McCain: I'm Cutting Medicare And Taxing Employer Health Benefits!

The Christian Science Monitor
By Alexandra Marks | Staff writer / October 6, 2008 edition

McCain’s Republican health care proposal calls for taxing the health benefits that individuals now receive from their employers. Senator Obama notes that it is the first time that health benefits would be taxed and calls the plan “radical change.”

“What Senator McCain is proposing is really dangerous for the American public because … not only would he tax health benefits for the first time in history, but more seriously he would dismantle state-based regulation and tie the hands of those folks who are involved in consumer protection,” Gov. Kathleen Sebelius (D) Kansas, an Obama supporter, said in a conference call with reporters Sunday October 5th.

The McCain campaign acknowledges that it would tax currently exempt health benefits as personal income. But it argues that giving a tax credit would equalize a system that currently favors employees who get health care benefits over individuals who have to buy them on their own.

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The main idea behind McCain's health care plan is to change the tax treatment of health benefits Americans get from their employers. Instead of allowing the cost of group insurance premiums to be ignored in calculating paycheck income tax withholding amount, as happens now, McCain would replace the current "paycheck" income tax deduction with an "tax credit" of $2,500 for individuals and $5,000 for families applied to April Income Tax Return calculations. The concept is that people would apply the tax credit towards the purchase of health insurance. The credit would be valid whether people buy insurance through their employers or on their own. If McCain's new once a year tax credit doesn't equal the amount of employer paid health benefits, on which the employee will have already paid income tax withholdings "paycheck by paycheck," then employees end up with an additional income tax payment on the difference. According to the latest Kaiser Foundation Benefits Survey, “premiums for employer-sponsored group health insurance rose to $12,680 annually for family coverage” in 2008. It should be noted that employer group premium rates per family are far lower than individual insurance market per family rates.

After adding a lot of confusion to everyone's annual income tax return, McCain's Health Care Plan amounts to the government spending a lot "tax credit" money to rearrange deck chairs on the Titanic. Even McCain's business supporters aren't impressed with the McCain health care plan that will cost even more and do nothing to help the uninsured. The only people that will truly benefit are Big Insurance Companies who will be taking in all that "tax credit money" as insurance premium payments. (Remember, McCain Advocates Deregulating Health Care Like He Has Pushed Deregulation Of Wall Street) Giving everybody a big new tax credit costs the government a lot of "real" money, but McCain has been less than clear on how he will pay for his Health Care Plan.

First McCain said he would eliminate the entire tax deduction for health insurance, in order to pay for his new tax credit. This would have paid for itself, but it would have done so by raising taxes on a lot of people.

Then McCain decided he was keeping part of the deduction after all. While he would be raising taxes on a very few people, he'd be lowering them for most. Of course, that would also have meant running much bigger deficits.

Now McCain is saying, no, no, he's not going to increase the deficit with his health care plan. Instead, McCain will pay for his Health Care Tax Credit Payments To Big Insurance Companies by cutting Medicare and Medicaid.

The Wall Street Journal Online
McCain Plans Federal Health Cuts
By LAURA MECKLER - October 6, 2008

John McCain would pay for his health plan with major reductions to Medicare and Medicaid, a top aide said, in a move that independent analysts estimate could result in cuts of $1.3 trillion over 10 years to the government programs. . . Douglas Holtz-Eakin, Senator McCain's senior policy adviser, said Sunday that the campaign has always planned to fund the tax credits with savings from Medicare and Medicaid. Those government health-care programs serve seniors, poor families and the disabled.

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McCain’s radical cuts to Medicaid and Medicare would put affordable health care out of reach for millions of seniors, people with disabilities, and low-income families.

But McCain’s running mate, Alaska Gov. Sarah Palin, tells a different story about Medicare/Medicaid cuts while speaking to seniors who depend on Medicare and Medicaid. At a rally in Florida on Tuesday Oct 7th, Palin delcared that McCain will “protect the entitlement programs that Americans depend on”:

And John McCain and I will protect the entitlement programs that Americans depend on - and above all, Social Security. No presidential election cycle is complete without the Democratic candidate coming down here to Florida to try to stir up fear and panic on this issue. And if you expected any better from the guy who promised to get rid of “old-style politics,” you’re in for a disappointment - because Barack Obama has exploited this issue the way he exploits so many others.

