When it came to promoting his health insurance initiative, Sen. John McCain's timing seemed unfortunate.
In an article in Contingencies, an actuarial journal, the Republican presidential nominee highlighted a central tenet of his plan -- deregulating the insurance industry "as we have done over the last decade in banking."
The article appeared in the journal's September/October issue, just as the deregulated banking industry was imploding.
That gave McCain's Democratic rival, Sen. Barack Obama, an easy way to distinguish his own plan, which involves more regulation of health insurance at the national level -- including standardizing benefits and premiums and requiring insurers to accept all applicants.
There are similarities between the presidential nominees' plans. Both require increased government spending. Neither explicitly calls for universal coverage. And both rely on the private insurance industry to continue to arrange and finance healthcare for most non-elderly Americans.
But they approach the problem of America's growing uninsured and underinsured populations in dramatically different ways.
McCain would rely on market forces to expand coverage. Obama would widen public safety-net programs, subsidize coverage for the poor and make public insurance similar to that offered to federal employees (including members of Congress) available to all.
Another fundamental difference is the tax treatment of health coverage.
Under current law, the value of employer-provided health benefits is tax-exempt. But when individuals buy insurance on their own, they must pay for it with after-tax dollars. This amounts to a taxpayer subsidy for employer-sponsored insurance.
McCain proposes to level the playing field by eliminating the tax exemption for workplace-provided insurance. He would replace it with a universal tax credit of $2,500 for individuals and $5,000 for families.
At first, the credit would generously cover employee costs, according to an analysis by the Tax Policy Center, a think tank sponsored by the Urban Institute and the Brookings Institution.
For example, a taxpayer whose federal tax rate is 25% and who has a family health plan valued at $12,100 would pay an additional $3,025 in tax but receive a $5,000 credit.
Over time, that benefit would shrink even if McCain's credit was indexed to consumer inflation. That's because medical premiums have been rising much faster than inflation.
