McCain to Tax Health Benefits

[walter_mellon]

Right now 71% of Americans get their health insurance through their employer, and the amount paid by the employer is not taxed as income. McCain's health plan would eliminate this exemption. In return, individuals would get a $2500 tax credit and families would get a $5000 credit. According to the McCain camp, this plan would be "revenue neutral", so it is technically not a tax increase. The goal is to lower the cost of insurance so more people would be motivated to buy individual policies, rather than rely on their employer.

Leaving aside whether the plan will actually work as advertised, I don't see how he can believe that he could sell a plan of taxing health benefits in this economic climate. I also don't know why the Obama campaign hasn't been hammering him on this issue. Oh, he also wants to deregulate insurance markets. Maybe the success of deregulated finacial markets inspired him?

Problems:
1. With premiums rising 10-15% a year, any savings for individuals would be eaten up rather quickly, leaving the poor still unable to afford adequate coverage
2. Individual policies are administratively more expensive than group policies.
3. Companies, especially small businesses, would have less incentive to offer insurance if tax benefits disappear.
4. There is still no provision for helping people with pre-existing conditions get coverage. Being a diabetic myself, I cannot get a policy that costs less than my house payment. If Mccain wins, I may have to move to Canada; maybe Troels can help me get Danish citizenship.

I'd like to here from McCain fans about this. Do you really want to pay taxes on your benefits in return for a tax credit?

[MattKingUSA]

I think you would have better luck asking Palin fans about this. I really don't think you'll find many Mccain fans. He's a uhh...I don't know.

[eddie]

Uncle sam already taxes excess life insurance costs paid by the employer. The real way to solve the issue of taxes is to end the top amount that can be taxed for social security purposes.

[greggh]

Uncle sam already taxes excess life insurance costs paid by the employer. The real way to solve the issue of taxes is to end the top amount that can be taxed for social security purposes.

Funny you should mention that. I just finished watching Michael Moore mentioning that as one of his "7 modest proposals for President Obama" http://www.youtube.com/watch?v=2ZIN1MyUtUs