The Senate health care reform bill is headed for a Christmas Eve vote, and is expected to pass, needing only a simple majority of votes. The Daily Kos published an article this week detailing reasons why the bill should pass, and there are several good points in the article. But I felt that the very first point needed to be addressed, as there seems to be so much misunderstanding around what people actually pay for their health insurance. The author is responding to another article that noted that the Senate reform bill “forces you to pay up to 8% of your income to private insurance corporations – whether you want to or not.” The Daily Kos article responds with
“If American families could get health insurance for only 8% of their income, you could bet a lot more of us would have it. In 2008, the average family premium for health insurance was $12,298. In 2003, the median income of a family of 4 was $67,019. So, umm… a typical family of 4, in the status quo is paying, let’s see, over 18% of their income in health insurance premiums. Put it another way, a typical family of four would see their premiums reduced from $12,298 under the status quo to $5361.52.“
I see this sort of thinking tossed around a lot, with people mentioning that the average family pays more than twelve grand a year for health insurance. But stop and think for a moment about your own family and other families you know. Are most of them paying roughly a thousand dollars a month for their health insurance? Off the top of my head, I can think of several friends who pay less than $300/month for family health insurance policies. All of them work for companies that provide health insurance benefits, and the employers pay a good chunk of the premiums. It’s true that the total premiums for their families could be close to a thousand dollars a month – but the employees aren’t paying the entire premium themselves.
In the individual market, things work a little differently. Those of us who don’t have an employer that provides health insurance have to buy our own coverage. Our total premiums are quite a bit lower than the premiums on group plans, because individual plans are medically underwritten. But we pay the entire amount ourselves, with no assistance from an employer. We work with individuals and families in Colorado who are purchasing their own health insurance, and it is extremely rare for a client to purchase a policy that is at or above a thousand dollars a month. Most family plans that our clients choose tend to be less than $500/month. My own family has an HSA qualified plan for less than $350/month.
Yes, some people are paying a thousand dollars a month or more for their family’s health insurance. People on COBRA are paying group rates but without an employer’s assistance with premiums, and will find themselves paying the sort of prices detailed in the Daily Kos article (although the COBRA subsidy provision in the stimulus package has helped a lot of people afford their health insurance this year). And some people work for companies that payroll deduct all health insurance premiums for dependents, which will quickly drive a family’s out of pocket premium costs quite high (but family members who are healthy can usually find less expensive coverage in the individual market instead). We know that there are families out there who are paying more than a thousand dollars a month for their health insurance. But they are the exception rather than the rule. The Daily Kos article makes it sound like the average family will end the year with nearly $7000 in their pockets from premium savings, and that just doesn’t add up.