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03-22-08 CAP-Responding To Douglas Holtz-Eakin Robert Gordon
03-22-08 CAP-Responding To Douglas Holtz-Eakin Robert Gordon
03-22-08 CAP-Responding To Douglas Holtz-Eakin Robert Gordon
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McCain and Bush’s plans are bigger and more radical than Democrats’
plans:
McCain’s website says his plan would, “Reform the tax code to
eliminate the bias toward employer-sponsored health insurance….”
This is virtually identical to what President Bush said in his 2008 State
of the Union: “So I have proposed ending the bias in the tax code
against those who do not get their health insurance through their
employer.”
Assuming that McCain, like Bush, would use the revenue from
repealing the employer tax breaks to fund his new health tax credits
for all, this means that the cost of the tax credits would be $206 billion
in FY 2009 and $3.6 trillion over 10 years according to the Joint
Committee on Taxation. Both plans would change the tax subsidy for
health insurance for every one of the 160 million Americans with
health insurance today, creating “winners and losers.” And,
irrespective of whether this is spent on a standard deduction or tax
credit, this amount of spending is double that proposed by Obama or
Clinton’s plan.
McCain and Bush’s plans would make it harder for people with health issues
to obtain affordable health insurance:
Both plans provide new tax incentives for individual-market health
insurance. And both promote cross-state insurance purchasing. The
McCain plan says: “Families should be able to purchase health
insurance nationwide, across state lines….” The White House says,
“The President supports permitting the purchase of health insurance
policies across state lines.”
Cross-state insurance shopping is code word for deregulating health
insurance. If all sick people could purchase in well-regulated states,
then no insurers would offer coverage there. Instead they would find a
state with the least regulation and set up business there – a virtual
“Cayman Islands” for health insurers. It would lead to fewer choices,
according to an analysis by the Congressional Budget Office during
Holtz-Eakin’s tenure as director: “The shift of individuals expected to
have relatively low health care costs to out-of-state insurance
coverage would increase the price of coverage offered by insurers
licensed in-state, and could lead to erosion of the availability of such
coverage by insurers located in secondary states.”
The bottom line is that even though tax credits would help some uninsured gain
coverage, the McCain plan, like Bush’s plan, would take away employer coverage
without replacing it with a viable alternative for many. Health reform requires more
than tax reform.