With all the talk about Hillary Clinton and Barack Obama's healthcare plans, presumptive GOP nominee John McCain's healthcare fix has largely slipped under the radar.

But McCain is advocating one extremely important--even transformative-- change to American healthcare delivery.

You know how the cost of your healthcare premiums is taken out of your paycheck "pre-tax"? That means the costs of your health insurance premiums--the part your employer pays and the part you pay--are shielded from federal tax.

McCain wants to do away with that, exposing the entire per-employee cost of health insurance to federal tax.

With average annual health insurance premiums costing employers between $8,000 to $10,000 per worker, that's a big tax hit. If your coverage costs $10,000 per year and you're in the 28 percent tax bracket, you'll be dinged for an extra $2,800 per year in federal taxes.

But McCain's plan calls for tax relief to make up for those extra taxes.

So why bother to raise one tax while relieve it with another?

Here's a succinct summary of McCain's plan from the Cleveland Plain Dealer:

McCain also is proposing to rattle the status quo: He would end the longtime practice of allowing employers to offer health insurance to workers as an untaxable fringe benefit.

 

Instead, workers would have to count the value of employer-paid health premiums as income on their tax returns.

 

To help offset the additional taxes workers would have to pay, McCain would give tax credits ($2,500 per person, $5,000 per family) to all Americans with private coverage, including people who buy it on their own, who currently get no tax break.

 

[Said Larry Levitt, a health care finance expert and vice president of the Kaiser Family Foundation:] "On Sen. McCain's side, it would really transform the way in which many Americans get health insurance because it would move away from employers providing coverage towards people buying it on their own."

So the idea is employers, who often pay a majority of a worker's health insurance premiums, would lose incentive to do so, since they'd lose the tax deduction they now get for providing that benefit. This would push more employed people who now have health insurance into the private market. A tax credit would make that purchase more affordable.

Here are the relevant tax-related passages from John McCain's healthcare proposal appearing on his campaign website. 

• Reform the tax code to eliminate the bias toward employer-sponsored health insurance, and provide all individuals with a $2,500 tax credit ($5,000 for families) to increase incentives for insurance coverage. Individuals owning innovative multi-year policies that cost less than the full credit can deposit remainder in expanded health savings accounts.
• Families should be able to purchase health insurance nationwide, across state lines, to maximize their choices, and heighten competition for their business that will eliminate excess overhead, administrative, and excessive compensation costs from the system.
• Insurance should be innovative, moving from job to home, job to job, and providing multi-year coverage.
• Allow individuals to get insurance through any organization or association that they choose: employers, individual purchases, churches, professional association, and so forth. These policies will be available to small businesses and the self-employed, will be portable across all jobs, and will automatically bridge the time between retirement and Medicare eligibility. These plans would have to meet rigorous standards and certification.

The McCain vision is one in which employers are no longer the main providers of health insurance. Individuals will be seeking coverage themselves in the open market.