John McCain Will Reform The Tax Code To Offer More Choices Beyond Employer-Based Health Insurance Coverage. While still having the option of employer-based coverage, every family will also have the option of receiving a direct refundable tax credit – effectively cash – of $2,500 for individuals and $5,000 for families to offset the cost of insurance. Families will be able to choose the insurance provider that suits them best and the money would be sent directly to the insurance provider. Those obtaining innovative insurance that costs less than the credit can deposit the remainder in expanded Health Savings Accounts.
One of the problems with the way health care is paid for in this country is that it is paid for by corporations as an untaxed benefit. Thus, the more benefits the worker gets that qualifies for this “tax exempt” status the better of the worker is. Well up to a point. Clearly having 100% of one’s salary devoted solely to health care is not something a worker would like. Still, the point that by pushing more benefits under the umbrella of “health care benefit” that the worker would spend money on anyways makes the worker better off. This is what leads to “gold plating” and adding items to health insurance which really shouldn’t be insurable events (e.g. pregnancy and child birth).
Of course, there is the pooling problem. A person who has a serious medical problem and is receiving health care benefits via an employer might be in for some trouble. Healthy co-workers might look around and find better deals with the tax credit and purchasing their own health care, thus leaving the employer with the most costly employees from a health care stand point. Firms not liking this might look for ways to get rid of these employees and or their benefits.
