Tax credits at heart of McCain's health care proposal
By Scott J. Anderson
Wednesday, April 30, 2008
(CNN) -- A tax credit to help individuals and families
buy health insurance is at the heart of a health care proposal
Sen. John McCain unveiled Tuesday.
The credits will spark greater competition among insurance
providers and put "individuals and families back in charge," the
presumptive Republican presidential nominee said during a speech
in Tampa, Florida.
"Millions of Americans would be making their own health care
choices again," McCain said. "Insurance companies could no
longer take your business for granted, offering narrow plans
with escalating costs."
Under McCain's heath care plan, individuals would be eligible
for a $2,500 credit and families a $5,000 credit to help pay for
health insurance if they do not subscribe to, or do not have
access to, employer-provided health care coverage. The
government would send the money directly to insurers.
McCain's plan would cost $3.6 trillion over 10 years, the
campaign said. McCain would pay for the program by
eliminating the tax break employers get for offering insurance.
Doug Holtz-Eakin, a McCain senior policy adviser, said the tax
credit would allow individuals to obtain health coverage
"tailored to the circumstances of your life" rather than being
forced to accept the insurance provided by an employer.
McCain also proposed that state governments set up a nonprofit
Guaranteed Access Plan to provide coverage to individuals who
are denied coverage from private insurers because of
pre-existing conditions. McCain said he would work with
Congress, governors and private industry to adequately fund the
Holtz-Eakin said McCain's willingness to work with the states to
create individual programs in each state shows he understands a
"better job doesn't take the form of a one-size-fits-all plan
formed in Washington."
McCain argues that the increased competition will lower health
care costs, which will allow more of the roughly 47 million
Americans who are uninsured into the system.
The Arizona Republican would also permit generic drugs to be
imported from Canada to
increase competition among pharmaceutical manufacturers.
"We know competition and choice drive down costs," said
Carly Fiorina, a former Hewlett-Packard CEO who is advising
the McCain campaign.
Holtz-Eakin said the plan would also encourage insurers and
health care providers to deliver better health and disease
management as well as more preventive medicine such as
anti-smoking programs, which he said would further reduce costs.
Health providers would be paid for "doing the right thing"
rather than being paid for every test and procedure, he said.
In coordination with McCain's speech, his campaign released a
television ad that touts the plan. In the ad, which is
airing in Iowa, McCain says, "I can characterize my
approach on health care by choice and competition, affordability
and availability. ... The fundamental problem is not the quality
of health care; it's the cost of health care. So,
health care must be made affordable and available."
Critics of McCain's plan said the tax credits would not put a
significant dent into what a family must pay to buy health
insurance on their own. The average cost of providing
health care for a family of four annually is more than $12,000,
according to the Kaiser Family Foundation.
For individuals with pre-existing conditions, the costs of
obtaining insurance could even be higher, critics said.
Critics also said encouraging individuals to buy health
insurance could undermine the system of employee-based health
insurance, with no guarantee a new system would emerge to
up that argument while criticizing McCain, saying in a
statement, "John McCain is proposing a radical plan that would
mean millions of Americans would lose their job-based coverage."
"So while people might have a 'choice' of getting such coverage,
employers would have no incentive to provide it," she said.
Fiorina, however, said McCain's plan would not undermine the
employee-based health insurance system because employers would
continue to offer health coverage to attract and keep quality
McCain's free market approach to health care reform is very
different from the proposals offered by the Democratic
presidential candidates, Sens. Barack Obama and Hillary Clinton.
Both of their proposals include more government mandates for
health care coverage.
mandate that every individual have health care and would provide
government subsidies to those who could not afford to purchase
insurance on on their own.
She would also allow individuals to join the private health care
plans that are offered to members of Congress, and she would
create a new public insurance program modeled after Medicare.
includes tax credits to individuals to help buy health insurance
and would require large businesses to provide or help pay for
health insurance for their employees.
is estimated to cost $110 billion annually, which would be paid
for by eliminating the Bush tax cuts for those making more than
$250,000 and by eliminating waste and inefficiencies within the
Obama would not mandate that every individual have health care
insurance, but he would require health insurance for children.
As part of his plan, Obama would create a public insurance
program for those not covered by private insurance and would
also require large employers to help pay for their employees'
Obama's plan is estimated to cost between $50 billion and $65
billion and, like
would be paid for by eliminating the Bush tax cuts for those
earning more than $250,000 a year.