In the opinion of officials with leading trade groups – the U.S. Chamber of Commerce, the Business Roundtable and the National Federation of Independent Business - American business is decidedly lukewarm about Senator John McCain’s proposal to overhaul the health care system by revamping the tax treatment of health benefits.

The officials predict that the McCain plan eliminates the exclusion of health benefits from income taxes, and would accelerate the erosion of employer-sponsored health insurance, hardly reducing the 45 million uninsured figures. Since McCain would not change the ability of companies to deduct health benefits as a business expense on their corporate income taxes, advisers opine he would continue to exclude the value of health benefits from the payroll taxes that finance Social Security and Medicare.

The business leaders forecast that Mr. McCain’s free-market approach would impose particular burdens on small businesses and old-line manufacturers that are already struggling. R. Bruce Josten, executive vice president for government affairs at the Chamber of Commerce, said: “To some in the business community, this is very discomforting. The private marketplace, in my opinion, is ill prepared today with an infrastructure for an individual-based health insurance system.”

Moreover, health economists too show an ‘ideological’ divide over Mr. McCain’s plan. Analysts who support it project that it might provide coverage to 25 million people, while critics predict that the number of newly insured would peak at five million and then decline. 

McCain’s claim that his plan would not add to federal spending, is also incorrect. According to the Tax Policy Center estimates, the plan will cost at least $1.3 trillion over a decade. Though supporters emphasize that the plan would provide a tax cut for the average American, opponents say that certain high-earners will face an increase and that some in the middle class may break even only by reducing their coverage. 

Of late, the health coverage plans of both the presidential candidates have already set off a furious ‘back-and-forth’ from both the campaigns. Obama attacked McCain’s plan, terming it “radical” and a “Washington bait and switch,” and reinforcing the message in four television advertisements.