Tale of two markets

Americans who have employment based insurance receive a substantial tax subsidy since the dollar value of their insurance benefits is not counted as taxable income. There are also other benefits. Employers buy their insurance in group markets, which are not only cheaper but do not subject individual employees to medical underwriting—discrimination through higher prices and exclusions from coverage based on actual or predicted medical needs. Therefore, people with employer based insurance have better access to insurance. In addition, the group policies generally offer more substantial benefits than individual policies. Often, employer plans have lower initial out of pocket costs, more preventive benefits, and better protection against catastrophic costs.

Americans whose employers do not offer health insurance do not receive the automatic tax subsidies to purchase insurance that come with employer plans and thus bear the full cost. Buying their insurance as individuals, they generally have access to fewer benefits, pay the highest administrative costs as a percentage of premiums, and face the most aggressive medical underwriting.3 Premiums in the individual market can be as high as five times the average premium of roughly $12 000 a year in the employer market.4 5

McCain proposal

Mr McCain proposes to eliminate the tax benefits of employer sponsored insurance. This means that the dollar value of the insurance will be taxed as income. The better …