Friday, September 11, 2009

Curb Your Enthusiasm! Health Care Will Still Be Very Hard to Do

I guess all of us in the health care debate are a bit bipolar. From lots of folks thinking health care reform was in critical condition a couple weeks ago we’ve now gone to lots of reports extolling a newfound optimism in the wake of the President’s impressive speech this week.

Don’t interpret this post as my thinking health care reform is something we should be putting off—it’s already 20 years overdue.

But, I will suggest, we can’t begin to presume anything will be easier after a speech.

I thought Ceci Connolly’s article in today’s Washington Post set the proper tone:
"One day after President Obama pitched his plan for comprehensive health-care reform to a joint session of Congress, administration officials struggled Thursday to detail how he would achieve his goal of extending coverage to tens of millions of uninsured Americans without increasing the deficit.

"The 10-year, $900 billion proposal Obama envisions borrows heavily from concepts circulating on Capitol Hill, but there was little evidence that the broad ideas are sufficient to break a congressional logjam."
The issues ahead are still daunting. In health care, lofty rhetoric and big concepts have always been a lot easier than the thousand pages of detail that follow.

Let me give you an example.

The President said in his speech that his goal was a bill costing about $900 billion. Obviously, he is trying to keep the cost down under a trillion dollars. But to do so, lots of trade-offs have to be made—the old health care push it in here and it pops out there problem.

The recent Baucus Senate Finance draft also aims at a cost of between $800 billion and $900 billion. But to hit that number the authors have had to slim down the subsidies the uninsured would get and the value of the policy.

The Baucus draft would extend insurance subsidies (on a sliding scale) up to 300% of poverty—that is $66,150 for a family of four. The draft also says a family at 300% of poverty would be required to pay up to 13% of their income toward the cost of a policy—that would be $8,600 a year.

If they either lost their current employer coverage or didn’t have any in the first place, this family would be mandated to buy health insurance. If they did not, the fine would be $3,800 if their income was over 300% of poverty and $1,500 if it were below.

So, a middleclass family heard the President say that his plan would provide them with health care security. Under the Baucus plan, that means they would be expected to spend $8,600 for a health insurance plan that would likely have a $2,000 deducible. If they didn't buy it, they would have to pay a fine of $3,800.

Do you know many families making $66,000 a year that have an extra $8,600 in their checking account--much less for a health policy with big deductibles and out-of-pocket costs?

Explain this one to Harry and Louise.

The House bill isn’t much better in this regard.

Under the House Energy bill, a family making 250% of poverty ($55,125) would be required to pay 8% of their income up to $4,416 a year for a policy that could have a deductible of $1,000 and a $7,450 out-of-pocket cap.

At 300% of poverty ($66,150), the House Energy bill would limit a family’s insurance costs to $6,612 a year with a deductible of up to $2,400 and an annual cap of $8,520 in our-of-pocket costs.

A family making 400% of poverty ($88,200) would be expected to pay as much $10,584 a year for their insurance that could have a $3,000 deductible and a $10,000 annual out-of-pocket cap.

These are the kinds of details that inevitably follow the elegant rhetoric in health care.

Would access to insurance be a big improvement over what we have today. You bet.

Is this health care "security?" Ask Harry and Louise.

The Kaiser Health News website has a comprehensive article reviewing expected premiums and out-of-pocket costs for the House bills here.
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