So, let there be no misunderstanding: John McCain has always kept his promises to America, and as president, he will keep America’s promise to our senior citizens.

Conservatives like Republican incumbent for the U.S. 3rd Texas Congressional District, Sam Johnson, age 78, Republican incumbent for the U.S. 4th Texas Congressional District, Ralph Hall, age 85, and Republican incumbent Senator John Cornyn all support Senator John McCain's calls to deregulate Health Care, just as they all supported deregulating the Banking and Home Mortgage Loan systems. The Republican incumbents also support McCain's Health Care Plan to tax employer provided health care benefits and McCain's call to cut Medicare and Medicare funding.

During an interview with the Dallas Morning News, Sen. John Cornyn (R-TX) endorsed Sen. John McCain’s (R-AZ) health care proposal and suggested that Americans with pre-existing conditions could find coverage in the individual market:

Q. Do you support Senator McCain’s — and President Bush”s — proposal to move away from employer sponsored [health] insurance and not just have those tax credits focused — tax breaks — on big employers?

A. I do because, you know, one thing that I’ve been amazed at is how many people feel like they’re trapped in a job that they don’t like because they’re afraid to move to a new job and be excluded under a pre-existing conditions clause in their new employer’s health insurance policy.

The Dallas Morning News Trail Blazers Blog
John Cornyn likes McCain's call for big shift on health care
By Robert T. Garrett - Sep 02, 2008

Cornyn has it backwards. While the "Health Insurance Portability and Accountability Act of 1996" (HIPAA) includes protections “that limit exclusions for preexisting conditions” for individuals in groups plans, the unregulated individual insurance market that Senator Cornyn supports systematically excludes people with pre-existing conditions from coverage. Further, since McCain and Cornyn advocate full health care deregulation, the "Health Insurance industry the Health Insurance Portability and Accountability Act of 1996" would be deemed as unneeded, as Cornyn seems to suggest in his Dallas Morning New interview.

Conversely, Americans with pre-existing conditions can rarely find coverage in the individual market. According to one Commonwealth study, nearly 90 percent of people seeking coverage in the individual market “never end up buying a plan, finding it either very difficult or impossible to find one that met their needs or is affordable.” Individuals with preexisting conditions are “denied coverage, have conditions excluded, or face much higher premium payments that are out of reach of most family budgets.”

Last month, Cornyn claimed that the Texas health care system — despite having the highest uninsured rate in the country — should serve as a model of reform. Thus, if Cornyn sees a higher number of uninsured as a mark of successful Health Care Plan, then McCain’s plan — which would increase the number of uninsured Americans from 45.7 to 55 million by 2013 — is certainly his best option.

The Center for American Progress Action Fund reported last month that 11 million Texans (see Texas figures in table below) could lose their employer health benefits under Senators McCain’s and Cornyn's health care plan.

Texas Health Care Statistics
Currently			Under The McCain/Cornyn Health Care Plan
Uninsured	% Uninsured	Uninsured With Chronic Conditions	Annual Health Care Spending Growth	Could Lose Their Employer Health Benefits*	Wouldn’t Find Coverage In Individual Market**	Tax Increase by 2013 for Couples Making $60,000
5.5 million	27%	1.8 million	7.4%	11 million	3.9 million	$580
*Total number of people with employer-based coverage **Covered by employer plan with chronic conditions who can't obtain coverage in the individual market Sources: Kaiser Family Foundation, Congressional Budget Office, Tax Policy Center, Center for American Progress Action Fund

Rick Noriega, the Democratic Candidate running for the U.S. Senate seat to replace incumbent John Cornyn, Tom Daley, the Democratic Candidate running for the U.S. House of Representatives 3rd Congressional District seat to replace incumbent Sam Johnson, and Glenn Melançon the Democratic Candidate running for the U.S. House of Representatives 4th Congressional District seat to replace incumbent Ralph Moody Hall, oppose the Republican plan to deregulate Health Care, tax employer provided health can benefits and cut Medicare and Medicare funding. All three Democratic Candidates have said that they support some type of heath care program that extends health care coverage to all Americans.