Presidential candidate John McCain wants to tax your health insurance premiums as paid by your employer. Aside from the downside to employees’ already eroded paychecks, this provides a disincentive for employers to provide health insurance benefits. The end goal? One NYTimes commentator says the goal is to take health insurance out of the employment context, and by imposing competition, end the escalation in healthcare premiums. [NYTimes John McCain’s Radical Agenda] Will such increased competition work to drive down the cost in healthcare premiums? We in California might look to the Workers’ Compensation insurance market as instructive on this. After deregulation, workers’ compensation premiums dropped radically initially as insurers engaged in price wars. The downside? 28 insurers went insolvent and premiums skyrocketed. Although such a plan to increase competition might prove beneficial in the short run, it is dangerously irresponsible in the long run. Perhaps Mr. McCain plans to be out of office by the time the downside hits.
While segregating health insurance from employment may indeed free those employees stuck at their job only because of the need for health coverage, McCain’s plan simply makes all citizens as vulnerable as the self-employed are now. Thinking of working for yourself? One big costly obstacle is health insurance. [NYTimes Finding Health Insurance If You Are Self-Employed] Hmm, while U.S. brokerage firms are fully bailed out in a style akin to French capitalism, under McCain’s plan American workers are poised to lose one more piece of their already worn thin security net.
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