The New York Times today did a good job pointing out that some people “could” pay more in taxes under the McCain plan. But the reality is that there is growing evidence that McCain has a massive new health tax as part of his plan, as this blog first discussed earlier. While the press typically portrays Democrats as the tax-and-spenders, McCain is on the verge of changing that paradigm with a plan that could have American’s spending $334 billion more in taxes over 10 years.
McCain’s advisors have confirmed that the spending under his tax credit plan is $3.6 trillion over 10 years, roughly the same amount that the Joint Committee on Taxation estimated would be spent by President Bush when he announced a similar policy. In the first year, the JCT estimated that the Bush policy would spend $220 billion in the first year.
This means the McCain’s spending on health reform is twice the price tag as Senators’ Clinton plan and Senator Obama’s. (Note: Senator Obama only describes his plan’s costs net of savings, but the Washington Post has published a cost estimate.)
Not only is the spending level very different between the Democrats and McCain, but the sources of funds vary as well. McCain would roll back the longstanding tax break for all 160 million Americans who obtain insurance through their employer. In contrast, the lower spending Democratic plans pay for health reform by rolling back President Bush’s tax cuts on the highest income Americans.
McCain will argue that their health plan is not new spending but different spending. It is indeed different. Every one of the 160 million Americans who gets a tax break via employer coverage would get a different tax break – sometimes more, sometimes less. If, like President Bush, McCain increases the tax credit by general inflation, the plan would increases the deficit in the early years, but raises taxes by $334 billion over 10 years.
In today’s New York Times article, a McCain adviser said that, “It would be a very, very small percentage of people,” would pay more in taxes. There are only two possibilities:
• One: Very few Americans are going to end up paying an astronomically higher amount on their taxes.
• Two: And what seems more likely, a whole bunch of Americans are going to be hit with the McCain health care tax.
Either way, the McCain statement to Sean Hannity of Fox News that, “none,” would pay higher taxes under his administration is just wrong.
And there is more to worry about in the McCain plan. This proposal would also take away rather than add health insurance options. It promotes and deregulates the individual market coverage, even though this market allows insurers to charge more or deny coverage to high-risk people. This market would draw off healthy workers, raising costs for employers. Fewer people would have the choice of keeping employer-based coverage.
Similarly, if you are sick, you will have no choice of health plans: instead, you will be forced into a high-risk pool, the so-called Guarantee Access Plan. Today, most high-risk pools have high cost-sharing, limited coverage, and waiting lists.
So, the Harry and Louise – the stars of the insurer-sponsored ads – should stop worrying about the Democrats’ plans. They should instead look at the details of the McCain plan. It could turn our current health care system upside down, resulting in higher taxes and more limited coverage for millions of Americans. This is a true cause for alarm.