Making A Horrendous Plan Worse

John McCain's health care idea is to get employers to throw their workers off of their health plans by taxing the benefits, leaving employees to the wilds of the individual insurance market armed only with a tax credit that is too small to actually pay for health insurance. Barack Obama's campaign has been hammering this of late, so McCain's team adjusted the tax hit, applying it to income taxes and not payroll taxes. But I guess the budget numbers didn't match up, so to pay for that too-meager tax credit, it turns out that McCain wants to cut Medicare.

John McCain would pay for his health plan with major reductions to Medicare and Medicaid, a top aide said, in a move that independent analysts estimate could result in cuts of $1.3 trillion over 10 years to the government programs.

The Republican presidential nominee has said little about the proposed cuts, but they are needed to keep his health-care plan "budget neutral," as he has promised. The McCain campaign hasn't given a specific figure for the cuts, but didn't dispute the analysts' estimate.

To be clear, creating efficiencies in the marketplace and applying cost controls would reduce Medicare spending in the same way it would reduce overall health care spending, but McCain isn't advocating that. He just wants to cut Medicare. To fill in his budget gap for his insufficient health care tax credit. I guess when Sarah Palin used a Reagan quote about how "if we aren’t vigilant, we’ll end up telling our children and our children’s children about a time when America was free," wherein Reagan was talking about what would happen if Medicare were enacted, she was being descriptive and not allusive.

Paul Krugman further explains McCain's dangerous health care plan today, and he wrote it even before this attempt to gut health care entitlements:

The good news, such as it is, is that more people would buy individual insurance. Indeed, the total number of uninsured Americans might decline marginally under the McCain plan — although many more Americans would be without insurance than under the Obama plan.

But the people gaining insurance would be those who need it least: relatively healthy Americans with high incomes. Why? Because insurance companies want to cover only healthy people, and even among the healthy only those able to pay a lot in addition to their tax credit would be able to afford coverage (remember, it’s a $5,000 credit, but the average family policy actually costs more than $12,000).

Meanwhile, the people losing insurance would be those who need it most: lower-income workers who wouldn’t be able to afford individual insurance even with the tax credit, and Americans with health problems whom insurance companies won’t cover.

And in the process of comforting the comfortable while afflicting the afflicted, the McCain plan would also lead to a huge, expensive increase in bureaucracy: insurers selling individual health plans spend 29 percent of the premiums they receive on administration, largely because they employ so many people to screen applicants. This compares with costs of 12 percent for group plans and just 3 percent for Medicare.

By the end, Krugman announces himself "terrified" by the McCain campaign's ideas. You should be too.

...SEIU has an ad out about healthcare today as well.