Hopefully Clearing Up a (Talking) Point
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.
Tags: Health Care Reform
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.
Scott – “A” for effort.
The thing is, I already have the right to not buy insurance I can’t afford. I also already have the right to buy low-cost junk insurance. I do not need legislation for this.
It is true that if I go to the exchange for my junk catastrophic insurance, I can buy it even if I have a pre-existing condition. But catastrophic insurance does not pay for chronic pre-existing conditions anyway.
So I don’t see how the 8% means test is giving me anything I don’t already have (or anybody else).
If the exchanges are really providing only catastrophic insurance to those with lesser means, I don’t see how this really helps them in terms of their expense and quality of care.
I understand where you’re coming from, and frankly, I agree that sometimes it’s hard to see where the benefits are for many of us. But among other things, you’re getting the right not to be dropped from your coverage because the insurance company thinks you’re too expensive, the right to have affordable, regulated coverage available to you in the exchanges if you should lose your job, or end up losing coverage through your employer. There are also cost control measures that wil help to put a brake on obscenely skyrocketing health care costs. And of course, you can opt out for a much lower than 8% cost.
But the thing to remember is, the mandate is vital to making the rest of the good stuff work. If we were talking about a freestanding mandate and nothing else, it would be a bad idea. Think of it as the cost for getting all the other good stuff.
But among other things, you’re getting the right not to be dropped from your coverage because the insurance company thinks you’re too expensive,
OK, so if you cost too much your insurance plan has to keep you and pass the cost on to your employer, who may now fire you. Great.
Or your employer could shop for a cheaper plan next year. But on the bright side, if you do get canned, you can still get affordable (maybe more affordable) coverage. But in the bigger picture, the mandate will bring in more, healthier people to the insurance companies, allowing them to keep costs in line.
To defend our saucy commenter, if you have a plan, like the one I currently have, that charges you a premium that is equal to 8-10% of income but provides a high deductible, your personal cost may be more than can be borne.
My healthcare plan doesn’t pay for anything (except for a bi-annual checkup) until I have spent $2,400. If you have this insurance, you will still be prone to NOT going to the doctor, since you are essentially still paying out-of-pocket for medical care. Yes, you will be covered if you slip and fall and break your hip, but you will still be bankrupted because you had to pay the first $2,400 plus your premiums.
I am hoping that we bolt on a public option in 2013.
Catastrophic insurance is a product that has already been mostly shunned in the marketplace. It costs very little to provide and has a very high profit margin. The insurance companies never could manage to find many suckers to buy it, but now here comes Uncle Sam.
I also want a public option or better yet single payer. I look at this bill as a start, nothing more. An easier next target would be negating the “deal” with Big Pharma and negotiating the price of Medicare/Medicaid drugs while allowing “re-importation”of drugs from Canada, measures that would cost Americans nothing.
I agree, LG. I wish this bill did a lot more for more people, but it would likely be more expensive, and just couldn’t get the GOP mandated 60 Senate votes. I’m with you in hoping that it doesn’t take long before the exchanges, 1)are open to everyone, and 2)contain a public option. We’ll have to keep working. I’ve said it before, but we’re at the end of the beginning, not the beginning of the end.
I think we are headed towards the public option – it really is the option that makes all this work. Problem is: The Public Option was attacked by both sides. The right hated it because they saw it as a road to single-payer – which I believe it is – and the left wasn’t happy because 1.) it wasn’t single-payer, and 2.) the public option in the bills wasn’t strong enough.
And while I wouldn’t count on the PO making a sudden recovery these next few weeks I won’t take it off the table simply because it’s the easiest solution to all those uncomfortable parts of the bill.
Scott P., I appreciate your risk-taking here. And the graphs and numbers look great. But the reality is, this is not a report out of a finite chemistry result. This is us crazy humans, and our crazy willful selves spending money where WE see a priority. I’m going to skip some mid-level arguments, and jump right to the chase:
1) Why would anyone making below 50k (family of four) need this tax credit? Chances are, they aren’t paying federal taxes anyway.
2) For the $325 “opt out” fee-who collects that? And then when the feces hits the fan, and Mr. and Mrs. OptOut need that 10k appendectomy, and hospital stay one rainy, Tuesday night–who’s going to absorb that “not large”, but devastating bill for them? They cry poor–and probably are–and then the US will go and create a safety net, for this safety net. Where the heck does it end?
3) So yes, while I agree most people want health coverage–our country has been coddled into the belief it should be top-notch and free. And heaven forbid healthcare premiums may need to be paid before the annual sojourn to Disney World, or that weekly 37.50 previously allotted for the nail tech.
4) Again, while these numbers may be tidy–the argument made of “this isn’t covering people–it’s driving them broke” resounds w/ “I’m already broke–why should I pay for coverage–aren’t I one of those people you should be helping?” And that’s a bunch of people. What a wake-up call when they find out, their government was talking about them to dig deeper too.
