only group omitted is the working poor, and groups 2 or 3 don’t care enough about the working poor to risk their current coverage in order to give the working poor coverage. It doesn’t matter what group 1 thinks because it doesn’t vote.
When an employer shops for health insurance, it– not the employees– is the customer. Customer service to the insureds is therefore not much of a priority. If your employer offers Fallon and HCHP, and you don’t like those choices, you don’t have the option of choosing BCBS.
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p>If you get to shop for your own insurance, yiu do. Hence you have more market power. If you are self-employed, you don’t need to shop against big groups, so you have more market power.
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p>As your the cancer-ridden 60 year old, I think the theory would be that the person got into a policy when they were 50 and in strapping condition, rather then suddenly deciding they need insurance at 60.
The senator continues to earn my wrath with each passing breath. He would be better served to stay out of sight until the election and let the media continue to sell him to us as a viable option. Everytime McCain opens his own mouth he digs himself a deeper hole.
When answering a question about healthcare during her lecture at the Institute of Politics at Harvard, Elizabeth Edwards said that, although she preferred Hillary Clinton’s healthcare plan over Obama’s, both were reasonable and would result in better healthcare coverage for average Americans. McCain’s plan, however, was in a different “solar system.”
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p>Like nodrumlins, she brought up the undermining of employer-paid healthcare and replacing it with a $5000 tax credit. But she also pointed out that the plan would cut many government-supported healthcare programs. McCain’s disdain for federally funded healthcare seemed curious and hypocritical to Edwards because McCain himself has been covered by government healthcare programs since birth.
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p>Also hypocritical for someone diagnosed with skin cancer, McCain would not require insurers to cover pre-existing conditions.
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p>The other point that she made that I hadn’t heard before was that the McCain plan would allow insurance companies to sell across state lines in order to avoid individual state regulations. Some states, like Arizona, have disasterously low standards for coverage with fewer restrictions and more liability protections for the insurance companies. Most policies would then be written in the insurer “friendly” states and could ignore the stricter restrictions in states that protect healthcare consumers, similar to the credit card situation.
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p>She also pointed out his corporate tax cut plan would benefit health insurance companies to the tune of $1.9 billion.
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p>The whole lecture video is here. The question on healthcare is near the end.
To the Obama/Hillary supporters who think, if their candidate loses, Hillary/Obama wouldn’t be any or much different than McCain. Honestly, this is especially true of Obama supporters – no offense. I’m tired of reading Obama supporters compare Hillary on X issue with McCain and say “See! They’re the same!!” It is absolutely, positively essential that a Democrat win this upcoming election, because McCain not only represents more of the same – he represents something even more nefarious than George W. Bush, in my opinion. With policies like these, he’s not only won’t fix Bush’s mistakes, but will clearly continue America on the wrong path. We can’t afford a McCain presidency, no matter what, so we all have to work hard and make sure Obama and/or Hillary win in November. There’s just nothing else to it.
This plan is nothing more than a win-win for big business and insurance companies. The business sector will no longer have to foot the high bill for insurance and insurance companies can deal with everyone on an individual basis – thereby allowing them to take or reject anyone they want and making much more money in the bargain.
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p>This is the plan that the right-wing talking machines spew out every once in a while.
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p>The only real benefit I see in this is that it will level the playing field between large corporations and small businesses. Since neither would offer benefits the talent pool wouldn’t be drawn to big business and innovation (which is stiffled in large corporations) could flourish in small companies. However, it would also make health insurance a thing of the past because the cost would be so prohibitive that it would make it quite acceptable to not carry health insurance.
De-coupling health insurance from employers is a “disaster”?
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p>Someone upthread laments that the soaring cost will surely drive some employers out of business so that means, the employee is not eligible at all when he loses your job.
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p>Second, employer provided health insurance screws with any kind of efficient labour system, causing employers to seek younger worker, and rejecting those older or women who may become pregnant.
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p>Third, it’s a tax game: companies pay for gold plated coverage for the Execs and deduct it!
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p>Ok, so, McCain proposes decoupling employers from their health care responsibility. That’s the disaster?
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p>Maybe it’s not that.
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p>Maybe the disaster is that the employee must pay for his insurance, after his employer stops funding it.
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p>Just a little economics and common sense here. If the employer drops his payment toward your health insurance, it’s HIGHLY probable that he’ll have to give you the same amount he was previously paying to BC/BS to you. Doubt that?
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p>So, if the employer gives you the $7,700 in lieu of paying the insurance company $7,700, you’ll take home about $6,000 after tax and when adding the $5,000 tax credit, you’re back to $11,000. So will the middle class guy pay more or less? I can’t tell. May have to fiddle with the amount of the tax credit. But at least there’d be no discrimation between employees and self-employed. Self-employeds, right now receive a limited tax benefit whereas employees who get a 100% deduction. So, the McCain plan creates parity between employees and self-employees. Is that the disaster?
