Monday, October 6, 2008

Oh, that's how you pay for that!

Not to pile on the whole McCain thing today (ok, maybe a little piling on), but he's been talking about his healthcare plan, which turns out to be less plan and less health for everyone. What were the odds of that?

McCain's plan has gone through several incarnations, with his heathcare policy team apparently making this up as they go. His eventual plan, after some twists and turns as people objected to both the first and second programs he floated, is to change how health benefits we get from our employers are taxed. Instead of people being able to deduct their premium costs on our taxes as we do today, McCain wants to offer everyone a healthcare tax credit - $2500 for individuals, $5000 for families - that we could use to purchase our own coverage, either from our employer or from healthcare insurers.

That tax credit is going to be pretty darn expensive, and McCain claims to be a tax cutter, not a tax raiser, so where does the cash come from to make this budget neutral? Well, you'd have to get rid of the existing deductions we all know and love. No more writing off the cost of healthcare coverage on our personal income taxes or from our payroll taxes.
That's what they said last month.

What's the big deal? Well, for starters, I can tell you that $5000 won't go very far toward the purchase of family health insurance. I think I read that the average policy today for a family costs around $12,000, so we're stuck picking up the rest of that tab. Not so user-friendly, is it?

The second problem with this new tax scenario is that it really change everyone's tax liability. Some people's taxes would go down, some would see their tax bills rise. If some taxes go up, McCain isn't really a tax cutter after all. Frick! Can't have that.

His campaign then came back and said they never intended to remove the payroll tax deduction, you silly goose. Most people would see their tax bill lowered, except for a "very small group" that had really robust health benefit packages. Hmmm....but that isn't budget neutral, since it would leave a budget hole. Damn!

So now they have a new idea - they'll make up the difference with significant cuts in Medicare and Medicaid. Well, how are you going to cut those when so many people use them and they are already sucking up a big piece of the budget?

For that, McCain falls back on his tired old approach, saying that the extra saving will come from eliminating Medicare fraud (you know, that thing that no one has ever been able to do), and by reforming payment policies to lower the total cost of care. He's a maverick!

There's still a month until the election, so we'll probably see two or three more versions of this as Obama's team and the media continue to do the math and point out where this is never going to work. Stay tuned.

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