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McCain’s true Healthcare plans

Obama’s Campaign got some new ammunition to fire at McCain over the last week, in the form of a series of advertisements.

Paul Krugman at the New York Times, however, had different ideas. He twisted and turned the McCain Proposal, and in the “Health Care Destruction” Column, he wrote that ‘McCain’s ideas are to bring down the current system of tax breaks for employer-provided insurance, and doesn’t seem to have an alternate solution.

This tax break is what’s keeping many employers from dropping their current health care plans, and over 20 million American will lose their employer provided insurane plans under McCain’s new plan’.

What’s happening here is Krugman has confused two different concepts, employer exclusion and employer deduction. McCain’s plans are to do nothing to the deduction, while remove the exclusion plan.

McCain’s plan would go something like this:

If a 4 member family is making around $80,000 a year, their employers would provide a sum of $10,000 as health insurance. When the employer exclusion is eliminated, the family’s income is seen as $90,000, and hence is taxable $2500 more. Seems like a bad thing right? Wrong. Because McCain also plans on giving that family a $5000 health care tax credit, so they end up with $2500 more than what they should have originally, while employers still get their tax benefits for the amount paid as employee insurance. That doesn’t exactly sound destructive, does it?

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