McCain's unfair health care plan

In what I imagine must be an exhausting, and at times humiliating project, Ruth Marcus and the Washington Post continue their undying attempts to be as generous to John McCain as humanly possible. Here, for instance, is an article they've summarized, "McCain's Health Care Plan Isn't That Bad."

So what does John McCain's plan do? It has... a refundable credit: $2,500 for an individual, $5,000 for a family. The Obama campaign tries to scare voters into believing that this is a terrible deal, noting that the average family policy costs about $12,000.

True, but if you get $12,000 in health insurance from your employer and are in the 25 percent tax bracket, you would owe another $3,000 in taxes. The credit would let you take $5,000 off your overall tax bill. You come out ahead -- unless your insurance is hugely generous, in which case it's serving to drive up everyone's health-care costs.

There are, certainly, serious flaws in McCain's plan. Younger, healthier employees would have an incentive to drop employer coverage and purchase cheap private insurance, driving up costs for companies left with the oldest, sickest workers. Eventually, many employers, especially smaller ones, would stop offering insurance. On the open market, McCain would leave insurance companies free to cherry-pick the healthiest enrollees.

What's missing from this assessment is the small fact that the information in the third paragraph is much, much more damning--particularly vis-a-vis middle- and lower-middle class workers--than the information in the first paragraph is exculpatory. That's true for a lot of reasons, but in large part it's because Marcus leaves out an important point.

Specifically, even if you currently receive $12,000 a year worth of health insurance from your employer, there's no guarantee that you will still get this much health care after John McCain swoops in to power. In fact, it's perfectly feasible that if McCain gets his way you--typical American--won't get any health insurance from your employer at all. Some pundits have been unusually generous to employers, assuming, for reasons unclear, that they'll all pair the elimination of an archetypal $12,000 plan with a concomitant wage increase of $7,000--precisely the difference in cost workers would have to pay, after the tax credit, for a (probably inferior) plan of the same price on the individual market.

It's fair, I think, to assume that wages will rise somewhat when employers cut health care benefits. After all, they'll still be competing for high quality labor with employers that continue to offer them. But, of course, there's nothing in McCain's plan that mandates anything of the sort.