Sorry–I kinda like Medicaid for the poorest poor, and SCHIPS for our children as needed. Everyone else needs to budget this great expense, and quit living out of their means.
I can go w/ pre-existing though–that definitely needs to be erased from pooling.
8% is the correct percentage for unsubsidized health insurance costs. It represents ~1 months pay. You will be fined if you don’t purchase private health insurance if it is available for 8% or less of your income. Those are not talking points; they are facts.
And who do you think is paying for the subsidies? They aren’t free. So people who aren’t subsidized in paying for their own insurance are also paying higher taxes to pay those subsidies -and where does that money go? Right into to profits of private insurance companies instead of staying with the families who earned it.
If you’re uninsured through your employer and at an unsubsidized income level, you will be exempt from the mandate to purchase private insurance only if you cannot find a policy that is less than 8% of your income. Of course, the insurance companies will offer crappy plans with high deductibles to make sure there is something for you to buy. Getting someone to purchase insurance that they then can’t afford to make claims against is a pure-profit customer.
Finally, you fail to address that having health insurance is not the same as having affordable health care. To a family of 4 making 35,000 a year, $1,400 after tax is a whole lot of money. It is $116 per month that they are being forced to pay before food, clothing, transportation, and housing. For many families, it is a crippling amount of money. Then, on top of that, they will need to pay for deductibles to actually get health care services. How are they going to afford them, too?
As I have stated before, I actually have no problem with these numbers in general if they meant that people would actually get health care services through a no-deductible public option single-payer system. What this bill does is guarantee a profit stream for insurance companies without controlling the costs of health care services and drugs in any significant way.
Agreed- “A” for effort.
I am hoping that we bolt on a public option in 2013.
I think the current HCR might actually make the public option LESS attainable.
What would be the argument for adding a public option in 2013 when the 2010 HCR act hasn’t even fully kicked in yet?
The only reason to add a public option would be if HCR is failing. And if the bill we pass today is failing in 2013, I don’t think voters will give us a shot to fix it by pushing it further left. I think we wasted that opportunity in 2010.
So the dire predictions that we won’t get to do HCR “for another generation” might yet come to pass, just not the way you meant it.
I have an HMO from work. I pay about 23% of the premium myself; my employer picks up the rest. I have co-pays for doctor visits and prescriptions. My partner has full coverage with BC/BS – his employer picks up the entire cost. I also have my premiums deducted on a pre-tax basis, so I’m reducing my taxable income by the amount of my premiums.
Currently, the largest health care plan in the country is the Federal Employees Health Benefits Program (FEHBP). Under the Bush administration, nothing was down to keep premiums in check – they basically gave the insurers carte blanche to raise rates. And they did. This is changing under this administration and premiums and prescription costs should be coming down.
the left wasn’t happy because 1.) it wasn’t single-payer, and 2.) the public option in the bills wasn’t strong enough.
Who on the left voted agaist the House bill for either of those reasons?
Single-payer advocates compromised by lining up behind the public option – any version. Stripping the public option (and even an upperdown vote on it) was a slap in the face; telling them “something is better than nothing” is maddening and alienating.
I pay about 23% of the premium myself; my employer picks up the rest.
Guess what, you are paying 100%.
You will be fined if you don’t purchase private health insurance
Hey, I have an idea. How about if we just go ahead and fine everybody. Then instead of a fine, let’s call it a tax. And then instead of just taking the fine and blowing it on foreign occupations and bailouts, let’s use the revenue to sign everybody up for some decent health care.
My 2013 thought is that with a mandate looming, we can use the deadline to get a public option at the beginning of the second Obama term. That may not come to pass, and you may be right. I am a pessimist about ANYTHING getting passed by this shitty Senate.
I’ll try to get to some of these points later, but let me just say now that I agree with a lot of you — this isn’t a perfect bill by any means. I would greatly prefer anon’s plan above and have a single-payer system. If anyone can come up with a plan to get one through Congress, I’ll be right there with you. But for now, we’re left debating the relative merits of the bill we have, which obviously is about as progressive a plan as has any chance of being approved. I’m just trying to make the point that the things in it are there for sound reasons, and what emerges will still be much better than what we have now. That’s the alternative, not single-payer.
Scott, here is a fundamental disagreement that I have with this bill: For the first time in American history, the government is forcing people to purchase a product directly from private for-profit companies. The government is mandating money from citizens under penalty of law directly for the profit of a few with no alternative. This is neither socialism or capitalism; it is a marriage of corporations and government in a way that is unprecedented in our country. It is, essentially, forcing every person to become an indentured servant to private insurance companies to pay for their profits.
Who we choose to work for and how we choose spend our after-tax money is a fundamental freedom and human right, in my opinion. This bill destroys that right. Destroys it. If health care is a human right (and I believe that it is), then it should be paid for and protected by the government for the general welfare of the population, not for the profit of private insurance industries.