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p>Is it the fact that people with pre-existing conditions can’t get insurance? That’s the disaster? That’s how life insurance works. Is life insurance similarly disasterous?
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p>One problem with laws against discrimination against people with pre existing conditions is that it must also be accompanied with the Mandate. Otherwise, I’ll not buy insurance until I get sick, then I’ll run out and buy some, knowing that they can’t turn me down. So I guess that means if you support laws against discrimination against people with pre existing conditions you pretty much have to go with Hillary, since she’s the only one who’s throttling up the Mandate machine. Maybe that’s the disaster: you don’t like McCain, so your stuck with Hillary.
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p>I’m understanding the Disaster now.
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…is extremely fuzzy. First of all, it is disingenuous to suggest that the employer who paid for the insurance is going to shift the savings to the employee. Said employer would go from having a tax write-off to a business expense that could reduce tax if there are profits. I haven’t crunched any numbers to determine the net result, but in difficult times when businesses are straining to maintain a profit it seems that it would be hard for an employer to choose a carry over deduction from gross income over a profit, if it came down to such a choice. I think it is only somewhat possible the savings will get passed on to the employee.
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p>Now, as far as the tax credit goes – A single person making 40,000.00/yr (whether that is reflective of a benevolent salary increase on the part of the de-incentivized employer is irrelevant), taking the standard deduction and personal exemption pays the IRS 4,296.00 for 2007.
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p>So their lovely 5,000.00 tax credit isn’t even a 5,000.00 tax credit since it is almost inconceivable to consider the government paying out an excess credit as a refund. So go ahead and make that credit as big as you want, a person earning an average salary is not even going to realize it. Heck, lets make it 20,000.00. Still doesn’t help.
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p>This is why this is a disaster. As per usual an idea is being floated without any real consideration as to how it will really effect people.
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p>And the pre-existing condition is part of the disaster. There are laws in place now in states that require health insurers to continue to cover pre-existing conditions when there is a lapse in insurance for a limited length of time. And the only one of these states with a mandate is Mass. To kick everyone to the curb without providing for the disaster that will doubtless ensue for those not protected by a state law is unconscionable.
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p>It’s a refundable credit. Doesn’t matter how much tax you are otherwise liable for. Just like the earned income credit, which, inconceivably pays out an excess credit as refund.
….McCain is not congress. It is still almost inconceivable that this is going to be passed as a refundable tax credit.
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p>The earned income tax credit, as I recall, is fairly inconceivable still to most republicans. I’m sure they are going to roll over on this one because John McCain tells them to.
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p>There is little chance of it surviving as a refundable credit. McCain has to know this.
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p>A bit of history. Milton Friedman advanced the idea of a negative income, then based on his theories, Gerald Ford, a republican, in 1975 revived it.
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p>I say revived it because it was first initiated in the 1920s under a Republican Congress. You say it’s ‘inconceivable’ but it sounds like you’re basing it on faith, and not history or reason.
is the same as a Republican today?
It’s pretty clear that a Republican in the 20s is probably dead today. So, there’s one substantive difference.
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p>I’m addressing the poster’s contention that EITC is “inconceiveable” to a Republican. Broad statement; no support.
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p>To the contrary, EITC was ‘invented’ in the 20s by a Republican Congress, advanced by a conservative economist, revived by a Republican President in 1975, expanded in 1986 under a tax amendment signed by President Reagan, expanded again in 1990 under President Bush and again in 1993 under President Clinton.
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p>It’s the largest largest anti-poverty tools in the United States with broad bipartisan support. To broad brush the Republican Party as opposed to EITC is a rediculous and ignorant statement with nothing to support it.
…based on faith rather than history. We are dealing with our current republican congress, not republicans from the 1920’s or from 1975. Mainstream republican ideals were very different at those times than they are now. Current republican sentiment from what I have observed both in the media, in person, and online is that a very large percentage of republicans view the EITC as wealth redistribution, with is a killer buzzword in the republican school of economics.
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p>There is also the issue of the applicability of both credits. The EITC is applicable to a very small percentage of tax payers. It is also applicable to a group of tax payers who are not always sophisticated enought to claim the credit. There are services and agencies in place to help people claim the credit, but the coverage is far from perfect. The irs estimates that approx. 25% of people qualifying for the credit don’t take it. So you have a small credit, maxing out at less than 5,000.00 for people with two children, that a relatively small percentage of people are able to claim, that only 75% of elgible claimants take advantage of.
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p>Then there is the health insurance credit. It will be available to every person with health insurance. I haven’t done the math, but I feel confident that I can presume it will cover more people than the EITC. It will be a refundable credit for more people than the EITC as well. It will be tied to a very expensive product, health insurance, that rises in price exponentially every year. If the credit goes through as refundable there will be legitimate fear that the credit will rise exponentially as well. Or at least that there will be pressure to increase it. Given the current state of economic policy of rank and file republicans I find it hard to believe that such a credit will be passed as refundable. And if it is refundable it will be capped far below it effectiveness.
