In the short term, if you’re healthy and wealthy, you can use Sen. John McCain’s $2,500/$5,000 health care tax credit and enroll in a low premium/high deductible health care plan in the unregulated individual health insurance market. Once you get sick, you may lose your coverage to another round of medical underwriting … see your costs increase astronomically … have certain conditions exempt from coverage … the list goes on and on.
But for the 56 million Americans with employer coverage today who have a chronic illness, who are women or who are ages 55 to 64 — three groups of people who pay more for health insurance in the individual market — McCain’s plan to shift Americans from the employer-based insurance market to the individual market is more than an inconvenience, it’s a net loss.
Because while insurance companies require older and sicker people (or those who simply use more care, like women) to pay higher premiums, McCain’s plan doesn’t offer them a higher tax credit.
In fact, according to a new report from CAPAF, “the flat $2,500 credit will cover less than 48 percent for older Americans and more than 48 percent for younger Americans”:
Specifically it would cover 84 percent of the premium for an 18-to-24-year-old, but only 23 percent of the premium for a 60-to 64-year old…The McCain plan gives people ages 60 to 64 a tax credit that is 53 percent lower than one that adjusts for premium variation by age.”
What’s more, boomers — who make up 17 percent of non-elderly adults but account for 26 percent of those with at least one chronic illness — will have a hard time finding coverage in a market which tries to maximize profit by insuring only the healthiest Americans. But if they go uninsured, Medicare costs will skyrocket. In fact, a recent study found that “chronically ill people turning age 65 who were previously uninsured had lower spending than insured people prior to Medicare. Yet once on Medicare, these uninsured Americans spent 50 percent more than previously insured Medicare beneficiaries who also had chronic disease”:
If, as one study suggests, being uninsured increases spending by 50 percent…having 2.4 million more chronically ill Americans join Medicare as uninsured rather than previously insured could raise its costs by $2.4 billion per year in 2005 dollars.”
Thus, under McCain’s plan older and sicker Americans — and in fact all Americans — pay more for less. Read the full CAPAF report here.