5 Democratic governors urge Obama health plan

Five Democratic governors made a plea yesterday in Philadelphia for Barack Obama's health plan, saying John McCain's proposal would weaken the employer-based system that covers 158 million Americans.

They asserted that McCain would deregulate health care at a time when the financial crisis was giving deregulation a bad name. And many of us, they said, would end up spending more for insurance - if we could buy it at all.

"Please go out and find me a health-care plan for a family of four for $5,000," Pennsylvania Gov. Rendell said, referring to McCain's plan to give people a $5,000 tax credit for family health insurance.

Gov. Corzine of New Jersey chimed in that a family of five would not get any more money than a family of four. And, he said, McCain makes no special provision for people who have health problems, a group that pays extra in the private market, if they can even find an insurer that will sell them a policy.

The McCain campaign rejected the contention that its plan would weaken the employer-based system.

The governors - the other three were Martin O'Malley of Maryland, Chet Culver of Iowa and Joe Manchin III of West Virginia - were in Philadelphia for a meeting. They spoke at Obama headquarters in Philadelphia. The bare-bones office, decorated with handmade signs and heavily scarred carpet, was crowded with campaign workers.

Obama's plan requires health insurance for children, creates new options for the uninsured, and prohibits price discrimination against sick people.

McCain, whose primary goal is to make insurance more affordable, takes away the tax break people now receive for insurance purchased by employers. The value of their health plans would be taxed as income. But McCain would give everyone, including those who get insurance at work, $5,000 tax credits for family plans and $2,500 for individual plans.

If the tax credit was bigger than the tax, people could invest the extra money in a Health Savings Account, the McCain campaign said. It did not respond to a question about whether that was the only way taxpayers could use the money.

McCain also would allow people to cross state lines, a move the other side says would weaken state attempts to regulate insurance coverage.

The average family insurance plan now costs more than $12,000 a year. Even people in the 35 percent tax bracket would pay less than $5,000 in new taxes, the McCain camp says.

Rendell said many employers likely would drop health insurance once it was taxed.

Thomas Buchmueller, a health economist at the University of Michigan, who analyzed the impact of the McCain plan, said 20 million Americans likely would lose employer-sponsored coverage because of the tax. About an equal number would gain private insurance.

The problem with the plan, he said, is that private insurance costs more, so people likely would get less for their money. And over time, the tax credit would be worth less because it is tied to general inflation, which is lower than the medical inflation rate.

Corzine said the McCain plan was similar to what President Bush has been proposing for several years. "It barely draws sponsors even among Republicans because it's such a failed concept," he said.

The McCain team did not respond to a question about the cost of McCain's plan or how he would pay for it.

The Tax Policy Center, a joint venture of the nonprofit Urban Institute and Brookings Institution, estimates that over 10 years, McCain's plan would cost $1.3 trillion and Obama's $1.6 trillion.

A McCain adviser was quoted in the Wall Street Journal yesterday as saying there would be cuts to Medicare and Medicaid, an approach that drew fire from the governors.

Corzine said the economy likely would be the first order of business after the election. It will "delay addressing some of these other legislative issues."