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p>The IRS has a broad outreach program providing free tax assistance, plus automatically calculates the EITC rather than relying on taxpayers, who may lack the sophistication, to do it for themselves. In addition, many states have adopted a similar program.
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p>I’ve given the history: revived in ’75, expanded in ’86, ’90, ’93…. Create your own mental image of rank and file Republicans dissing the program, but you’re simply wrong.
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p>It’s irrefutably a program with bipartisan support. If you disagree, feel free to post a link or something substantive other than your gut feel.
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p>So then, project your wrong assumption forward to see if a Health care credit is conceiveable, and who knows? Can McCain succeed with such a plan. Hard to say, but it’s not inconceiveable, based on the history of the relatively succcessful, and bipartisan supported EITC.
…I’m not simply wrong. It has a certain amout of bi-partisan support to be sure, but they are very different credits with different effects and one will be significantly larger than the other. I don’t have time at the moment but I will be happy to post evidence of the current, lackluster republican support for any further increase of refundable tax credits.
In 2003, workers whose employment has been adversely affected by foreign trade were entitled to what was then, a new, refundable tax credit for the cost of health insurance they purchase for themselves and their families.
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p>The Health Insurance Tax Credit (HITC), Section 35 of the IRC, is a refundable credit equivalent to 65 percent of the amount of health insurance premiums paid. As I said, like the EITC, it’s refundable.
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p>Fancy that, Phil Crane of Illinois, a Republican, along with 19 cosponsors, 3 Democrats sponsored the bill. The Bill passed the House on a voice vote, and the Senate in a 66-30-4 vote. Bipartisan? You do the math. A Republican president signed the bill.
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p>There’s a simple test here. Gary, do you support the EITC? Do you support expanding it to flatten the distribution of wealth?
Yes, because the EITC is a relatively efficient, low overhead means to increase the take-home pay of those most needy, who also work. And no to the second part, because I see no value in distribution of wealth for the mere purpose of distributing wealth.
On what planet would it be expected that employers would give the employees the cash that they would now no longer be paying to insurers?
Here is a better guess of what will happen on planet Earth.
The employer will drop coverage and that will be that.
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p>You could try negotiating for some of that windfall but the employer would likely tell you a violin encrusted saga about those pesky chinese (which this paln makes us one step closer to becoming) and his just trying to nail down a profit before hurrying off to that all important strategy session on the golf course in Cancun.
Rest assured, under the McCain plan such “business” expenses will remain fully deductable as always.
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p>Explain to me then, why an employer shouldn’t, today, cut hourly wages and keep the savings for himself?
It’s the same thing. Cut wages or cut health benefit is identical effect to employer.
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p>Either way — cut wages or cut a significant benefit –, the employer would be reducing compensation. Yet, you believe that cutting a health benefit will somehow enure solely to the benefit of the employer.
You asked “Explain to me then, why an employer shouldn’t, today, cut hourly wages and keep the savings for himself?”
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p>Now that is a good question since the practice you describe is done every day. It is refered to as outsourcing.
As to why it shouldnt be done … I suppose without discussing the ethical aspects of the practice, one might be wise to consider the effect on the overall market for products and services provided by the employer.
It is these same employees who are the “consumers” who keep this economy afloat. Killing two birds with one stone is not desirable in this instance.
the only person who polls worse than Jeremiah Wright in public opinion polls – George Bush.
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p>This one sounds even more DOA than Bush’s plan to privatize Social Security.
A central problem with this discussion seems to be a misunderstanding of the tax break attached to employment-based health insurance. It’s not a tax break for the employer, it’s a tax break for the employee. The employer can deduct costs of doing business whatever their form; the employee, however, pay income tax on salary but not on insurance.
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p>Elimination of the tax break would make no direct difference to employers, though many would probably increase total compensation in order to retain employees by maintaining their same level of take-home pay. The employees, on the other hand, might prefer cash, once the tax advantage is removed; it is this preference that might lead to the elimination of such benefits.
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gosh, that sure does sound nice. and all-american.
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p>but i don’t know anyone who is complaining that they don’t have enough power or information to hold accountable and vet the efficacy of their doctors or the facilities that they practice in.
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p>how many people are really up at midnight googling efficiency ratios of a particular pre-diabetes treatment plan to see whether there may possibly exist a cheaper and more efficient course of action offered by a different (ie competing) healthcare provider?
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p>does that make someone a piker or welfare queen if they don’t? do they have no sense of ‘personal responsibilty’.
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p>people who are sick or injured want to go to a doctor, and get fixed. and they want to believe that the system that they are shoveling so much money into will be accountable (read: regulated) enough that they can worry about getting better, rather than price shopping life-or-death chemotherapy drugs like they were dvd players.