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Health Reform Sparks Doubts About Cost of Coverage
By Andy Miller
WebMD Guest Blogger
Affordability.
It’s the latest buzzword in the health care reform debate.
We're going to look at one angle -- the one for a family of four, making an annual income of $60,000 but lacking health insurance.
The new reform law would require the family to purchase coverage. If no employer coverage was available, the family would go to a new health insurance exchange and get federal subsidies to offset the cost of policy. Still, the price tag for the family, with a household head of age 50, would exceed $6,000 a year under the Finance Committee plan (using the Kaiser Family Foundation subsidy calculator at www.kff.org). And that cost doesn’t include the inevitable co-pays and deductibles.
The penalty for not getting insurance? It may be zero under the Baucus bill coming out of the Senate Finance Committee.
Will that family buy coverage or pay the (non) penalty and remain uninsured? Is the coverage truly affordable? “How many [families] have $6,000 of room in their budget?’’ says Bob Laszewski, who writes the blog Health Care Policy and Marketplace Review.
One major element in the debate involves the level of subsidies to help the uninsured buy coverage. The reform proposals give subsidies to people making up to four times the poverty level, or about $88,000 for a family of four.
The subsidies in the Baucus plan, at $461 billion over 10 years, is a large chunk of its price.
The subsidy carrot is accompanied by a stick – penalties for not getting coverage. And the recent weakening of penalties that has riled the insurance industry.
All along, insurers had been banking on a major tradeoff in supporting the drive for reform. The industry agreed to jettison their discriminatory practices against people with pre-existing conditions in exchange for a federal requirement that everyone obtain coverage. A mandate for people to buy insurance would bring millions of new customers to their health plans.
But the Finance Committee has reduced and delayed the penalties it originally proposed for people who don’t purchase coverage. Under an amendment, families would face no penalty the first year up to a maximum of $1,500 in 2017. And individuals and families would not face a penalty if coverage cost more than 8% of their income. In the previous version, the exemption started at 10%.
Those Finance Committee penalties and exemptions are not a big enough stick, according to America’s Health Insurance Plans, a major trade group. People will ignore the penalty or wait till they get a serious illness before they obtain coverage, the group said.
“Fewer people participating will lead to higher premiums for everyone else,’’ said Robert Zirkelbach, an AHIP spokesman. “Unless everybody participates in the system the market reforms aren’t sustainable.’’
Meanwhile, many experts insist the subsidies in the Baucus bill are not high enough, especially for the uninsured middle class.
And Laszewski says that under the plan, people “can wait till someone in their family has brain cancer to buy insurance.”
The subsidies for people under 250% of the poverty level are adequate, he says. But those at the upper end of the income range have trouble with affording a policy that could cost a family $6,000 to $10,000 a year, says Laszewski, who recommends raising both the subsidies and the penalties. “Where [the legislation] is now is political expediency that destroys the insurance market,’’ he says.
Finance Committee members are attuned to the affordability issue. Baucus last month said, “We want to make sure that if Americans have to buy insurance, it’s affordable.’’
Yet Ed Haislmaier, an insurance expert at the Heritage Foundation, says the insurance products under reform would attract a larger percentage of the sick but leave the young and healthy outside the system. “If someone is in reasonably good health, they’ll be more likely to pay the fine,” he says.
Congress is insisting on comprehensive coverage in the health insurance exchange, Haislmaier adds. “You’re selling something to people 25 and healthy that they don’t need and can’t afford. Young people are healthier and don’t earn as much.”
In 2006 Massachusetts reformed health care law to require individuals to buy insurance, but Boston-based consumer advocacy group Community Catalyst said the state’s subsidies for the uninsured were more generous.
“The reason people don’t have health insurance is that they can’t afford it.’’ says Michael Miller, the group’s director of strategic policy. “They have a mortgage to pay, kids with school expenses, a car payment.
“You have to make it affordable for individuals and families, not just the federal government,” Miller says.
The $900 billion cost barrier will have to be broken to make it more affordable for the middle class, says John Holahan, director of the Urban Institute’s Health Policy Center. “If we want health reform, you’ve got to put a little more money into it.”
Still, the current reform legislation would represent a vast improvement over the current individual insurance market, which is riddled with cost and coverage problems, says Families USA, another consumer group.
The price of insurance for those at the 400% poverty level “is a lot of money,” acknowledges Kathleen Stoll, director of health policy for the group. “But it’s a lot better than paying full freight. Is it absolutely a free ride? No way.”
Yet Stoll also notes that reform legislation would protect people against high out-of-pocket costs and annual and lifetime medical spending limits. “I would like to see subsidies higher, as an advocate for consumers. Do I think they’re a wonderful start? Yes.”
The affordability issue is difficult to project, both in the ultimate fate of legislation – if it’s passed – and in the marketplace. Dean Smith, a health care expert at the University of Michigan, says of the penalty vs. coverage dilemma: “It’s really hard to gauge the public sentiment on this.”
But if people remain uninsured, Smith notes, they will often get care in emergency rooms. “And someone is going to pay for it – that’s the taxpayers.”
SOURCES:
Associated Press.
