In this election season, we've seen expose after expose on Obama's church, Reverend White's teachings, Sarah Palin's daughter's pregnancy, John Edwards's affair, and so on. But virtually nothing about policy. Ezra Klein has an interesting piece about how John McCain's health care plan will massively raise taxes on everyone, result in 20 million Americans losing their health insurance, and basically end employer-based health insurance.
The individual insurance market is not the same as the employer-based insurance market. It sacrifices the bargaining powers of numbers for the cost-effectiveness of comparison shopping. It is fractured. It has higher administrative costs. Insurers can discriminate on the basis of preexisting conditions, geography, age, gender, and even simple whim. The risk pools are smaller. The deductibles are higher, as are the co-pays, and the spending caps are lower. And the individual insurance market is much more expensive: Buchmueller, Glied, Royalty, and Swartz estimate that "for a typical family that moves from group to individual coverage...the move to nongroup insurance will raise premiums for an identical policy by more than $2,000 per year." That increase alone chews up 40% of the family tax credit, and that's simply so the family does not lose ground. In addition, the tax credit is not indexed to health spending, and will sharply decline in value with each passing year. In sum, individuals will be in a costlier market, where insurers have more power to set prices and conditions, and McCain's tax credit will do less to help them with every passing year.
Yet, mark my words, the media narrative for this election will be that Obama is in favor of higher taxes.