Conservatives Will Tax Your Health Care

The Facts

John McCain’s health plan will hit families with a huge new tax. Currently, employer-provided health care benefits are tax exempt, a longstanding policy that has saved families thousands of dollars and helped keep health care costs from spiraling out of control. [Tax Policy Center] McCain has promised to eliminate this tax break, a move that could add over $1,100 to the average family’s tax bill by 2013. [JohnMcCain.com, Center for American Progress Action Fund] The tax credit McCain claims will offset this new burden would rise only at the rate of inflation—not the rate of health care costs, which grow much more quickly—so that by 2018 a family earning $40,000 a year will be paying $2,800 in higher taxes, even with McCain’s tax credit. [Center for American Progress Action Fund]

Millions of currently-insured families will lose their health care coverage under the McCain plan. The health care tax exemption does more than lower families’ tax burden; it also provides an incentive for businesses to offer health care benefits to their employees. Without the exemption, an estimated 11 million to 27 million people nationwide will lose their employer-sponsored health insurance. In the hardest-hit states— New York, Rhode Island, Vermont, and Connecticut—as many as 1 in every 6 currently-insured workers would lose their health care coverage. [EPI Policy Center]

McCain’s plan would strip away protections, leaving families with weaker coverage. Families who lose their employer-sponsored health insurance will have to fend for themselves in the “individual insurance market.” Using the money provided by the McCain tax credit, many families will be able to afford only plans that fit the conservative mold for “consumer-driven health care.” These plans offer high-deductible insurance with skimpy coverage and are tied to health savings accounts. [Center for Budget and Policy Priorities]

McCain’s plan will sink anyone with a pre-existing condition. Plenty of families won’t be able to obtain health coverage at any price, since the McCain plan offers no protection for those with pre-existing conditions. That will allow insurers to refuse to cover an estimated 56 million people who have preexisting conditions such as cancer or diabetes. [Center for American Progress Action Fund] McCain’s plan doesn’t work for anyone who is sick.

Saddling families across America with higher medical bills could bring more economic upheaval. Many experts believe that the current financial crisis had its roots in a wave of foreclosures, but few acknowledge that many foreclosures themselves were tied to high health care costs. Two studies found that about half of families facing foreclosure reported that their financial difficulties were caused by health care issues such as unmanageable medical bills or missing work due to a medical problem. [Robertson, Washington Post]

The Argument

Conservatives who support McCain’s plan would tax your health care. They give you a credit, but only to negotiate on your own with the insurance companies. And they don’t protect you if you are already sick; insurance companies are free to reject anyone with a pre-existing condition.

McCain’s health care proposals would force families to pay more for less coverage. The McCain plan would not only result in higher taxes for middle class families, it would also force them to pay more for health care coverage out of their own pockets.

So-called “consumer-driven health care” would raise health care costs. The McCain plan will accelerate the decline of employer based health care, and force families to buy individual insurance plans on their own. Conservatives argue that making people spend their own money on medical treatment will encourage them to seek health care only when they need it most. But experts have long argued that the best way to lower health care costs is to encourage people to get more preventative care, so that small, easily-treatable problems don’t turn into life-threatening conditions requiring expensive treatment.

The McCain plan would put an unprecedented burden on American families. Families would have to shop for health insurance on their own, process medical bills on their own, and find doctors and hospitals on their own. They would also have to pay more of their health care costs out-of-pocket, since “consumer-driven” insurance plans come with high deductibles.

Progressive Solutions

Guarantee quality affordable health care for all. Any working parent should be able to afford to take their sick child to a doctor. Under progressive plans for universal health care, everyone will be guaranteed high-quality health coverage.

Offer families a genuine choice of quality health care plans. Any progressive plan should give families the option of keeping their current health insurance, or switching to a new national health care plan.

Lead the way to a public mandate for quality, affordable health care for all. Health Care for America Now (HCAN)—a coalition launched by the Campaign for America’s future and over 100 national and local organizations—is creating momentum for health care reform by asking individuals and all levels of candidates for office: Whose side are you on when it comes to America’s health care future? Will you support guaranteed, affordable coverage with real choices, or will you follow the conservative approach and put Americans at the mercy of private insurers? HCAN is generating a nationwide discussion among working people, grassroots community leaders, elected officials, experts and opinion leaders, bringing them together to demand health care action.

Over the next 2 weeks, HCAN and other groups are releasing state-by-state reports on the McCain plan in each state. To find an HCAN event in your area, click here.

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