"Rising Health Care Costs Will Eliminate McCain’s Health Tax Credit"
A new report from Aon Consulting Worldwide predicts that health care costs will increase by 10.6 percent in 2009, outpacing inflation.
And while the “increase is the smallest Aon has seen in six years,” the jump in costs still outstrips the growth of Sen. John McCain’s (R-AZ)’s much-touted health care tax credit. As James Kvaal, Peter Harbage, and Ben Furnas argue in a recent CAPAF report, since McCain indexes his health tax credit — $2,500 for individuals and $5,000 for families — to inflation, and not growing premiums (which are driven by increased cost), his credit depreciates every year:
As a result, McCain’s credit becomes a tax increase. For a couple earning $40,000 and paying $13,800 for insurance, “McCain’s new tax credit would cut their taxes by $50 in 2009, but because the credit quickly falls behind rising premiums that are the basis of the current tax break, the family would pay $1,169 more in taxes in 2013…[and] would pay $2,809 more in taxes by 2018.”