When she wasn’t sidestepping questions during Thursday’s vice presidential debate, Gov. Sarah Palin managed to string a couple sentences together about her ticket’s health care plan.

“[John McCain is] proposing a $5,000 tax credit for families so that they can get out there and they can purchase their own health care coverage. That’s a smart thing to do.”

The moderator, Gwen Ifill, might have followed up by asking why providing a puny $5,000 tax credit when the average family health insurance policy costs more than $12,000 is a “smart thing to do.” But no matter, Palin continued by claiming the plan is “budget neutral” which should tell you everything you need to know about the plan: It’s a complete sham that doesn’t take health care reform seriously.

As Sen. Joe Biden characterized it, “It’s with one hand you giveth, the other you take it.” McCain proposes to pay for his health care plan by revoking employers’ tax breaks for providing health insurance. This will be the first time in American history that health benefits have been considered taxable income. Sixty percent of Americans, 160 million, receive health insurance through their employers.

Unlike all those phony attack ads saying one candidate or another voted 300 bazillion times for higher taxes and killing puppies, McCain is actually proposing the largest tax increase on the middle class in American history. It’s a truly radical policy stance that hasn’t gotten enough attention over the course of the campaign.

If employees’ health benefits are no longer tax-exempt, this will be a strong incentive for them to drop their plans entirely. That will mean millions more uninsured (estimates suggest around 20 million, or one in eight, could lose their employer-provided coverage). McCain hopes to mitigate this by providing a refundable tax credit that can be used in the individual insurance market so people can purchase their own plan or cover out-of-pocket expenses.

But the individual health insurance market is flawed, and it’s not because insurance companies can’t sell their products over state lines. It’s because they can deny access or render its cost almost prohibitive to anyone who is old or has even a relatively minor preexisting condition. It’s also more expensive because risk is being concentrated on individuals rather than pooled with other beneficiaries. The poor, old and sick will find the tax credit to be a real bridge to nowhere. Only the young and healthy will really come out ahead. And remember readers, you’re not going to be young and healthy forever. Just ask McCain.

McCain believes that the fundamental problem with health care in America is that people are using too much of it. That’s incorrect. Americans are using too much of the wrong kind of care, such as expensive and high-tech late interventions in advanced diseases and end-of-life care. But Americans are not using enough preventative care and routine monitoring that save money in the long run.

This is because if you are uninsured or if you have to pay a high deductible for a visit to the doctor, you put off those visits as long as possible. This is sure to increase costs in the long run because people wait until small problems like high cholesterol and chest pain become expensive ones, such as heart disease requiring triple bypass. The government ends up paying for this anyway when the uninsured patient gets rushed to the emergency room and can’t reimburse the hospital.

To be fair to McCain, employer-provided health insurance was an accident of history that operates poorly in practice. Health costs are a rapidly growing, unsustainable burden. Employer-based coverage is an especially great burden for small businesses with small employee risk pools. So any eventual comprehensive health care reform should include a shift away from getting insurance through one’s employer.

But in the absence of a heavily regulated individual market that ensures access to everyone regardless of health for a fair price, taxing health benefits is a recipe for catastrophe for millions. But far from pushing more regulation, McCain wants to deregulate the insurance industry much like the financial services industry. We all know how that turned out.

There isn’t enough column space to discuss Obama’s health care plan in any detail, but suffice it to say he wants to introduce efficiencies into the existing health care structure and offer large subsidies to anyone who can’t afford coverage. The uninsured will be allowed to buy into a public plan that can compete with private plans and convince people that public provision of health care isn’t so scary. Obama’s plan probably won’t do much to restrain costs in the long run and has no mandate that gets everyone covered, but he’s light years ahead of McCain in understanding the problem and proposing solutions that will deliver some essential improvements.

McCain admits he’s never understood the economy as well as he should. That goes double for health care.

Ryan Greenfield ([email protected]) is a senior majoring in political science and economics.