I know it’s a slippery slope when you start trying to debunk every inane talking point that comes along, but there was a specific one that I wanted to look into and get the facts on. There’s a certain “saucy” commentor here who keeps making claims along the lines of, “Obama’s going to make poor people pay 8%, or one month’s salary, a year for health insurance they can’t afford. This isn’t covering people, it’s driving them broke.” I’ll admit that I pretty much side-stepped this issue, since I didn’t have the numbers at hand. I knew it probably wasn’t right, but it didn’t sounds as ludicrous as death panels or mandatory sex-changes (remember that one?). Now I think I can counter this claim a bit more authoritatively.
First let me preface this by making clear that I don’t claim to be an expert in health care policy — just a guy who’s read a lot. If anyone wants to challenge (or correct) my facts, please feel free. The first problem is that is as of now, it’s impossible to get exact numbers because the final bill is not written, but we can get pretty close. Now, since, at least at first, the employer-based insurance system will be left alone (booooo!), and anyone who buys insurance through their employer is already receiving a tax subsidy, the additional subsidies will be limited to those purchasing individual coverage on the open market, through the newly-created exchanges.
Here’s a great place to start, and it might answer a lot of questions:
The above chart shows the maximum percentage of income that would have to be paid for coverage by someone in the exchange. This chart shows a family of four, but the amounts are simply percentages of the federal poverty line, which currently is $22,050 for a family of four ($10,830 for individual, $14,570 for family of two, $18,310 for a family of three). So, to put it in dollar amounts, for an individual making $18,000, the max amount would be in the range of $900, or $37.50 per biweekly paycheck. For a family of four making $35,000, it’s about $1,400, or $53 per check. Not nominal amounts, but not crippling. And remember, that’s a maximum. There certainly might be plans cheaper than that.
Additionally, for anyone making under 133% of poverty ($14,403 for ind., $29,326 for family of four), Medicaid would now be available without the restrictions it has currently. There are other numbers and rules, but its late I gotta draw the line somewhere. Finally, where I think the 8% number might be coming from pertains to those who have coverage available to them through their employer. If you do, and there is no plan available to you that costs less than 8% of your income, you would be exempt from any penalty for violating the individual mandate for coverage. Also, you would be eligible to purchase a low-cost catastrophic coverage plan (low premium, minimal coverage, high deductible) from the exchange. To put that into perspective, I have a family of three, we’re solidly scraping-by middle class (DL doesn’t pay as much as you’d think), we have a decent but not extravagant plan, and we’re paying close to 10% of income. Does it suck? Yeah. But 8% is not unreasonable, and remember you’re getting health insurance. It isn’t just an empty tax or fee.
So, no indigent people purchasing through the exchange will have to pay anywhere near 8% of their income. And those in the employer system might have to pay up to 8% of income to get coverage (but maybe less), or pay an assessment to help defray the cost of their care if they choose not to buy coverage. The assessment would be in the range of about 1% of income or $325, whichever is higher. So yes, you can opt out. Oh, and none of this takes effect until 2014. So to conclude, the individual mandate is necessary in order to make the whole plan work. I’ve given my defense of it here. My last word on all this is that I think the entire concept is based on the notion that most people actually want health coverage. Maybe some don’t or don’t want to pay for it. Those people are in the minority, and frankly, quite foolish. For the rest of us, whatever bill eventually emerges will be a great help for a failing system.