The Senate Bill Saves Families Money

[Maraya1969]

by Johnathan Cohn

(The same scenario using non-reform and reform.)

Let’s imagine it’s 2016 and you are an administrative assistant, a garage mechanic or perhaps trying your hand at consulting for the first time. You’re married, just turned 40 and have two kids to feed on a household income of around $50,000. You want to buy health insurance, but can’t get it through an employer. How much will it cost? And how much--or how little--protection will it provide?

If reform doesn’t pass, according to Gruber’s figures, the average premium for the non-group market--that is, the market for people buying coverage on their own--will be around $12,000 a year. Right off the bat, you’re spending a fifth of your income on health insurance.

But what does it cover? Policies in the non-group market are notoriously spotty and unreliable. And benefit requirements vary enormously depending on the state. Many allow considerable, sometimes unlimited, out-of-pocket expenses. For the sake of comparison, though, let’s assume you have a policy with a deductible no higher than that allowed for a Health Savings Account. According to Gruber’s projections, that would mean you’re on the hook for--wait for it--another $12,000, plus a few hundred in change.

Put it altogether and that’s a total liability of around nearly $25,000--about half of your income.

That may actually be a best-case scenario in one sense. If you’re going to hit that high deductible, chances are pretty good that someone in your family has a chronic medical condition. And if you or your family member has had that condition all along, insurers might not even sell you a policy. Maybe you have diabetes. Or you’re married to a cancer survivor. Maybe one of your kids has asthma. Whatever the case, chances are you can’t get health insurance at all. Your total risk of loss would be, well, every single penny you have.

So what happens if reform does pass? For starters--and this is no small thing--the insurance company will have to sell you a policy, no matter what pre-existing conditions your family brings to the table. And you’ll know from the start that the policy will cover basic services because the government will be defining a basic benefits package. That package is going to include a broader range of services than the typical non-group policy would without reform. So when your doctor recommends a standard test or procedure, you won't have to panic it falls into some hidden policy loophole.



But what will that coverage cost? The basic premium is roughly the same, according to Gruber’s calculations that he extrapolated from official Congressional Budget Office estimates. But that $50,000 income means you’re also eligible for federal subsidies. Large federal subsidies. In fact, the government will cover about two-thirds of the price, so that you’re left owing just $3,600.

Now, you could end up spending a lot more on medical care if you or someone in your family gets sick. But here, too, the federal government would step in to help. Under the reforms, the government would limit out-of-pocket spending to around $6,000 per year. Combined with the premium, you’re on the hook for around $10,000 total, or about a fifth of your income.

EDIT FOR ALL THE NAYSAYERS. The median income for a family of 4 in the US is lower than the highest income on the chart,(350 X's the poverty level). Which means the average family will benefit from the reform.

http://www.census.gov/hhes/www/income/medincsizeandstate.html



http://www.kaiserhealthnews.org/Columns/2009/December/122109Cohn.aspx







?w=512&h=294&as=1

[nightrain]

1. and for those making more than 350%? Oh.... Nothing. There's the problem.

If we can't afford insurance now, how will we be able to afford it after "reform"?

[Maraya1969]

3. You want a graph for every single possible senario?

[nightrain]

5. why stop at 350%? keep on going.

[Nikki Stone1]

9. If you're going to support this bill, then, YES, you need to provide more scenarios

than you have.

Seriously, you really don't get the big picture, do you?

[golddigger]

2. Got one of those neat graphs for a family of two?

[mmonk]

4. Gee, who to believe, Jonathon Grubar or former Cigna Executive

Wendell Potter?

[regnaD kciN]

6. Actually, that chart is out-of-date...

...and the reality is actually better.

It looks to me like the chart was based on the initial draft of the Finance Committee bill, which based subsidies for those in the 300%-400% range on people paying 11% of their income on premiums. However, it was later dropped to 9.8% of income. So, for example, the family at the high end of that chart, instead of paying $9,879 ($823.25 per month) in premiums, would actually have to spend $8,295 ($691.25 per month), a considerable difference.

Also, keep in mind that this is a scenario is based on insurance rates in the small-scale market (and continuing their rate of growth from then until now). However, this hypothetical family would be eligible to purchase insurance through the exchange, which would create a larger pool, and thus potentially drop premium costs to something more in line with what large-group markets would pay.

