McCain Proposes Medicare Cuts and Health Benefit Taxation

From Bloomberg:

Polls in Ohio ``are showing increased support for Barack Obama,'' because voters are paying attention to McCain's support for privatizing Social Security, backing ``job-killing trade agreements,'' and his backing of deregulation of the banking system, Ohio Democratic Senator Sherrod Brown said on ABC's ``This Week'' program yesterday.

Actually Sherrod, you missed one, it's also because he wants to tax health care benefits provided by employers as income. Even for my dad, that's a bad deal. But the Wall Street Journal (ugh, I can't believe I'm linking to this rag) noted today that in order to do what McCain wants, he'd also have to CUT medicare and Medicaid. MEDICARE cuts would be really hard for many Ohioans to take, and especially hard for my parents who are 65 and 61.

But Douglas Holtz-Eakin, Sen. McCain's senior policy adviser, said Sunday that the campaign has always planned to fund the tax credits, in part, with savings from Medicare and Medicaid. Those government health-care programs serve seniors, poor families and the disabled. Medicare spending for the fiscal year ended Sept. 30 is estimated at $457.5 billion.

snip

In exchange, the government would begin taxing the value of health benefits people get through work. If an employer spends $10,000 to buy a worker health insurance, the worker would pay taxes on that money.

Dad carries the medical for the family (he and mom) and does so through his workplace. It's a really nice benefit. He pays nothing, the company provides the benefit and although he has a high deductible, it's worked for them due to their declining health. Their medical bills last year amounted to nearly 7% of their total income. If they were forced to find health care on the open market, I'm not sure they'd be able to get any and I'm sure they aren't the only ones in this boat. My brother is pretty much there, too.

My brother is a teacher and through his union, he and his wife have excellent health care benefits for their family of 6. Despite his and her recent hospitalizations, surgeries and broken limbs in their kids (they're into sports), their health insurance has made it possible for them to get by and save for retirement.

I'd also like to make one note about the Wall Street post and McCain's anti-unionism...

Mr. Holtz-Eakin said the campaign never intended to apply the payroll tax to health benefits. That means that most people would see a net tax cut, contrary to Sen. Obama's assertions. Only those with very rich benefits packages are likely to see a net increase in taxes.

If your employer pays for your health benefits as is usually negotiated for by your union, that BENEFIT will be taxable for income AND payroll. YOU WILL SEE A TAX INCREASE. For those with mediocre benefits (usually non-union workers where unions compete in the local labor pool), poor benefits (think Wal-Mart type jobs and employers) and no benefits (part time employees working multiple jobs or unable to afford the coverage at all), they MIGHT see some real value, but probably not as good as the Obama tax cuts (try the calculator).

This measure is aimed at eliminating a negotiating tool for unions, their ability to negotiate for benefits. It's aimed at lowering the wages of unionized employees and those who benefit from unionized wages without being in a union in order to drive down wages. And, this is what it will do. Employers are not going to turn around and hand over the benefit cost to employees as income. They're just going to stop offering the benefit and you'll be out on the "open Market" much like the market on WallStreet. And we all know how that worked these past 8 years, don't we?