Conservatives Will Tax Your Health Care

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 [2]] 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 [3], Center for American Progress Action Fund [4]] 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 [5]]

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 [6]]

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 [7]]

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 [4]] 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 [8], Washington Post [9]]