I just finished reading a Newsweek interview with Katherine Swartz, a Harvard professor of health policy and economics who is well versed in insurance. Swartz answered questions about the McCain and Obama health care reform proposals, shedding light on the differences between the two plans. She points out that both plans have funding shortfalls, and given the financial situation in the US right now, it’s unlikely that either one would get off to a strong start next year. Her estimation is that McCain’s proposal would result in about 21 million people losing employer-sponsored coverage in the first year, but that about the same number of people would buy individual health insurance with the tax credits McCain is proposing. But as time goes on, Swartz sees the number of uninsured Americans increasing under McCain’s reform proposal.
Obama’s plan isn’t perfect – it would still leave some Americans without health insurance. Swartz predicts about 6% of the under-65 population would be uninsured, compared with the current 17%. So while there would still be people falling through the cracks, things would likely be much better than they are today.
One part of the interview that caught my attention was when Swartz detailed the costs of health insurance, compared with the tax credit that McCain is proposing. McCain’s plan would give a tax credit of $2500 to individuals, and $5000 to families, to use to purchase individual/family health insurance. Swartz contends that those amounts are not high enough, saying “For a family, insurance premiums in the nongroup markets are typically above $700 a month, and that’s with a deductible of at least $5,000.” I thought that sounded a little high, at least for the Colorado market. I used the Colorado Health Insurance Insider’s instant quote tool to get quotes for a hypothetical Denver family, with 40 year old parents and two children. I picked a total of eight policies from Aetna, Anthem Blue Cross Blue Shield, Humana, and United Health Care. From each company I chose one HSA qualified policy with a deductible of about $5000 for the family, and one traditional policy with copays for doctor visits and a deductible of between $2000 and $5000 per person. The average price for the eight policy options for this family was $428/month. Far lower than the “above $700” referenced in the article. Of course Colorado – like most states – uses medical underwriting on individual health insurance policies. And if underwriting were no longer allowed on Colorado policies, we could very well see the average family premium exceed $700/month. But for now, $5000 goes a long way towards paying for a health insurance policy in Colorado.
Of course for people who are not able to qualify for a medically underwritten policy, it doesn’t matter whether the coverage is affordable or not, since it’s not available for them. We do have Cover Colorado, but the premiums are significantly higher than they would be on a similar underwritten policy. Instead of charging higher premiums to everyone on individual policies (and thereby increasing the number of people who are unable to afford coverage and are forced to become uninsured), how about instituting a federal subsidy to help lower the premiums on state high risk pool health insurance in order to bring the premiums more in line with private health insurance? A federal high risk pool would be a good idea too, instead of the state-by-state pools that we have now (especially since some states don’t even have high risk pools available for residents unable to qualify for individual health insurance). There are lots of ways to attack the problems in our health care system. But a significant premium increase on currently-underwritten health insurance is only going to drive more people out of the market, and runs counter to the stated goal of expanding health insurance coverage and health care access for everyone.