This post originally appeared at Open Left
I’m looking over the House’s “Affordable Health Choices Act.” Like so many families, my wife and I need a good health insurance plan when COBRA runs out in a few months, so let’s see what this plan offers us. (Of course like most people here I would prefer just one Medicare-like plan for everyone, but this would be unfair to insurance company profits so it is off the table.)
You can read the House health care bill here. Think Progress’ Wonk Room post on this is here.
The proposed legislation includes a “mandate” requiring everyone in the country to purchase health insurance or pay 2.5% of their income as a penalty. Employers are required to pay for health insurance for all full-time workers or pay an 8% payroll tax instead. (That means that they pay the government 8% on top of all the wages they pay out.) I haven’t figured out yet what happens with part-time workers.
The supporting materials say that “public plans” have to be on a “level playing field’ with private insurance, including holding rates higher to cover “startup costs and contingency funds”.
People making up to 133% of poverty level will be covered by Medicaid. Then the plan has a subsidy to help people pay for the mandated insurance, but only for individuals who make $43,320 or less and a family of 4 making $88,200 or less. People just above that 133% will have their payments limited to 1.5% of income by the subsidy. That slides up to the “high” end where people will have payments capped at 11% of income, which is $4765.20 per year, $9702 for a family of four. Above that income level, people apparently just have to buy health insurance without subsidies – currently as much as $4-500 a month per person if they want just a basic plan.
Good: Everyone will be covered so those with insurance won’t be paying for those without. And everyone GETS covered – no pre-existings, etc. Costs will be lower because people will have access to care instead of being forced to wait until desperate then heading to an emergency room. It will reduce the future health care burden on the economy.
Best: No one will ever be forced into bankruptcy again. (What about nursing homes and home care ?) No one will be forced to stay at a job just to be covered anymore. Age discrimination based on health coverage costs will end.(Assuming older people don’t have to pay higher rates.)
Bad: Mandates without meaningful subsidies. People and businesses are required to cough up huge amounts of money. The people and businesses most affected by this are those who don’t have insurance now – often because they can’t afford to.
Worst: Republicans will be able to savage Democrats for this bill because they didn’t choose to subsidize the mandated costs in a meaningful way.
Summary: This is an excellent plan within the context of preserving insurance company profits, trying to appease Republicans who won’t vote for it anyway and not spending more over ten years than we spent on big financial corporation bailouts in about ten minutes. It makes some extremely important changes that we all need. But overall I think the restrictions they are operating under might make the plan unworkable because needed public support could erode before the plan takes effect.
This plan has a mandate requiring everyone to buy insurance. A mandate is the only way that health care reform can work because of the cost savings that come from universal coverage, but a mandate without meaningful subsidies is political dynamite that Republicans will use to try to destroy the plan – and Democrats – for decades. If you don’t think they will call the mandate a “big government ordering you to pay a huge tax” and do everything they can to destroy Democrats who vote for this, then you don’t know Republicans.
My wife and I currently pay about $850 a month for the minimal plan in this area under our COBRA, and under this House bill that becomes a mandate. So the House bill will require us to cough up about $10K per year if we make a dime more than whatever the married maximum is going to be, and quite a bit even if we don’t because the subsidy is minimal. The fact is we wouldn’t have health insurance today if COBRA were not subsidized, and certainly can’t afford anything approaching $10K, public option or not.
Businesses will have to cough up 8% of payroll. Ian wrote about this earlier.
The plan doesn’t appear to take effect until 2013, giving Republicans a lot of time to campaign on “stopping this massive tax” and spread lots of lies about it after it passes. So we could lose both Democratic control of Congress AND health care reform. I wonder how much of this plan is the result of political calculations by many Democrats who worry about directly taking on the Republicans and the insurance companies — even though I expect both will work to kill this bill no matter what is in it. On the other hand maybe this plan is just a step in a strategy involving introducing increased subsidies later.
I think the political cost of mandates, combined with keeping private insurance, demonstrates why Medicare-For-All (insiders call this “single-payer,” apparently to confuse ordinary people) really is the only workable plan. But, as I said, meaningful subsidies could make this plan politically workable. As I said above it could be that this is a strategy to introduce a plan that “pays for itself” and gets that out of the way, but increasing subsidies later as the public reacts to the amounts they will have to pay.
At least there is a “public option.” Without it this mandate would be the final straw in the complete corporatization of the government – just passing a law requiring everyone to give the rest of their money to big companies. If the public option gets removed I’m not sure how requiring everyone to buy health insurance from private insurers is supposed to be different from requiring everyone to buy a cell phone (but only from ATT with a data plan) or cable TV, except health insurance costs a lot more. If the public option is removed a mandate must not pass.
I ran a business for a number of years and provided health coverage until I couldn’t afford to. I understand the effect that a new 8% payroll tax will have. (Of course businesses that don’t provide health insurance aren’t going to do so under this plan either, and will have to pay this tax instead.) But this may be worth it to help everyone get health insurance. I might think so, but most business owners are going to howl and scream about this. Remember, health care costs are a big reason companies like GM moved plants to Canada.
Final word: Increase the subsidies so no one making less than $100K has to pay very much and this will breeze through and be loved. Republicans and insurance companies are going to try to kill this no matter what you do so get the public behind you with meaningful subsidies.