McCain Rips Obama’s ‘Pay or Play’ Health Plan

Jul 7, 2008 10:11pm

ABC News’ Teddy Davis, Bret Hovell, and Gregory Wallace report: Republican John McCain launched a new line of attack against Barack Obama today, portraying the Democrat’s health-care plan as an unaffordable job-killer.

"Small businesses are the job engine of America, and I will make it easier for them to grow and create more jobs," McCain said. "My opponent wants to make it harder by imposing a ‘pay or play’ health mandate on small business."

McCain refers to Obama’s plan as "pay or play" because employers would either have to "play" by making an unspecified "meaningful contribution" to the cost of their employees’ health coverage or else they would be forced to "pay" a "percentage of payroll" toward the costs of a national plan.

While unveiling his "Jobs for America" economic plan in Denver, McCain charged that Obama’s health plan would add "$12,000 to the cost of employing anyone with a family."

"That means new jobs will not be created," McCain said. "It means existing employees will have their wages cut to pay for this mandate."

The $12,000 figure cited by McCain is the current average annual cost of a family health insurance policy.

While the "pay or play" attack identifies a basic feature of his rival’s health-care plan, the Arizona senator is omitting key details about Obama’s plan to mitigate costs on struggling small businesses.

"This is a real distortion of reality," Obama health-care adviser Stuart Altman, who is also the dean of Brandeis University’s Heller School for Social Policy and Management, told ABC News. The employer’s contribution is "never going to be 100 percent of $12,000."

Obama’s plan includes an exemption for small businesses that meet unspecified "revenue thresholds." He proposes reimbursing employers for catastrophic health-care costs to lower the premiums faced by individuals. In addition, Obama would consider less than 100 percent to be a "meaningful contribution."

"It could be 50 percent. It could be 60 percent," Altman said. "It varies depending on how the Obama people set the percentage up."

Businesses with low revenues would contribute to the cost of their workers’ health care on a "sliding scale" with some fully exempt.

Obama spokesman Nick Shapiro said the candidate will leave it to the legislative process to define what constitutes a "meaningful contribution" from employers, as well as the scope of the small business exemption and the threshold at which government picks up catastrophic expenses.

"Those are all details that will be worked out with Congress," Shapiro said.

Altman said requiring employers to make a contribution toward their workers’ health-care costs is always "controversial" with those who don’t currently "pay for it and don’t want to pay for it."

"You have a number of companies that essentially are freeloading off of those that are covered," Altman said. "The Obama plan is an attempt to level the playing field. Not to create an undue tax. … Just because you’re small doesn’t mean you’re not profitable."

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