McCain’s health plan would shake Hawaii

THE ISSUE Sen. John McCain's proposed health plan would threaten Hawaii's workplace health insurance system if enacted.

Hawaii's system of health-care insurance through employers would be put at risk by Republican presidential nominee John McCain's health plan, which received sharp criticism in the past week. Fortunately, even if McCain is elected, a Democratic Congress would reject it as it did President Bush's plan, a model for the McCain proposal.

The system of requiring sizeable Hawaii companies to offer health insurance to their employees has been praised and replicated in other states. McCain would effectively dismantle those systems by ending tax exemption for workplace health insurance, taxing employees for the portion of health coverage paid by their employers.

Instead, McCain proposes offering tax credits for employees to buy insurance through their employers or elsewhere. The credit would be $2,500 for individuals and $5,000 for families, even though family insurance policies average $12,000, well above the 75 percent that most employers pay now. The credits would remain the same, but even if they were tied to the Consumer Price Index they would become more distant from the rising cost of health care.

A report for the online journal Health Affairs estimated that the McCain plan would cause 20 million people to lose their employer-sponsored insurance and 21 million would buy insurance on the individual market. Essentially, the 45 million Americans without insurance would remain uninsured.

Democratic nominee Barack Obama proposes requiring most companies to offer their employees health insurance or pay a payroll tax of 7 percent or so to a pool financing government-sponsored insurance. It is estimated to expand insurance to 18 million Americans in the first year and 34 million in 10 years.

According to the nonpartisan Tax Policy Center, McCain's plan would cost $1.3 trillion over 10 years compared with the $1.6 trillion cost of the Obama plan. For many good reasons, Congress is more likely to consider the Obama proposal as a workable model for legislation.