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Candidates’ healthcare fixes: tax credits vs. more federal spending

The US spends twice as much on healthcare per capita than other nations but still trails in access to care.

By Staff writer / October 20, 2008

Business owner: Gary Cox and his family are home builders in Delaware, Ohio. He belongs to a group health plan through the local chamber of commerce. He backs McCain.

Melanie Stetson Freeman/The Christian Science Monitor

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Delaware, Ohio

Over the past 25 years, the American healthcare system has been steadily unraveling.

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More than 45 million Americans now have no health insurance at all. Another 25 million have some coverage, but not enough to pay their medical bills.

For the 6 in 10 Americans who do have healthcare plans through their employers, each year finds them paying higher premiums and higher deductibles even as their coverage shrinks.

Their employers, meanwhile, have to cope with annual premium increases of 10, 20, or 30 percent. Many have to shop around each year just to find an insurance policy they can afford. Some give up and stop offering insurance altogether.

In short, the American healthcare system is a mess. And recent polls show that, next to the economy and Iraq, healthcare is foremost on voters’ minds.

“We’re spending twice percapita what other countries are spending and we’re 19th out of 19 for conditions that are amenable to medical care,” says Karen Davis, the president of the Commonwealth Fund, a nonprofit, private foundation dedicated to improving the nation’s healthcare system. “Two-thirds of American adults have a problem either getting or paying for medical care.”

The presidential candidates’ prescriptions to fix the healthcare system are strikingly different. John McCain would offer tax credits to help people buy insurance. He’d pay for it by taxing as income the healthcare benefits that people currently receive from their employers.

Barack Obama, on the other hand, would build on the current public/private system by expanding Medicaid and the State Children’s Health Insurance Program (SCHIP). He’d create a National Health Insurance Exchange that the uninsured and small businesses could buy into. To pay for it, he would roll back the Bush tax cuts for the wealthy.

Each plan is expected to have a very different impact on individuals like Mindy Hedges, who just lost her insurance, as well as on businesses like Cox & Sons, which is struggling with high premiums.

Here’s a look at why.

A fundamental problem

The nation’s healthcare system has evolved into a huge Rube Goldberg-like contraption. Fix one part of it, and you can cause worse problems in another. At the core of that complex machine are millions of uninsured Americans.

When people don’t have insurance, they tend to put off getting care that medical doctors say is necessary. The result: those conditions can deteriorate. The uninsured often end up in the emergency room, where hospitals are required to treat them, even if the people can’t pay. That drives up healthcare costs for everyone.

“The important thing is to ensure that everybody has health insurance,” says Dr. Henry Simmons, president of the National Coalition on Health in Washington. “Every other country that today has universal coverage provides it at about one-third to one-half the cost, every bit as good coverage – in some cases better.”