Bread and Circus's Journal - Look before you leap into McCain's idea of health coverage

http://www.pnhp.org/news/2008/september/lo...

Look before you leap into McCain's idea of health coverage

By James C. Mitchiner
Other Voices
The Ann Arbor News
September 11, 2008

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Let’s look first at the income tax credits. The idea is for individuals and families to use these credits to purchase health insurance plans in the non-group market, i.e., from a private insurer not sponsored by your employer. Premiums would be kept reasonable because plans would compete with each other to sell health insurance to those who valued it, or at least to individuals deemed “good risks” (read: healthy people).

And what level of credits are we talking about? Senator McCain proposes credits of just $2,500 per individual, or $5,000 per family.

Given that the average annual family health insurance premium in 2007 was over $12,000, it seems to me that $5,000 is woefully inadequate. Some, in fact, have compared the effect of these tax credits to that of throwing a 10-foot rope to a man stuck in a 40-foot hole. Just to make up the difference between the credit and the premium cost, a middle class family of four with a household income of $70,000 would have to fork over 10 percent of that income, a commitment that would seriously impact the family budget.

Let us suppose, however, that a worker could find and purchase a policy for only $5,000 per year. What would it look like? My guess is that it would have either multiple coverage restrictions (non-coverage for pre-existing conditions, a prolonged waiting period before insurance became effective) or significant financial limitations (high deductibles or co-pays, puny lifetime maximums), which defeat the purpose of having insurance in the first place. Clearly, private insurers cannot make a profit by selling comprehensive insurance at premiums the average individual can afford.

Perhaps the most significant objection to tax credits, however, is that they don’t address the serious flaws inherent in for-profit insurance.