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McCain Health Care Plan: Tax Credits For Insurance

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By WILLIAM MARCH

The Tampa Tribune

Published: April 30, 2008

TAMPA - Sen. John McCain sketched the outlines of his health care proposals Tuesday in a major speech in Tampa, pushing a reform program that seeks to enhance market competition and end reliance on employer-provided health insurance.

That, he says, will make health care more affordable and health insurance more accessible.

The heart of McCain's proposal is to offer tax credits of up to $2,500 for individuals and $5,000 for families for purchase of their own health insurance.

At the same time, he would end the current tax exemption for premiums that workers pay on employer-provided insurance, seeking to make individual consumers the ones who choose and pay for their own health insurance.

"The key to real reform is to restore control over our health care system to the patients themselves," McCain told a small group of health care professionals gathered at the H. Lee Moffitt Cancer Center & Research Institute at the University of South Florida. "Americans need new choices beyond those offered in employment-based coverage."

He said the plan "would help change the whole dynamic of the current system, putting individuals and families back in charge, and forcing companies to respond with better service at lower cost."

McCain has been talking about these ideas for months, but added some details in what his campaign billed as a major policy speech, the anchor of a weeklong campaign tour in several states focusing on health care. The proposal includes:

•Urging states to cooperate, and providing some federal assistance, in forming Guaranteed Access Plans to try to find "last resort" health insurance to those who have trouble buying insurance, particularly those with chronic health conditions.

•Eliminating individual state requirements that health insurance policies provide specific kinds of coverage. Many states require that policies cover such specific diseases or procedures such as emergency room visits, diabetes, colorectal cancer screenings and breast reconstruction. Those requirements, McCain said, create "a different health insurance market in every state," and cut competition.

•Further limits on medical malpractice lawsuits, long a popular cause among Republicans and health care professionals. McCain said a "first step" is to ban lawsuits against physicians who "follow clinical guidelines and adhere to patient safety protocols."

University of South Florida public health professor Jay Wolfson said that proposal would require assembling information on the "best practices" for dealing with specific diseases and injuries, and keeping the list updated - "a challenge," he said. Physicians would be immune from lawsuits if they followed those guidelines.

McCain didn't provide any overall cost for his plan, in part because much of it, including the GAP pools, remains to be designed. Campaign aides said he will be elaborate on his proposals as time goes on.

Critics Call It 'Go It Alone Approach'

Local Democrats and interest groups who don't like McCain's proposals reacted quickly to his speech. Union members demonstrated near where McCain spoke at USF, and U.S. Rep. Kathy Castor, D-Tampa, called reporters to criticize McCain's proposal.

Castor criticized McCain's past positions on health care, including his vote last year against expanding the State Children's Health Insurance Program for children whose families are poor but not poor enough for Medicaid.

McCain opposed a five-year, $35 billion proposal pushed by Democrats to cover 10 million more children, saying it raised income limits too high, up to $60,000 for a family of four.

"McCain's prescription is, go to your accountant's office and cash this in and good luck," she said of the tax credit proposal. She said it's inadequate because the cost of family insurance nationwide is approaching $12,000 a year.

Without the tax exemption, "employers are going to find fewer and fewer reasons to provide it," she said.

Bill Newton of the Florida Consumer Action Network said McCain's "go it alone approach" will make it harder, not easier, for families to get coverage. His organization and the Service Employees International Union held a news conference after the speech at the same hotel where McCain was holding a $2,300-a-person fundraising lunch.

Oncologist Unsure Tax Break Is Enough

McCain's potential Democratic rivals also took shots.

In a statement from her campaign, Sen. Hillary Rodham Clinton called McCain's proposal "radical" and said it "means 158 million Americans with job-based coverage today could be at risk of losing the insurance they have come to depend upon."

Those with chronic or pre-existing health problems might then have trouble getting coverage through the last-resort GAP pools, she said.

Sen. Barack Obama called it "a tax break that won't guarantee coverage and doesn't ensure that health care is affordable for the working families who need it most."

Douglas Holtz-Eakin, McCain's policy adviser, said the $5,000 tax credit is roughly equal to or greater than the tax benefit employees now get from the existing exemption, and therefore shouldn't be inadequate.

He said the GAP programs "don't exist yet," and therefore can't be accused of failing to provide coverage.

Wolfson said McCain's proposal tracks long-standing suggestions by health care economists who increasingly think consumer pressure is the only way to force greater efficiency in health care delivery.

Moffitt oncologist William Roberts, in the crowd for McCain's speech, agreed.

"Competition is the answer," he said. "Insurance prices could go down."

Roberts said he's not sure the size of McCain's tax breaks, $2,500 and $5,000, is enough to make the plan work.

Wolfson said one drawback, probably temporary, is that the proposal likely "would create a bit of chaos for a while in the marketplace," as individuals accustomed to relying on employer-provided plans suddenly had to shop for their own. Another, he said, is that young, single, healthy people might neglect to buy insurance, and could be left unprotected in cases of injury or disease.

McCain acknowledged that the nation's current health care system "falls far short of ... ideal," with some 47 million individuals lacking health insurance coverage of any kind, about half of whom are long-term uninsured.

"In many respects, the system has remained less reliable, less efficient, more disorganized and prone to error even as it becomes more expensive," he said. "Rising costs are by no means always accompanied by better quality in care or coverage."

He vowed he won't "create another entitlement program that Washington will let get out of control" in order to provide coverage for the uninsured.

Reporter William March can be reached at wmarch@tampatrib.com or (813) 259-7761.

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