McCain's Health Care/Tax Plan Means 100% Of American Workers Could Pay Less Taxes

McCain's health care plan is a giant tax cut to every working American.  Just as 401k plans made retirement accounts portable and not tied to one company, McCain's Health Care Plan will not only make health care portable and not dependent on one employer it will give folks without a company plan the chance to purchase a plan for the first time.

Contrary to Obama's misleading Ads, this health care plan is not an increase in taxes on anyone.

Rich Lowery in National Review writes,

Where Obama’s 95 percent [Americans receive a tax cut] promise is fundamentally dishonest is in how it discounts the effect of his health-care plan. Obama would require businesses to cover their workers or pay a tax. If the tax is relatively low, employers will choose to dump their employees into Obama’s new public program, making a hash of his talking point that no one will lose his current coverage under the plan. If the tax is high, employers will provide coverage themselves, but will inevitably fund it by paying less in wages or hiring less. Obama is proposing a large new tax on employment.

McCain’s health plan, in contrast, would amount to a $1.3 trillion tax cut, according to the Tax Policy Center. McCain would tax employer-provided health benefits for the first time, but offset that with a $5,000 tax credit per couple for all health-insurance purchases. Independent analysts say the vast majority of taxpayers would be better off.

McCain rarely talks of his plan in these terms, and Obama has taken after it as a tax hike in a series of devastatingly effective and misleading negative ads. The latest CBS/New York Times poll says 51 percent of people think McCain would raise taxes, compared with 46 percent who think Obama will. This means Obama is holding his own or winning the tax debate with his Republican opponent, a necessary condition for a Democrat to win the White House.

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Steven Landsburg, an Economist and a professor at the University of Rochester, writes about McCain's health care proposal.

McCain gets health care right. The reason poor Americans get too little health care is that rich Americans get too much. The reason rich Americans get too much is that they're overinsured, and therefore run to the doctor for minor problems. The reason they're overinsured is that employer-provided health benefits aren't taxed, so employers overprovide them.

It has been clear for decades that the single most effective way to control health care costs is to eliminate the tax break for employer-provided health care. According to one careful study by my colleague Charles Phelps (admittedly several years old, but I'm not sure anything relevant has changed), this single reform could reduce health care costs by 40% with essentially no effect on health care outcomes.

Essential as this reform may be, I'd always assumed it was a political non-starter. I was therefore astonished to learn that it's the essence of McCain's health care reform. (At the same time, he would give each individual $2500, and each family $5000, to use for health care.)

I am astonished that I hadn't heard about this, and particularly astonished that Barack Obama hasn't thrust it in my face with a negative spin. Possibly he has and I just wasn't paying attention.  In any case, this is just what the doctor ordered, and I am delighted that McCain has put it on the table.

Obama, by contrast, wants poor people to get more medical care without addressing the problem of overuse by rich people. Where is that extra medical care going to come from? If the answer is "nowhere," then a primary effect of the Obama plan must be to raise prices, making doctors and hospitals the big beneficiaries.

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Michael Gerson in the Washington Post explains how misleading Obama is about McCain's health care proposal.

...McCain has proposed replacing the current government health-care subsidy for employers with a tax credit that would help all individuals and families purchase coverage. Biden terms this the "largest tax increase in the history of America for the middle class." He is off by -- well, by even more than the norm of Biden hyperbole. In fact, the McCain trade-off would result in a significant tax cut for nearly everyone (except those with the highest incomes).

Obama breathlessly reveals that the McCain credit "wouldn't go to you. It would go directly to your insurance company." Since the credit is intended for the purchase of health insurance, where else should it eventually go? Is it a scandal that a child-care credit eventually goes to child-care centers?

"At least 20 million Americans," charges Obama, "will lose the insurance they rely on from their workplace." As Yuval Levin of the Ethics and Public Policy Center points out, this is a distortion. He cites a Tax Policy Center estimate that the McCain plan would result in 21 million people entering the individual insurance market by 2018 -- many because individual ownership of insurance will be more attractive. In every mainstream analysis, McCain's plan would result in a net increase in the number of insured Americans.

Obama terms the McCain plan "radical" -- which is its main virtue. It goes to the root of the problem -- a system that depends mainly on businesses to provide health coverage. Over the past few decades, the rising cost of health coverage to employers has eaten up pay increases, acting as a wage cap and leaving many incomes stagnant or falling. Business-based health coverage leaves many workers afraid to change jobs -- a handicap in the constant employment churn of the new economy. It discriminates against the self-employed and places unique burdens on small businesses. And it insulates workers from decisions about health-care costs. Few in the current system benefit from searching out the best health-care prices and results.

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Michael goes on to explain the pitfall of the Obama plan which he refers to as Medicare in slow-motion (meaning the price controls in the Obama Big Government plan would eventually eliminate competition) and everyone would be in the Big Government plan.  Thus causing rationing and running into every foreseeable problem currently experienced by many other countries like Canada and England.

He also says Mccain's plan isn't too radical but too timid.  Read the whole article.

Of course these two plans aren't the only way to go.