Daily News Updates - Health Insurance News

Health-Care Contrasts, Pt.9 – What will Mr. McCain’s plan deliver?

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Detailing Mr. McCain’s plan, the reports comment on the effect of lowering health insurance standards. Not surprisingly, this is expected to offer more choices. Even more choices are being induced by replacing the employer-based health insurance tax exempt incentive with more general tax credits which can be used for private-individual health insurance. This way, the young and healthy can escape the expense of risk-sharing until they get older or less healthy. Meanwhile, the older and less healthy will see continual rate hikes in they health insurance. Eventually more and more will lose it altogether.

In any case, employees can take the $2,500 tax credit ($5,000 for joint filers), should they owe that much tax, and apply it toward part of a policy. They will be taxed for health insurance costs now. If they stay with their employer’s plan, they will be taxed for it for the first time. Also, because the ‘business advantage’ of offering employee health insurance will be taken from employers, they would quickly drop health insurance from their benefits package, according to the report.

A 20-million strong exodus is expected from the employer-based coverage. In the end, about 21 million new individual health insurance policies are expected. If these figures are correct, the 45.7 million figure of Americans without health insurance may drop to 44.7 million. Over enough years, an increase up to 5 million may follow, before it drops off again.

More concerns were voiced in the Health Affairs article. Because it is known that individual health insurance is less efficient, the move to this direction will ultimately result in more expensive policies of less quality.

Also, by lowering health insurance standards, many of the consumer protection mandates will go away under Mr. McCain’s plan.