Health Care Policy Misrepresentations

I generally find the New Republic to be a bit too left-leaning, but I enjoyed this Health Care Policy discussion by Jonathan Cohn.

Here's a summary:

In order to cover his proposed 5K tax credit for health coverage, McCain would tax health benefits. Specifically, while the existing exemption for payroll taxes would stay in place, the existing exemption for income taxes would be repealed. But that would still leave 1.3 trillion dollars that McCain would need to find somewhere in the budget to make his plan revenue neutral. His chief economic adviser suggested that this would be accomplished through "savings" in Medicare. Obama pounced, by equating, against the vociferous protests from the McCain camp, "savings" with "cuts." The McCain campaign is not clear how it intends to skim 1.3 trillion from the current cost of Medicare. (Vague promises to "improve efficiency" and "eliminate fraud" don't sound promising.) Cohn says that no serious economists see the necessary "savings" as realistic. Hence, "cuts" is a borderline fair characterization.

Now, Obama's plan would leave a half a trillion dollar hole in the budget and he would also seek to improve efficiency of Medicare to address that; however, he has been consistent and specific as to how he intends to do so. "Cuts" therefore are substantially less likely.

Finally, and most importantly in my opinion, McCain boxes himself in through the holes in the budget his tax cuts will generate; hence if his "savings" don't work out he has to borrow from China. Obama is not boxed in with respect to tax policy to the same extent.