Okay, John McCain Good Health Care Idea

John McCain Will Reform The Tax Code To Offer More Choices Beyond Employer-Based Health Insurance Coverage. While still having the option of employer-based coverage, every family will also have the option of receiving a direct refundable tax credit – effectively cash – of $2,500 for individuals and $5,000 for families to offset the cost of insurance. Families will be able to choose the insurance provider that suits them best and the money would be sent directly to the insurance provider. Those obtaining innovative insurance that costs less than the credit can deposit the remainder in expanded Health Savings Accounts.

One of the problems with the way health care is paid for in this country is that it is paid for by corporations as an untaxed benefit. Thus, the more benefits the worker gets that qualifies for this “tax exempt” status the better of the worker is. Well up to a point. Clearly having 100% of one’s salary devoted solely to health care is not something a worker would like. Still, the point that by pushing more benefits under the umbrella of “health care benefit” that the worker would spend money on anyways makes the worker better off. This is what leads to “gold plating” and adding items to health insurance which really shouldn’t be insurable events (e.g. pregnancy and child birth).

Of course, there is the pooling problem. A person who has a serious medical problem and is receiving health care benefits via an employer might be in for some trouble. Healthy co-workers might look around and find better deals with the tax credit and purchasing their own health care, thus leaving the employer with the most costly employees from a health care stand point. Firms not liking this might look for ways to get rid of these employees and or their benefits.

FILED UNDER: Campaign 2008, Economics and Business, Health, Politicians, US Politics,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Triumph says:

    Of course, there is the pooling problem.

    This shouldn’t be minimalized–given the fact that pooling is the basis of insurance.

    Last year, according to the Kaiser Foundation, expenditures for an individual through employer-based health plans was $3700 and $8800 for families.

    The likely effect will be rising out-of pocket costs for most people and it is unlikely that health care access will be enhanced.

  2. legion says:

    The, of course, there’s the fact that people who are unemployed or work for a company that doesn’t provide health coverage simply can’t afford it at all. Being in-between jobs right now, I can provide object lessons on that subject – If I don’t get a job within the next month or so, I’m going to have to come up with about $2000 to cover my family for the next quarter. And I’ll have to, because that is still less expensive that the full-retail price of a 3-month supply of the prescription medication my son takes.

    Another topic to think upon – if it was my medical treatment, and I had to choose between that and, say, food, how likely would I be to ever get a job? With or without health care?

  3. anjin-san says:

    Clearly a step towards McCain’s goal of “de-coupling” insurance from employment. Problem is, if you are trying to get insurance as an individual and you have pre-existing conditions, well, good luck.

    Of course this is not a problem for people who are married to rich women, are senior government employees, and so on.

  4. Bithead says:

    Here is the first issue, then;

    Is insurance to be

    * A guard against Emergencies, where you stockpile money against the event of an illness, wherein you actually pay your way

    * A means by which you obtain meds cheaper, because someone else is paying for them?

  5. anjin-san says:

    Here is the first issue, then;

    Is insurance to be

    * A means for the CEO of Wellpoint to make $46 million a year off of people trying to take care of themselves?

    * A means for people to have decent health care that they pay for, via taxes, work, premiums, or all combined?

    Bit seems to think he is Superman, and a catastrophic accident or illness can never befall him. Either that or he figures “screw people who can’t take care of themselves because of accident or illness, unless of course I should become on of them in which case I will let the system take care me. Ha, Ha.

    Even Christoper Reeve was not Superman. Costs associated with his accident exhausted his resources pretty quickly, and he was a movie star. It can happen to ANYONE.

  6. legion says:

    Bithead,
    The answer is both. And if it takes different systems to address both those areas, then so be it. Catastrophic medical care is pretty obvious, but a large & increasing number of people in this country are on long-term prescription meds – whether it’s blood pressure, hyperactivity, anti-depressants, or whatever. And those drugs are so expensive they simply can’t be afforded by middle-income families without some sort of subsidy.

  7. Rick Jacobs says:

    $2,500 per person, $5,000 for a family? Good God, I paid over $15,000 in premiums alone last year and that was through my employer. What kind of insurance would I get for just $5,000?

  8. Bithead says:

    Bit seems to think he is Superman, and a catastrophic accident or illness can never befall him. Either that or he figures “screw people who can’t take care of themselves because of accident or illness, unless of course I should become on of them in which case I will let the system take care me. Ha, Ha.

    Oh, quite the contrary. At the same time, however, we’re talking about programs which in legion’s case, as an example…(No, Legion, I’m not picking on you) cost more than he can ever pay in. Get more than 40% of the people on the plan doing that and you’ve doomed the plan to failure, or service cuts or more likely both. What’s the help in that?

    And even assuming we’re talking a government plan, where’s that money come from?

  9. anjin-san says:

    Oh, quite the contrary.

    Come on Bit, don’t dance away from the issue. What if, God forbid, you needed round the clock care for the rest of your life? After your resources are exhausted:

    * A guard against Emergencies, where you stockpile money against the event of an illness, wherein you actually pay your way

    will you refuse the government supplied, care you need to stay alive? Care others pay for?

  10. legion says:

    At the same time, however, we’re talking about programs which in legion’s case, as an example…(No, Legion, I’m not picking on you) cost more than he can ever pay in. Get more than 40% of the people on the plan doing that and you’ve doomed the plan to failure, or service cuts or more likely both.

    Bingo… this gets us to a key point: medical care itself – both catastrophic and long-term maintenance – are priced beyond the ability of _anyone_ to afford without significant subsidization.

    And even assuming we’re talking a government plan, where’s that money come from?

    Where does it come from now? Primarily companies that consider it worth the expense they intercept for their employees vs. the ability to keep said employees healthy. Which leads us to the next point – what makes health care so expensive? IANAD, but I expect it’s the high cost of insuring practitioners, plus the exorbitant prices drug companies insist upon for their patent medicines (discussions about acceptable profit-to-R&D ratios can go somewhere else).

    Address the cost drivers, and then maybe you can alter the cost. But decreasing the population that can actually get it & afford it only drives up the default rate. That’s bad for everyone – even, eventually, the doctors, drug companies, and insurers themselves.

  11. Bithead says:

    So, let me understand this;

    You’re into the ‘insurance’ plan… and you want the government to take it over, because you want someone else to pay for your healthcare… put another way, you want something for nothing… and yet it’s the oil companies, and anyone else making a profit that is being ‘greedy’?

    The narcissism involved here is the stuff of legend.

  12. anjin-san says:

    because you want someone else to pay for your healthcare

    Hey Bit, folks in the military have government health care. Can you believe the greed of those guys?

    Who said anything about “something for nothing” or “free” health care. Another red herring from the right…

  13. anjin-san says:

    Bit you have not answered my earlier question. If you were facing catastrophic health care costs, would you refuse taxpayer supported treatment?

  14. Bithead says:

    Narcissism aside, you keep ignoring the central issue, here. There is a limit to even what government subsidy can do for coverage of heathcare, if there’s more outgo than income.

    What do we do? Simply start printing money?

  15. Bithead says:

    Who said anything about “something for nothing” or “free” health care.

    Look again and what Legion said; his ‘insurance’ take is far more than he can pay himself. If you can’t pay for soemthing, that’s something for nothing.

  16. anjin-san says:

    more outgo than income.

    Funny, Bush has lived by this principal for years, and no worries…

    Now you are worked up?

  17. Bithead says:

    Funny, Bush has lived by this principal for years, and no worries…

    So, which social spending programs would you prefer he cut?