Obama attacks McCain health plan on trail, in ads

As the presidential campaign entered its final month, Democrat Barack Obama issued a sharp assault on Republican John McCain’s healthcare proposal Saturday, arguing it would lead to higher taxes for some families and knock as many as 20 million people out of their current insurance plans.

The topic provided a new focus for the campaign, as Obama launched four television ads in battleground states criticizing McCain’s plan. The candidates have spent the last two weeks sparring over the nation’s financial crisis.

McCain held no public events Saturday as he prepared at his retreat near Sedona, Ariz., for Tuesday’s debate.

The McCain healthcare plan would significantly alter the way many Americans get their healthcare coverage. It would eliminate tax breaks on employer-sponsored healthcare benefits and instead give Americans healthcare tax credits -- a $2,500 credit for individuals and a $5,000 credit for families.

Obama called the plan “radical” several times Saturday.

The McCain campaign argues its plan would reduce the amount most Americans spend on healthcare by creating more competition for insurance plans and better coverage options as more people seek plans in the private market.

“John McCain trusts the judgment of the American people,” senior policy advisor Doug Holtz-Eakin said in a conference call responding to Obama’s speech. “He’s willing to put money in their hands because they know what’s best.”

But campaigning in heavily contested Virginia at a park overlooking the James River, Obama argued that the Arizona senator’s plan amounted to “pulling an old Washington bait-and-switch.”

“He gives you a tax credit with one hand -- but he raises your taxes with the other,” Obama said.

“A $5,000 tax credit. That sounds pretty good,” Obama said. But he noted that a survey by the Kaiser Family Foundation showed that the average cost of a family healthcare plan is $12,680. “Where would that leave you? Broke,” Obama said.

A number of independent analysts have concluded that McCain’s plan would prompt younger workers to abandon their employer-sponsored plans to find less expensive coverage on the open market -- meaning employers could end up with a pool of older workers, whose healthcare is more expensive. “Many employers will drop their healthcare plans altogether,” Obama predicted.

“Under the McCain plan, at least 20 million Americans will lose the insurance they rely on from their workplace,” he said, citing a recent analysis of McCain’s plan in the journal Health Affairs. But the Illinois senator did not mention that the same analysis found that 21 million Americans could gain coverage under the Republican nominee’s plan.

Holtz-Eakin disputed Obama’s 20-million figure and called the Democratic nominee’s assertion that employers would stop providing insurance “patently false.” Employers would still be able to deduct health insurance costs, and they would still be competing to attract quality employees, he said. “Their incentive will be unchanged.”

John Holahan, director of the nonpartisan Health Policy Research Center at the Urban Institute, said that though Obama’s wording about the 20 million workers was technically correct, analyses of McCain’s plan have shown “the net effect is more or less a wash, or a small gain.”

Obama’s charge that taxes may go up under McCain’s plan is true in some cases, Holahan said, because McCain’s tax credit would not keep up with healthcare inflation.

“After five to 10 years, the current tax deduction is going to be worth more than the current value of the credit,” Holahan said. “Depending on your income -- you could be worse or better off.”

The McCain campaign estimates, however, that less than 5% of Americans would see their taxes rise.

“It is the case there may be some people at the very top who have a liability greater than their health tax credit,” Holtz-Eakin said. But “under the current system . . . we are having the middle class pay taxes and subsidize the gold-plated coverage of the most affluent in America.”

Before leaving Newport News for Asheville, N.C., where he is preparing for the debate, Obama also criticized a controversial provision of the McCain plan that would allow employers to sell insurance across state lines, which he called “a starting gun for a race to the bottom.”

“Insurance companies will rush to set up shop in states with the fewest protections for patients,” he said.

Holtz-Eakin called Obama’s remarks “cynical” and “deceitful,” and emphasized that McCain’s plan would set up a program guaranteeing coverage for high-risk patients and a mechanism allowing patients to appeal insurance company denials.

For months, McCain has sharply criticized Obama’s healthcare approach as an expensive, intrusive expansion of government.

The Obama healthcare plan would help the uninsured get coverage through a new National Health Insurance Exchange and would provide subsidies for low-income Americans to help them purchase insurance. The plan would also boost the number of workers who are insured by requiring employers to automatically enroll their workers in employer-sponsored health plans, but would permit employees to opt out.

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maeve.reston@latimes.com

seema.mehta@latimes.com

Reston reported from Virginia and North Carolina and Mehta from Arizona.