In presidential campaigns, we talk a lot about the number of people without health insurance. And rightly so. When almost a fifth of the working-age population has no coverage at all, the country has a serious problem on its hands.

But it's not just whether you have insurance that matters. It's also what kind of insurance.

If your insurance doesn't cover necessary services or if it has onerous deductiles and co-payments, you could still be in a lot of trouble. A sudden medical calamity, whether it's severe injuries from an accident or a heart attack or the detection of cancer, could leave you exposed to financial ruin. A chronic disease like diabetes could force you to make choices between, say, paying your mortgage and paying for the ongoing treatments that will keep you healthy.

None of this is hypothetical. According to a recent report from the Commonwealth Fund, an additional 25 million "underinsured" Americans--or nearly half the number of the uninsured--face precisely these sorts of situations.

And under John McCain's health care plan, that number would likely go up. Maybe way up.

That's the most important argument put forth by a new article, out this morning in the policy journal Health Affairs, by four well-respected scholars--among them, Columbia' Sherry Glied, whom I've quoted previously.

As Glied and her colleagues note, and as regular readers of this publication know, McCain has quietly proposed a fairly radical change in the way the tax code treats health insurance. Instead of exempting group health insurance from personal income taxes, as the govenrment does now, McCain would simply offer everybody a tax credit.

The change sounds straightforward enough. And it even has some progressive elements. Under the current system, the wealthy get larger tax benefits from their health insurance payments than eveyrbody else, since the size of the break depends upon your tax rate. Under McCain's plan, everybody would get the exact same break--even people too poor to pay any taxes, since the credit is fully refundable. ("Refundable" means that if you're not wealthy enough to actually pay taxes, the government sends you a subsidy.) 

But that tax break is critically important to the insurance system we now have in place. It's a key reason that employers offer insurance to their employees. And it's a key reason that employees decide to accept that offer. Take away that tax break, and employer-sponsored insurance will no longer be as valuable financially. Fewer companies will offer it and fewer employees will take it. 

Why should we worry about this? McCain thinks we shouldn't. If fewer people got group health benefits, many of them would go out and buy coverage on their own, directly from insurers. This, he and his advisors have claimed, would set up a much more vibrant market that would--through the magic of consumer power--bring down the cost of medical care.

But almost nobody with serious policy credentials believes consumer power can have such a dramatic impact on costs, particularly since it's a lot harder to find decent coverage in the individual market--for reasons Glied and her colleagues explain:

The reality is that providing coverage through nongroup plans is much more costly than providing that coverage through groups. Administrative expenses are twice as high in nongroup markets as in group markets. The costs are higher because insurers in this market spend considerable resources on medical underwriting, and economies of scale are lost. It is much more expensive to sell insurance to millions of individuals one individual at a time than it is to sell to a much smaller number of employer groups, each comprising thousands of employees. For a typical family that moves from group to individual coverage, therefore, the move to nongroup insurance will raise premiums for an identical policy by more than $2,000 per year. Shifting people into the nongroup market would not save money for most Americans. Rather, it would lead to increased spending on administrative costs and a decrease in the portion of health spending that actually goes to providing care. (Empahsis mine.)

Another virtue of the employer-sponsored system is that it encourages what wonks like to call risk-pooling. Government regulations stipulate that, in order to qualify for the existing tax break, companies must offer similar benefits to high- and low-wage employees. And in group plans, companies (more or less) have to make coverage available to everybody, even people with pre-existing medical conditions. The result is a situation where, thanks to the large numbers of people covered, large numbers of relatively young and healthy people are paying into the system--enough to cover the costs of those few people with really expensive-to-treat medical problems.

This doesn't happen as much in the individual market. Instead, carriers try to avoid people who have pre-existing conditions--either by charging them higher rates, excluding coverage of their illnesses, or simply denying coverage altogether. (For more on this phenomenon, here's an article I just wrote about it for Self magazine.) Healthy people can get insurance on their own. And sometimes it's a really sweet deal for them, as long as they stay healthy. Sick people can't get decent coverage.* So they're stuck paying more of the bills on their own. And they are the ones who need coverage the most.

What's the bottom line? Glied and her colleauges examined the existing literature, extrapolated from it, and determined that--at first--the number of people without insurance would be roughly the same as it is now. But the type of insurance would be different. About 20 million would have lost group health insurance while another 20 million would have picked up individual coverage. That's not a change for the better.

Oh, and that's not to mention the fact that--as presently structured--the tax break would not keep up with the rising cost of medical insurance. Over time, that means it'd become less and less valuable. So the overall rate of people without insurance would climb, too.

Fewer people with health insurance. Weaker insurance for those who already have it. This is McCain's solution to the anxiety over rising medical bills?

Wonky footnote: Just to be clear, employer-sponsored insurance is far from ideal. And it's already declining on its own. So it'd be fine for McCain's to hasten that decline if he were creating a more comprehensive, more reliable alternative in its place--just like some of the more innovative universal health insurance plans out there do. But that's not what McCain is proposing.

The best analogy here is to a table with a faltering leg. Universal coverage advocates would replace with the weak leg with a strong one. McCain would replace it with an even weaker one.

(I should also mention that the new Health Affairs also includes an article that's critical of Obama's health care plan. Although it makes some interesting arguments, I'm far less persuaded by it. I'll try to blog on it later today or tomorrow.)

*Update: I edited my original item to clarify two things. First, cheap individual insurance can seem like a sweet deal when you're young and healthy. But even young and healthy people have accidents, come down with illnesses, and so on. In other words, they're vulnerable to high medical bills, too. Second, I made it clear that without risk-pooling people with medical problems can't find "decent" insurance. It's quite possible they'll be able to find some sort of bare-bones coverage. But if you have a serious chronic illness, bare-bones coverage may not do you much (if any) good. 

--Jonathan Cohn