
justagirl asked: An analysis of McCain’s plan by four professors from Columbia University, Harvard, Purdue and the University of Michigan:
Eliminating the tax exclusion would greatly reduce the number of people who obtain health insurance through their employers. This decline would be driven by three factors: the effective price of employer-sponsored coverage would increase, the nondiscrimination rules would no longer apply, and low-risk employees would have less incentive to remain in employer-sponsored groups.
Elasticity estimates from published studies can be used to predict the coverage reduction caused by the effective price increase. Anne Royalty provides an estimate that is typical of those found by researchers in this area: her results suggest that eliminating the income tax preference for health insurance would result in a 17 percent decrease in the share of workers who are offered health insurance by their employers. This translates to a net decrease of twenty-eight million Americans (one out of every six people with employer-based coverage) covered by employer-provided health insurance. …
Studies suggest that many employers would be quick to drop health benefits in response to a major policy change, such as the McCain plan, that greatly altered the business case for offering benefits. Also, as we note above, these estimates account only for the price effect of eliminating the tax preference; they do not account for the number of low-wage workers who might lose employer-sponsored insurance when employers are no longer bound by the nondiscrimination rules, nor do they capture the impact of breaking up existing risk pools.
http://content.healthaffairs.org/cgi/content/full/hlthaff.27.6.w472/DC1
Jacquelyn