I spend a good deal of my time reading about health care and health insurance reform. And yet I am having a hard time keeping up with all of the proposals I’m seeing these days. I wonder how it is for people who aren’t glued to sites like Healthcare Economist and Managed Care Matters. I imagine the whole thing has probably started to take on a bit of a circus side-show look.
Today, I’ve been reading about how a plan crafted in the House this week would include health insurance premium subsidies for individuals earning up to $43,000 a year, and for families of four earning up to $88,000 a year. These numbers sounded pretty big, so I did a quick census data check for Colorado. The median household income here in 2007 was $55,517 (across the US it was just under $51,000). And those numbers reflect households with just over two and a half people.
Colorado is by no means a poor state . But our median household income is more than $30,000 below the cutoff point for the proposed health insurance premium subsidies. That means that a good chunk of the population here – and across the country – would qualify for subsidies under this proposal. It seems that if the government is looking to cut costs, they might want to limit the subsidies to families who would otherwise truly have difficulty paying for health insurance. The way I see it, a family of four earning $88,000 a year shouldn’t have trouble paying for any of life’s basic necessities, including health insurance.
Richard Kirsch, of Health Care for America Now, has said that “people with incomes just above the subsidy line could consider the mandate a burden. ‘They’ll be put in this funny dilemma where they can’t afford health care, but they have to pay a fine.” I’m having a hard time getting my head around this one. A family of four earning more than $88,000 a year is not in a position where they can’t afford health care. If they have serious pre-existing conditions and live in a state that doesn’t have a high risk pool, they may be unable to get health insurance if they don’t have employer-sponsored coverage. But this is an issue that revolves around underwriting, state mandates, and risk pool availability on a state-by-state basis. It isn’t an issue of helping people pay premiums.
Most of the people I know have household incomes of less than $88,000 a year. And most of them also have health insurance. Some – like my own family – are paying all of the premiums themselves. I’m sure that the high limits on the subsidies are designed to make everyone feel like they’re getting a piece of the pie. But that pie might not be as big as everyone would like to believe. If the ominous numbers coming from the CBO lately are any indication, the devil is going to be in the money details of this whole thing. And subsidizing health insurance premiums for families who are earning well above the median income isn’t going to help.
{ 2 comments… read them below or add one }
Unfortunately, this is another example(intentional or otherwise) of a backdoor way to exclude brokers from the process. There has been discussion of requiring all persons who receive subsidies to participate in the Public Plan Option an d to sign-up through a Connector. If you make the income qualification high enough it will cover 90% of the market, effectively pushing th eprivate sector out of the process.
We’ll need to keep an eye on the details surrounding subsidies. Fortunately, it looks like many in Congress have taken note of the CBOs warning and will press to curtail subsidies to bring the cost of reform back to a manageble range.
Louise:
The idea of subsidizing households far above the median income tells me that health insurance premiums are out of line for the median household.
If annual group premiums are over $12,000 per year for a family, and the median household’s income is under $51,000, then the premium is almost one-fourth of the household’s income.
And, that is before deductibles and out-of-pocket costs.
Sounds like health insurance premiums is pretty close to what banks, at least in the past, used to qualify people for mortgages!
Subsidizing premiums that are already too high in relation to income is not the way to get a handle on costs.
Don Levit