In one of the more bizarre parts of Douglas Holtz-Eakin’s health care memo, the McCain senior policy adviser argues that McCain’s health care plan preserves employer coverage because “younger and healthier employees with the McCain health care tax credit will have a bigger incentive to stay with the employers“:
For example, a 25-year-old employee in the 25 percent tax bracket with a $2,500 tax credit could either purchase a policy in the individual market for the same amount or stay with his employer plan and receive a $5,000 policy with an additional $1,250 to invest in a portable health savings account. Why would people choose worse insurance and less money?
Ironically, Holtz-Eakin highlights the inefficiencies of the individual market and undermines the very rationale behind McCain’s health care plan.
For months, the McCain campaign has maintained that the senator’s health care proposal would lower costs by allowing healthier Americans to find cheaper coverage in the individual market. During the unveiling of his health care plan in April, McCain argued, “Americans need new choices beyond those offered in employment-based coverage. Americans want a system built so that wherever you go and wherever you work, your health plan goes with you.”
Free market capitalism is at the very heart of McCain’s proposal. By equalizing the tax treatment of individual and employer health care plans, McCain hopes to entice healthier workers (the only ones who could find affordable coverage in the individual market) to opt out of the employer system and invest in their own health, make their own health care decisions.
McCain surrogates have suggested that unfettered from burdensome mandates and regulations, insurance companies will develop innovative health care plans with dramatically lower premiums, and out-of-pocket expenses. Competition and a national health insurance market will rein in growing health care costs and Cadillac and caviar health care plans will become a thing of the past.
So why the flip? Well, in order to defend the McCain health proposal from critics who charge that it would undermine existing coverage, the campaign is awkwardly trying to convince Americans that healthier workers won’t flee employer-insurance pools and increase costs for those who are left behind. In the process, they’ve admitted that the individual health insurance market offers inferior coverage, conceded that workers value the employer health contribution, and have stepped all over their talking points.
All in all, it’s kind of fun to watch.