McCain's Health Plan Funded By Medicare/Medicaid Cuts

  To make his health plan "budget neutral," John McCain plans to cut Medicare and Medicaid by $1.3 trillion over 10 years, according to this story in the Wall Street Journal.

  Spokesmen for the McCain camp said changes in Medicaid and Medicare to improve the programs, as well as eliminating fraud, would cover the cuts. Exact details have not come out.

  Barack Obama's campaign calls the entire plan a shell game

  Quote: Sen. Obama is focused on Sen. McCain's plan to offer a new tax credit of $2,500 per person and $5,000 per family toward insurance premiums. This would allow people to buy health coverage on the open market, where they may have more choices and might look for a better bargain.

In exchange, the government would begin taxing the value of health benefits people get through work. If an employer spends $10,000 to buy a worker health insurance, the worker would pay taxes on that money.

"It's a shell game," Sen. Obama told an outdoor rally of 28,000 people Sunday in Asheville, N.C. "Sen. McCain gives you a tax credit with one hand -- but raises your taxes with the other."

Sen. McCain's plan actually would lower taxes for most people. But that means the plan wouldn't pay for itself, because it cuts certain taxes more than it raises others.