In the vice presidential debate last night, Democratic VP candidate Sen. Joe Biden (DE) cited an estimate from a recent article in Health Affairs that 20 million Americans would lose their employer-sponsored coverage under the health reform plan advanced by Republican presidential candidate Sen. John McCain (AZ).

The Health Affairs article, a critique of McCain’s health plan by Thomas Buchmueller of the University of Michigan and coauthors, was part of a three-article online package. Also included were a critique of the Obama health plan by Joe Antos of the American Enterprise Institute and coauthors and an outline of a possible compromise blend of both candidates’ plans by Wharton’s Mark Pauly [all three papers are free access online through the election]. The package was followed on the Health Affairs Blog by a roundtable among authors of the three papers and responses to the critiques of the McCain and Obama plans by Tom Miller of the American Enterprise Institute (an unpaid McCain adviser) and David Cutler of Harvard (an unpaid Obama adviser).

Senator McCain has proposed ending the tax exclusion for employer-sponsored coverage and replacing it with a tax credit of $2,500 for individuals and $5,000 for families. The Washington Post took Sen. Biden to task for failing to mention that Buchmueller and coauthors also estimated that 21 million Americans would gain individual coverage through the credit (including those now uninsured and some who would lose employer-based coverage), making McCain’s plan essentially a coverage wash in the short term.

However, as the Post mentions later and the Wall Street Journal’s Health Blog also points out, Buchmueller and his colleagues also said that within five years, five million more people could lose coverage under McCain’s plan. That stems from the fact that McCain’s proposed tax credit would not be indexed to health care costs and so would lose purchasing power over time.

In the authors roundtable on the Health Affairs Blog, Gail Wilensky of Project HOPE, an unpaid adviser to the McCain campaign, explained that McCain’s tax credit is purposefully not indexed to health care costs in order to create some incentive to restrain health spending:

[The credit] is intended to be indexed to the consumer price inflation, but we know what happens if all we do is increase funding to match increased spending. You certainly can’t have it remain a constant-dollar amount, unindexed over time, but indexing it to health expenditures is too much capitulation in the fight to moderate spending.

The roundtable also included Kathy Swartz of Harvard, one of Buchmueller’s coauthors, and Pauly. Wilensky was a coauthor of the article critiquing Obama’s plan.

In the roundtable, Wilensky and Pauly argued that ending the tax exclusion for employer-sponsored benefits would not necessarily drive Americans into the individual market in droves. Except for the very smallest employers, which are already dropping coverage, firms “are going to continue to offer insurance as a strategy to attract good employees,” Wilensky said.

But Swartz warned that “employers would see the removal of the tax treatment of employer payments for coverage as a green light to stop paying for coverage, since it will be the employees who will pay the premiums and get the tax credit.” She added:

Employers that will still sponsor and pay for employee coverage will be employers that either are in a very tight labor market or are going after highly skilled people who assume they will get health insurance from their employer. Other workers, I think, are going to be in trouble.