John McCain wants to replace the tax benefit for employer-provided coverage with a personal tax cred

[Omaha Steve]

http://www.nationaljournal.com/njmagazine/print_friendly.php?ID=nj_20080524_9618

Sat. May. 24, 2008
by Ronald Brownstein

Today, most Americans receive health insurance through large organizations (either their employer or the government). Only a small number of them (about one in 11) buy it on their own in the individual insurance market.

Almost all experts agree that the health care proposal that presumptive GOP nominee John McCain recently announced would shift that balance--perhaps substantially--toward individually purchased coverage. McCain wants to replace the tax benefit for employer-provided coverage with a personal tax credit of $2,500 for individuals and $5,000 for families. That trade would cause some companies to drop coverage, driving an unpredictable number of their workers from employer-based insurance to individually based plans. Some of the uninsured--especially young people attracted to lower-cost, stripped-down plans--might also use McCain's new tax credit to buy individual policies. On both fronts, his plan would decouple insurance and employment. Hoping to promote portability and choice, McCain would steer millions of additional Americans toward the individual insurance market.

That raises an obvious question: Could the individual market handle the load? A wide variety of experts, including some in the insurance industry, say that the answer, at least for today, is no.

For starters, the administrative costs of individual policies are at least triple those of employer-based policies. That means a worker shifting from a group policy to an individual one receives significantly less coverage for the same price, notes Kenneth Thorpe, an Emory University health policy professor. And although group policies share risk between the young and old, the healthy and sick, the cost of individually based policies varies enormously, depending on the person's health. Most important, people with prior health problems often cannot get affordable coverage--if they can get any at all. "If you are a 60-year-old woman with multiple chronic diseases, forget it," Thorpe says. "There is nowhere for you to go in the individual market."

America's Health Insurance Plans, the industry's trade association, insists that the individual market works better than Thorpe and similar critics believe. But, tellingly, even AHIP is not arguing for more reliance on individually based insurance. "We haven't advocated that," says Karen Ignagni, the group's president. AHIP has endorsed a McCain-like tax credit for the uninsured, but it opposes eliminating the tax break for employer-based coverage.

FULL story at link.

[dflprincess]

1. All this proves is that McCain has no idea what health insurance counts.

But I suppose someone who has had government healthcare his whole life wouldn't.

[papau]

10. But this by definition raises cost to non-rich as it lowers cost for rich who get extra

generous policies not otherwise deductible/excludible under current law.

[midnight]

2. Corp. Insurance Co. are McCain's backers. American's without

insurance and that is most of us well love knowing this. For the rest, get ready for stripped down nothing.

[MrModerate]

3. Individually purchased cover is an absolute disaster for those who have to . . .

Purchase it. Or try to. If you need it (i.e., you're older or not in perfect health, or from a demographic the insurance vultures disdain, they just won't insure you). If they will insure you, it will be at prohibitive rates, and they'll disallow anything serious that might actually cost them a nickel. And even if they do -- through some underwriting error -- cover your serious condition, you can be sure they'll yank your coverage as soon as you show any sign of needing it.

Insurance companies, despite what they told you in Business 101, are not in the business of distributing risk. They're in the business of avoiding risk altogether while extracting the maximum amount from their policyholders under the fiction that they'll provide benefits when you need them. They are ghouls, extracting an obscene percentage of the health care dollar and delivering no genuinely useful service.

They should be nationalized and downsized, their investors given about 3 cents on the dollar, and about 10 percent of their staff retrained to process record-keeping paperwork. Senior managers should be given the opportunity to seek useful work that doesn't debilitate the economy.

Perhaps car washing. You can always use one or two more car washes.

[Brigid]

9. Amen and amen.

Did you used to work for one of those vultures too?

[MrModerate]

11. Nope. Just a "customer" . . .

Who's cycled through captive (corporate salaryman), independent consultant, and now captive again. I actually had my care delivered (at least when I was in the US) through one of the better HMOs -- Kaiser of Northern California. They weren't above error, but on the whole (and largely because the insurance ghouls were out of the picture) delivered decent value for money.

Since being forced onto Aetna in states where Kaiser doesn't serve or while assignment in other countries, I've had to deal with Aetna, for which polite language to describe doesn't exist.

[Yael]

4. This will not work

Insurance goes in groups to mitigate risk. The more employees a company has, the better their rates and coverage.

We have to re-work our coverage every year, raising co-pays mostly -- just to keep us covered.

[ColbertWatcher]

5. McCain doesn't know what he's doing...

...as soon as someone tells him this is a push toward privatizing Medicare--and no one wants it--he'll release a statement "clarifying" what he really meant and that he really doesn't support it.

[nashville_brook]

6. he figures, since healthcare is already broken, why not set it on fire too.

[jmowreader]

7. The insurance companies THEMSELVES will get this shot down

That "triple the administrative costs" part alone will cause the insurance industry to go against this hard.

Check this shit out: I went to Blue Cross & Blue Shield's website and ran a quote for my wife and I. A policy that doesn't actually cover anything--$3500 deductible and massive copays, and a $5 million lifetime maximum benefit--would cost me $400 per month. A policy that might be worth having is closer to $900. Per month. Let's see...$10,800/year minus John McCain's $5000/year tax credit...that brings the price of the decent policy down to ALMOST what the crappy one costs. Those numbers are without children or maternity coverage, and lots of people have or are planning to have children. That's a PPO, now, and HMOs should be cheaper.

I know the Republican healthcare plan is "don't get sick," but this takes things to extremes.

[Brigid]

8. How much money . . .

has the insurance lobby contributed to McSame's campaign?

[SoCalDem]

12. Tax credits are for the rich..

If one is offered a 5K tax credit, but they only "owe" 1K, how do they "get" the other $4K??

Insurance is the problem,,not the solution

Many people forget or choose to forget that MANY people already HAVE government medical coverage:

medicare
medicaid
VA
federal employees

The ONLY people who are tossed to the curb, are the "middles", who are job-slaves if they HAVE employer-offered coverage, and one illness away from the poorhouse,if they don;t..

[ProdigalJunkMail]

13. whoooohoooo...

a tax credit of $5000 for a policy that would cost about $12000 for me and my family...

Nothing like a $7000 a year shot in the nuts...

sP

[bmichaelh]

14. McCain is out of touch

McCain is simply out of touch.

These are the facts from personal experience.

I recently lost my job in the housing industry.

COBRA for this company was extremely high: $306.00.
That is $3672.00 a year.

I attempted to get coverage from other insurance carriers but no one would cover me due to a prior history of cancer.

A personal tax credit of $2500.00 would still mean that I would have to pay about $1000 or more for insurance premiums.
It could be much more. I know of individuals that have paid about $500 a month in insurance premiums.

This is much more than I am paying with my current employer.

McCain is naive and inexperienced.