McCain Health Plan Means Tax Hike, Says Suddenly Concerned Times

"McCain Health Plan Could Mean Higher Tax," a headline declares, and for once, the Times is not trying to be complimentary. But how are Clinton and Obama planning to pay for their own huge government expansions of health coverage?

For Thursday's edition, the headline writer for Kevin Sack and Michael Cooper's article on John McCain's health care proposal found a peculiar way to spin the provocative plan, which would remove the preferential tax treatment of health insurance by employers (currently, money spent by employers on employee's health insurance is excluded from employee's taxable income). In return, McCain would provide $5,000 refundable tax credits to families to purchase health insurance.

The headline? "McCain Health Plan Could Mean Higher Tax."

The Times portrayed its interpretation of McCain's health care plan as a broken promise on McCain's part.

Though Senator John McCain has promised to not raise taxes, his campaign acknowledged Wednesday that the health plan he outlined this week would have the effect of increasing tax payments for some workers, primarily those with high incomes and expensive health plans.

The campaign cannot yet project how many taxpayers might see their taxes go up, said Douglas Holtz-Eakin, Mr. McCain's top domestic policy adviser. But Mr. Holtz-Eakin said in an interview that for some, Mr. McCain's health care tax credits would not be large enough to compensate for his proposal to eliminate the tax breaks afforded to workers with employer-provided health benefits.

On stops in Florida and Pennsylvania this week, Mr. McCain, the presumptive Republican presidential nominee, has emphasized a free-market approach that he said would lower health care costs and make insurance affordable.

To do so he is proposing a major tax change that he hopes will make the insurance marketplace more competitive and less expensive in part by encouraging more people to buy health insurance on their own instead of receiving it from their employers.

The 71 percent of insured Americans who get their health coverage through their employers now enjoy a significant advantage because the money spent by employers on their health coverage is excluded from their taxable income. If employers chose to pay that share of a worker's compensation as wages rather than benefits, the income would be taxable.


The tax treatment of health benefits has been criticized as both discriminatory and regressive, and some analysts believe it encourages workers to buy more coverage than they need, driving up health costs.

To end the disadvantage to those who do not buy insurance through employers, Mr. McCain proposes to eliminate the exclusion of health benefits from taxable income. In exchange, he would provide refundable tax credits of $2,500 to single people and of $5,000 to families, with the goal of stoking competition in the individual insurance market. The elimination of the exclusion would generate $3.6 trillion over 10 years, according to the McCain campaign, and that money would pay for the tax credits.


While the change would primarily affect those with gold-plated insurance policies, health analysts point out that middle-income workers with conventional coverage could conceivably pay more in regions where insurance costs are high. Over time, that might depend on how the tax credits are adjusted for inflation, a detail Mr. McCain has not discussed.

The headline boiled all that down to "McCain Health Plan Could Mean Higher Tax." And for once, the Times is not trying to be complimentary.

Suddenly the paper is worried about higher taxes on the upper class, "those with gold-plated insurance policies." Yet both Hillary and Obama want to raise taxes on those making over $200,000 and on Social Security. Times Watch doubts the paper has converted those controversial positions into headlines about raising taxes, because although the Times may favor tax hikes, it doesn't want to scare voters away from Democrats. Also, both Democratic candidates call for increased government spending on health care, which after all, can only be covered by deficit spending and taxes. Will they be getting the high tax headline treatment as well?