By David Lightman | McClatchy Newspapers

WASHINGTON — John McCain's health care tax credit plan would save the average household an estimated $1,241 next year. But critics charge that many people — especially those in poor health — could have a difficult time getting coverage with it.

The centerpiece of McCain's health care program is a refundable tax credit of $2,500 for individuals and $5,000 for households. The credit would go to insurers, though participants could deposit any amount higher than the premiums into personal health savings accounts.

McCain would tax consumers on the value of employer-paid health coverage. Employees are not taxed currently on those benefits.

Democratic rival Barack Obama, whose health plan includes subsidies to low-income families having trouble getting employer-sponsored or publicly funded coverage, says McCain's plan amounts to a tax increase.

"He gives you a tax credit with one hand, he raises your taxes with the other," Obama told an Indianapolis audience on Wednesday, "and he didn't mention that the average health care plan costs $12,000, not $5,000."

But analysts say the credit would more than offset the increased taxes people would pay. According to the Urban Institute-Brookings Institution Tax Policy Center, McCain's plan would save the average household $1,241 next year and would benefit middle-income earners more. They'd save an average of $1,559, said Leonard Berman, director of the Tax Policy Center.

Whether the plan would help those without insurance obtain insurance is questionable, and some analysts believe over time more and more people would find themselves without health insurance.

Premiums for employer-sponsored health coverage currently average $12,680 this year, of which employees pay $3,354, according to a Kaiser Family Foundation 2008 employer survey.

Those numbers have spawned concern that the McCain plan wouldn't cover the cost of a policy, and that the gap would grow in the future. The McCain plan is expected to adjust the credit for inflation, but health-care costs usually rise far more than the cost of living.

Some also are concerned that the plan would undermine employer-based coverage. "The employer-based insurance system could unravel," said Dean Baker, co-director of the Center for Economic and Policy Research, a liberal Washington study group, because employers would lose incentive to cover employees, leaving them with less coverage.

Business leaders have voiced similar concerns.

"We believe the employer-based system is the foundation of health insurance coverage in this country," said Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce.

Employers now insure 177 million people. An estimated 45 million are uninsured, and others buy coverage privately or are covered by government programs.

"You need to build on the (employer-based) system," he said, and what employers and insurers need to do is put pressure on the system so costs are held down. The Chamber takes no official position on any candidate's plans.

Grace-Marie Turner, president of the Galen Institute, a Virginia-based conservative health-care research group, argued that employers wouldn't simply abandon employees.

Workers and their companies would have new incentive to work together to find ways to save on coverage, she said, particularly since McCain is not proposing to take away employers’ tax breaks for providing benefits.

McCain contends that his plan would make it easier for consumers to compare costs and benefits, and ultimately save money.

"We have got to give people choice in America and not mandate things on them," McCain insisted at Tuesday's debate, "and give them the ability — every parent I know would ... acquire health insurance for their children if they could."

Baker, though, was concerned that only healthy people would benefit, since insurers charge higher premiums to high-risk consumers or refuse to insure those with certain health conditions, such as diabetes.

ON THE WEB

John McCain's health-care plan

Barack Obama's health-care plan

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