In a Wall Street Journal (WSJ) opinion piece, one of the nation’s top economists says more Americans would benefit from the health plan presented by presidential hopeful, John McCain, than that of his opponent, Barack Obama. Robert Carroll, once a deputy assistant secretary for tax analysis at the US Treasury, bases his opinion on the refundable tax credit, proposed by McCain, compared to the current system, which provides a tax exclusion to help offset the cost of employer-based healthcare insurance coverage.
Carroll, now serving as vice president for economic policy at the Tax Foundation and as executive-in-residence for the School of Public Affairs for American University, expects the McCain plan to make insurance a possibility for as many as 15 million to 21 million currently uninsured Americans, although not all this new coverage will be employer based.
As an example of the McCain plan, a family of four pays $14,000 per year for healthcare insurance. Regardless of the family’s income, it would get a $5,000 tax credit to help offset the cost of the policy.
Under the current plan, that same family is allowed a tax exclusion to offset the cost of the healthcare policy but the dollar amount of the exclusion fluctuates from family to family according to household income. Under this plan, families earning about $25,000 and those earning $110,000 and up get the largest tax exclusions, roughly $4,250.
Under the McCain plan, the American approach to health care is expected to shift, with insurance coverage providing mostly for catastrophic care while the individual pays for routine medical exams and procedures. Carroll says the current tax policy is biased unfairly against Americans wanting more comprehensive coverage for catastrophic illnesses but McCain’s plan will erase that tax bias. He says the McCain plan will result in more Americans choosing insurance coverage that offers more services for catastrophic illnesses and with higher deductibles than the more generalized policies popular today with low deductibles that provide coverage for predictable medical costs.
Carroll feels McCain’s plan is important for keeping down the costs of the Medicare, Medicaid, and Social Security programs, which consume about 20% of today’s federal expenditures but which are expected to grow to 40% by 2040. Carroll expects the tax credit from McCain’s plan to slow the growth of the Medicare and Medicaid plans more so than the demographic-driven Social Security program but McCain’s proposed tax credit, as well as other measures of the McCain plan, are expected to generate broad benefits well into the future.