Freedoms surrendered are rarely returned. I hope with all my heart that this bill, if it passes, ultimately leads to a single-payer system, but I am extremely pessimistic about that happening anytime soon, if ever. In the meantime, another fundamental freedom and human right will have been taken by the Federal Government, and America will be even less a model for freedom and human rights than it once was.
A1, I’m sorry that you have this one moral issue with the bill, but I do see your point. And if we were discussing a free-standing bill, then the mandate would be very arguably a really bad idea. But it’s not. It’s one piece of a larger puzzle. I fully agree that a single payer system would be best, and a public option in the exchange available to all would be not far behind. But they’re not possible right now, in this legislation. And remember that the insurance companies are not just getting a free ride here — they’re getting significant regulations and oversight. That’s why they don’t like the bill and they’re fighting against it.
And for some of your examples: The family of 4 making $35k. Yes, $1400/year is not insignificant. But do you think that’s more or less than a stay in the hospital? How about treatment for an injury or a chronic illness? Let’s say Mrs. Example’s appendix bursts. From what I can see doing quick research, an appendectomy will run $20,000-$30,000. Think they can pay that without insurance? And if they don’t, guess who does? You and me, via higher insurance premiums since the hospital needs to recoup the costs through higher charges to the insurance companies. THAT is income redistribution. (Not saying you are one, but) Free market, pay your own way people should love the IM. This is requiring people to pay their own share.
“For the first time in American history, the government is forcing people to purchase a product directly from private for-profit companies”
Not to throw some snark in here, but isn’t that exactly what most states do with auto insurance? 🙂
You’re right, Mark. The only difference I would point out is that not everyone has to buy auto insurance — only people who want to drive legally. If you choose not to drive, then you don’t have to buy insurance. But the concept is the same.
On a related note, though, I don’t consider the the argument of “It’s never been done before” to be particularly persuasive. It’s more of a statement than an argument. Just because something hasn’t been done before does not, in and of itself, mean it shouldn’t. Just means it hasn’t. Even if something hasn’t been done before, isn’t it possible that maybe it’s still the right thing to do, and should have been done long ago?
Auto insurance can drop you or refuse to insure you for any reason, including “not having insurance.” If you can’t get a private plan you can get covered by the public option (Delaware Auto Plan) which costs MORE.
Scott, how do you think people are going to pay the deductibles for doctor visits and hospital stays?
The mandate was acceptable only when there was a viable public option. To say “they’re not possible right now,” is to make excuses for Obomba who lied about it when he was campaigning and then sold it out once he got to the White House. The broken promises, secret deals, and lies of Obomba about HCR are myriad, and they continue to this day, like insurance rates going down $3000.
Mark H, the auto insurance analogy is bogus. Driving is voluntary and endangers other people; that is why its most expensive component is liability insurance.
I hope the mandates are immediately challenged in court.
There is no way the single payer system will be revived in my lifetime anyway. Not until this sicko plan goes past 2018 and proves to be another horror show that must be challenged. I hoped Kucnich’s vote would be only if the States were permitted to enact their own. That is OUT OF THE BILL! There will have to be a challenge in court under States rights to recover from this ill conceived notion. Forcing private citizens to purchase any product from a for profit corporation is illegal! It does not and will not stand the smell test. It will be interesting to see what the right wing Attorney General in Va does. He claimed he will file a lawsuit to prevent Virgininas participation. If he files it may open the door to other state rights lawsuits.
There were several Congresspeople who voted against the House bill from the left, including Kucinich and Massa who both cited their preference for single payer.
JK, there IS a provision in the bill that allows states to try their own plans, so long as it meets the minimum requirements. Don’t have it in front of me, but has to do with innovations.
Health insurance extortion to be policed and enforced by the I.R.S. You can’t make this stuff up.
16,500 more IRS agents needed to enforce Obamacare
Washington Examiner ^ | March 18, 2010 | J.P. Freire
A new analysis by the Joint Economic Committee and the House Ways & Means Committee minority staff estimates up to 16,500 new IRS personnel will be needed to collect, examine and audit new tax information mandated on families and small businesses in the ‘reconciliation’ bill being taken up by the U.S. House of Representatives this weekend.
16,500 more IRS agents needed to enforce Obamacare
Wow, it creates jobs too! At least it will provide really good coverage for 16,500 more people.
Obamacare… Is there anything it can’t do?
Joe (the articulate) Biden and his crazey right wing talking points:
Tapper (ABC News) asked VP Biden what he’d been hearing from the members of the Democrat Congress that are vulnerable over this healthcare debate and Biden’s reply let slip the administrations ultimate goal; full government control of the insurance industry.
BIDEN: Well, I yes. Some of them I say they say, well, Joe, look, man, I mean, you know, you guys haven’t massaged this very well. And, you know, this thing has gone on so long, I don’t know. And my response is, hey, man, the proof of the pudding is in the eating. I’m telling you, you know, pre-existing, they’re going to be covered. You know we’re going to control the insurance companies.
YOU KNOW WE ARE GOING TO CONTROL THE INSURANCE COMPANIES