Obama Ad Drumbeat: 'McCain Will Tax Your Benefits'

It’s time to get some facts straight on health care.

Sen. Barack Obama’s campaign has put out three new ads in the last few days attacking Sen. John McCain’s health care plan, two of which focus on the proposal of a tax credit.

The Obama campaign is telling viewers McCain will tax their health benefits. Sen. Joe Biden, Obama’s running mate, told viewers of the October 2 debate the same thing.

The accusations are wrong. McCain is replacing one tax break with another – one that is much more generous and will be especially helpful to people who are uninsured.

Here’s how McCain’s plan works:

If you’re insured through your employer:  You already are getting a tax break – worth about $4,200 to the average American family.  You don’t see it because your health insurance – which is part of your compensation package – is tax-free.

McCain’s tax credit of $5,000 for a family would replace this $4,200 break you’re currently getting – and then some.

If you’re uninsured or have individual insurance: You’re NOT currently getting the same tax break as all those people insured through their jobs. McCain’s credit would give you the same advantage they would have – even if you make too little to pay income tax. It’s a “refundable” credit, meaning you get it anyway, even if you don’t owe taxes.

The tax credit replaces a break 60 percent of workers are already getting – and gives new money to those without coverage to buy insurance. Even now, policies bought on the individual market cost about half as much as employer-based policies, so the $5,000 credit will go a long way toward helping them buy coverage.

The money is specifically for health insurance, which is why the credit goes to the insurance provider of your choice to pay your medical bills. Obama attacked that provision in one ad, saying it would leave taxpayers on their own to pay a new health tax. That’s incorrect.

For those who have employer-based coverage, counting the value of health insurance as income will make these thousands of dollars in compensation visible – compensation you are getting right now even though it doesn’t show up on your pay stub. 

Under the McCain plan, people will have more control and will be able to buy the coverage that fits their needs and their pocketbooks.

Part of bringing down health care costs – which both candidates agree is the ultimate goal – is making these costs visible and giving people a choice of more affordable, portable coverage.

Obama Ad: “What They Can’t Explain ” features Biden’s comments from the October 2 debate

Obama Ad: “Prescription ” claims you’ll be “on your own” to pay a new health tax

Galen Institute resource: The Basic FAQs: Frequently Asked Questions on Health Policy and Responses from Our Pro-Market Perspective  

Also from Galen: Addressing Distortions of McCain’s Plan in Health Affairs