John McCain remembers the good old days and wants to bring them back — the good old days, that is, before World War II — at least as far as health insurance goes.
Mr. McCain’s health plan centers on eliminating the tax breaks for employers who provide health insurance for their workers — a marked departure from the current system — and giving $5,000 tax credits to families to buy their own insurance. His goal in shifting from employer-based coverage to having people buy their own policies is to encourage competition and choice, and to drive down the costs of health insurance.
Back in the days when John McCain was a boy, health insurance was fairly cheap. Now, there was a war going on, and the National War Labor Board had frozen wages and implemented price controls. This made it hard for employers to attract workers (the war had created a job surplus, reversing the labor surplus of the Great Depression). The Board, realizing it had created an unintended problem, ruled that the freeze did not apply to fringe benefits, such as pensions and employer-based health insurance.
Employer-based health insurance was a winner all around: employers liked it and so did unions. Health benefits were not subject to income tax or payroll taxes, as were cash wages. The system grew and eventually became something of the norm in the United States.
The norm, we all — with the exception of health insurance executives perhaps — would agree, has become a monster. We should applaud Mr. McCain’s recognition of that. Unfortunately, turning back the clock to the days before employer-based coverage was widespread doesn’t do the trick — not even if you throw in a $5000 refundable (those who pay less than $5000 in federal income tax are thankful) tax credit.
Let’s do the arithmetic. McCain’s benefit will amount to less than half of current rates to cover a family. You are on your own as far as buying insurance goes, and it’s going to cost you way more than $5000 out of your own pocket if you’re covering a spouse and/or children. So in effect, you’re already behind with McCain if you currently have employer-based coverage, unless you happen to work for Ebenezer Scrooge.
And if you happen to have a condition (or a gene) the insurance companies don’t like? Well, with McCain –
… rather than force insurers to abandon cherry-picking the healthiest patients, Mr. McCain proposed that the federal government work with the states to cover those who cannot find insurance on the open market. With federal financial assistance, states would be encouraged to create high-risk pools that would contract with insurers to cover consumers who have been rejected on the open market.
Mr. McCain was vague on Tuesday about how his safety net would be structured, and he did not specify how much it might cost, leaving the details to negotiations with Congress and the states.
In other words, he’ll get around to it?
Oh, and that “encourage competition and choice, and drive down the costs” thing? Been there, done that. To death. Are you liking your deregulated airlines with all their competition and choice? Me, I’d rather take the train. It was a loser in the 80’s and only the self-absorbed or brain dead would buy that argument anymore.
This health “plan” is bad. No, it’s worse than bad. It’s heartless and flippant.