John McCain wants to give every person that purchases his or her own health insurance $2,500, and families $5,000 in tax credits. Yesterday the Associated Press tried to answer this question: How many employers would drop insurance coverage for their workers because of this tax policy? In other words, will health insurance still be an attractive benefit?
Under McCain's incentive plan, some individuals would be able to make a profit from the system — they could buy a plan for less than the credit, keeping the difference. Thus, McCain's plan could give a boom to the market for individual plans, at the risk of weakening the employer based scheme.
Experts say the results will be mixed. To see why, read more.
It would probably take a while for employers to overhaul a benefit system common since World War Two; but, if employees opt for their own coverage, there may be reason to drop the pricey benefits offer. McCain has said that employer-provided insurance leads to higher health costs and inefficiencies.
Since Americans overwhelmingly approve of an employer paid insurance scheme is McCain taking a risk with a plan that might signal a transition away from that scheme? Should America move away from job related insurance and toward an open market solution?