Finally, note that this is for a family that wants to obtain coverage. Since the mandate is always on people's minds, I would point out that, if they decided they didn't want insurance, they could only be penalized for not doing so if there was insurance available to them at 8% or less of their income. In this case, that would be $4,000 per year ($333.33 per month). Since the odds of any comprehensive family coverage being available for such an amount would be miniscule, a family in that position would not be subject to "the dreaded mandate" at all -- nor, under the scenario (with my corrections) above, would any family of four earning less than $103,688. Without my correction (which I'm 99.9% certain is the current case), the income level would be even higher, at $123,488. Now, do you see why I describe this bill as containing about as close to a "pretend individual mandate" as you can get?

[Maraya1969]

7. Thank you. And it is nice to see someone looking at this with a more positive

light now. I was so upset about the public option and medicare falling through I never even thought to look up what is actually in the bill.

I also heard but I cannot find that an insurance company must pay 80% of their premiums toward medical care. At that rate I don't see how they are going to make the massive profits that they are making now. If they don't pay out 80% are they going to have to lower their premiums for the next year?

Either way I don't see 50 million dollar salaries coming from 20% of an insurance company's profits. I would love to know how much of a profit they are making now, with no reform.

[Yuugal]

8. Glad it will work for you

My kids pay zip for SCHIP. No premiums no copays no deductibles. Obamacare will end this in 2014 and we will be forced to pay out the ass for ins we won't be able to afford to use.

[Orangepeel]

12. how does it end it?

I can't find anything in the bill about ending SCHIP. In fact, it says this:

Maintenance of income eligibility. States would be required to maintain the same income eligibility levels through December 31, 2013 for all adults. This “maintenance of effort” (MOE) requirement would be extended through September 30, 2019 for all children currently covered in Medicaid or CHIP.

http://dpc.senate.gov/healthreformbill/healthbill05.pdf

What does that mean?

[Yuugal]

15. the house bill gets rid of it

"Jay Rockefeller is making a lot of noise about a provision in the House health care bill that would fold the SCHIP (State Children’s Health Insurance Program) into the insurance exchanges when they begin running in 2013. Rockefeller, who changed the Senate Finance Committee bill to rescue SCHIP from the same fate, released this statement yesterday:

The Congressional Budget Office has been very clear that replacing CHIP with private health coverage will lead some children to lose their health coverage altogether, which is harmful and intolerable. Health care reform should improve the coverage children have – not take their coverage away."

http://news.firedoglake.com/2009/11/05/does-the-house-health-care-bill-eliminate-schip/


If they roll the schip program into the scamcare bill my family won't be able to afford to take my kids to the doctor because of copays and deductibles. I'll be required to pay premium extortion to Aetna or some other criminal enterprise though and I'm sure that suits the Rahmscam team just fine. Its nice to hear the senate bill may be different but I'm sure all the good things like the PO will be dropped from the house bill and all the good stuff like schip will be canned from the senate bill in reconciliation. I cant read your link because I don't like adobe phoning home so I don't have it on my pc. I'll gladly take your word for it though. I'm just not confident anything good will come for my family from it. The last 30 years have been very instructive.

[Orangepeel]

16. I can't say I understand all of it, but if I'm right, I hope they go with that

There is a section of the bill that states must set up websites by 2013 where people can see if they are eligible for Medicaid and SCHIP and get info on the exchanges, but it doesn't say anything about merging or combining them. The statement I pasted is from a different section and it looks to me like states are required to keep it as is 2019 (with nothing about anything happening after that).

[TorchTheWitch]

13. simple - they raise rates

Not a damn thing in the bill saying they can't raise rates... therefore, they will. This is why a public option that is cheaper, run by the government and non-profit available to whoever wanted it was so necessary to provide competition to insurance companies. There is NO competition to insurance companies now and NOTHING in the bill saying they can't raise rates.

Why do you think health insurance stocks suddenly sky-rocketed and why Goldman Sachs suddenly decided they're going into the health insurance business?

[niceypoo]

10. Reform or no reform I pay 40% more starting next April

The bill does nothing to stop price gouging.

The reason I am given for the 40% increase? "It's the wave of the future (health savings plan)" they told my wife when she called their hotline.

The bill basically guarantees the US is stuck with private insurance for eternity.

[Maraya1969]

11. But that is before the reform. Right now health insurance premiums are going up faster

than salaries. People just cannot afford them. I think it is better to try this our and they can make amendments after it is passed.

Besides does your family fit into that chart? And then a few posts up someone explained that the situation is actually better than the chart says.

[nightrain]

14. for certain incomes getting subsidies, it might be better for them, how about

for those incomes you don't even mention? We get totally slammed. These bills are totally unaffordable for middle income people. Nice for those who get the subsidies. The middle income people are disappearing.

Older folks might have to pay 2-3 times the rates of a younger person! Is that affordable? No.