Obama/Biden Continue to Lie About McCain Health Plan

At the debate on Thursday night between Senator Joe Biden and Governor Sarah Palin, Senator Biden made this claim about the McCain health care plan to offer a $5,000 refundable tax credit:

You know how John McCain pays for his $5,000 tax credit you’re going to get, a family will get? He taxes as income every one of you out there, every one of you listening who has a health care plan through your employer. That’s how he raises $3.6trillion on your — taxing your health care benefit, to give you $5,000 plan, which, his website points out, will go straight to the insurance company. And then you’re going to have to replace a $12,000– that’s the average cost of the plan you get through your employer;it costs $12,000 — you’re going to have to pay — replace $12,000plan, because 20 million of you are going to be dropped. Twenty million of you will be dropped. So you’re going to have to place –replace a $12,000 plan with a $5,000 check you’ve just given to the insurance company. I call that the ultimate Bridge to Nowhere. [Transcript available on C-SPAN’s Debate Hub] It got the Senator lots of plaudits from the left, especially given the dust up over the Bridge to Nowhere from a few weeks ago. The problem is, the Senator shows that they just don’t understand the plan. Senator Obama continues the mistake in a campaign rally

“Here’s John McCain’s radical plan in a nutshell: he taxes health care benefits for the first time in history; millions lose the health care they have; millions pay more for the health care they get; drug and insurance companies continue to profit and middle class families watch the system they rely on begin to unravel before their eyes,” Obama said in front of a crowd of several thousand in this coastal community. “Well, I don’t think that’s right.”

There is no more simple way to put this then to say that either:

  1. Senators Obama and Biden do not understand McCain’s plan or

  2. They are lying about McCain’s plan

Neither of those scenarios are encouraging. Let’s set a few things straight. From the same article on Senator Obama’s campaign event:

In theory, the $5,000 tax credit would offset the additional taxes, and most Americans would pay the same or less in taxes while receiving similar health coverage. But independent studies suggest that once such a credit is offered, many firms will stop offering their employees health care benefits.

A study by the non-partisan Tax Policy Center estimated that 20 million Americans might lose their coverage under the McCain plan. But with the help of the McCain tax credits, more than 21 million people would also pick up health insurance — a point Obama’s critique omits.

So, as explained more people will be insured after receiving the refundable tax credit. Additionally, most people (anyone but the highest of income earners) will actually see their after tax earnings increase.

Cato schollar Michael F. Cannon has an article in the New York Daily News that brings up a second important point:

If employers weren’t providing health benefits, the labor market would force them to add that money to your cash compensation. In other words, the current tax break for job-based coverage lets employers control several thousand dollars of your earnings.

When a government policy denies workers control over their earnings, we typically call that a tax, not a tax “break.”


Employers now control about 28% of the $2.5 trillion sloshing around in the U.S. health-care sector. Given current trends in health-care spending growth and even assuming higher average marginal tax rates, over the next 10 years McCain’s tax credit would let workers control $7 trillion of their own earnings that they otherwise would not control. This effective $7 trillion tax cut completely swamps the $3.6 trillion tax increase Barack Obama advisers claim would result from McCain’s tax credits not growing as rapidly as the current tax “break.”

How does this situation not sound like a good idea?

I created the following document to help you explain this plan and it’s benefits to friends, family and debate opponents. Arm yourself with facts and win the war.

Please feel free to distribute document. The more people that see this the better.