Kaiser Health News.
New York Times.
Wall Street Journal.
John Holahan, director, Urban Institute Health Policy Center.
Bob Laszewski, Health Care Policy and Marketplace Review.
Dean Smith, professor, senior associate dean for administration, School of Public Health, University of Michigan.
Kathleen Stoll, health policy director, Families USA.
Michael Miller, director of strategic policy, Community Catalyst.
Kaiser Family Foundation Reform Subsidy Calculator.
America’s Health Insurance Plans.
WebMD Guest Blogger
Affordability.
It’s the latest buzzword in the health care reform debate.
We're going to look at one angle -- the one for a family of four, making an annual income of $60,000 but lacking health insurance.
The new reform law would require the family to purchase coverage. If no employer coverage was available, the family would go to a new health insurance exchange and get federal subsidies to offset the cost of policy. Still, the price tag for the family, with a household head of age 50, would exceed $6,000 a year under the Finance Committee plan (using the Kaiser Family Foundation subsidy calculator at www.kff.org). And that cost doesn’t include the inevitable co-pays and deductibles.
The penalty for not getting insurance? It may be zero under the Baucus bill coming out of the Senate Finance Committee.
Will that family buy coverage or pay the (non) penalty and remain uninsured? Is the coverage truly affordable? “How many [families] have $6,000 of room in their budget?’’ says Bob Laszewski, who writes the blog Health Care Policy and Marketplace Review.
One major element in the debate involves the level of subsidies to help the uninsured buy coverage. The reform proposals give subsidies to people making up to four times the poverty level, or about $88,000 for a family of four.
The subsidies in the Baucus plan, at $461 billion over 10 years, is a large chunk of its price.
The subsidy carrot is accompanied by a stick – penalties for not getting coverage. And the recent weakening of penalties that has riled the insurance industry.
All along, insurers had been banking on a major tradeoff in supporting the drive for reform. The industry agreed to jettison their discriminatory practices against people with pre-existing conditions in exchange for a federal requirement that everyone obtain coverage. A mandate for people to buy insurance would bring millions of new customers to their health plans.
But the Finance Committee has reduced and delayed the penalties it originally proposed for people who don’t purchase coverage. Under an amendment, families would face no penalty the first year up to a maximum of $1,500 in 2017. And individuals and families would not face a penalty if coverage cost more than 8% of their income. In the previous version, the exemption started at 10%.
Those Finance Committee penalties and exemptions are not a big enough stick, according to America’s Health Insurance Plans, a major trade group. People will ignore the penalty or wait till they get a serious illness before they obtain coverage, the group said.
“Fewer people participating will lead to higher premiums for everyone else,’’ said Robert Zirkelbach, an AHIP spokesman. “Unless everybody participates in the system the market reforms aren’t sustainable.’’
Meanwhile, many experts insist the subsidies in the Baucus bill are not high enough, especially for the uninsured middle class.
And Laszewski says that under the plan, people “can wait till someone in their family has brain cancer to buy insurance.”
The subsidies for people under 250% of the poverty level are adequate, he says. But those at the upper end of the income range have trouble with affording a policy that could cost a family $6,000 to $10,000 a year, says Laszewski, who recommends raising both the subsidies and the penalties. “Where [the legislation] is now is political expediency that destroys the insurance market,’’ he says.
Finance Committee members are attuned to the affordability issue. Baucus last month said, “We want to make sure that if Americans have to buy insurance, it’s affordable.’’
Yet Ed Haislmaier, an insurance expert at the Heritage Foundation, says the insurance products under reform would attract a larger percentage of the sick but leave the young and healthy outside the system. “If someone is in reasonably good health, they’ll be more likely to pay the fine,” he says.
Congress is insisting on comprehensive coverage in the health insurance exchange, Haislmaier adds. “You’re selling something to people 25 and healthy that they don’t need and can’t afford. Young people are healthier and don’t earn as much.”
In 2006 Massachusetts reformed health care law to require individuals to buy insurance, but Boston-based consumer advocacy group Community Catalyst said the state’s subsidies for the uninsured were more generous.
“The reason people don’t have health insurance is that they can’t afford it.’’ says Michael Miller, the group’s director of strategic policy. “They have a mortgage to pay, kids with school expenses, a car payment.
“You have to make it affordable for individuals and families, not just the federal government,” Miller says.
The $900 billion cost barrier will have to be broken to make it more affordable for the middle class, says John Holahan, director of the Urban Institute’s Health Policy Center. “If we want health reform, you’ve got to put a little more money into it.”
Still, the current reform legislation would represent a vast improvement over the current individual insurance market, which is riddled with cost and coverage problems, says Families USA, another consumer group.
The price of insurance for those at the 400% poverty level “is a lot of money,” acknowledges Kathleen Stoll, director of health policy for the group. “But it’s a lot better than paying full freight. Is it absolutely a free ride? No way.”
Yet Stoll also notes that reform legislation would protect people against high out-of-pocket costs and annual and lifetime medical spending limits. “I would like to see subsidies higher, as an advocate for consumers. Do I think they’re a wonderful start? Yes.”
The affordability issue is difficult to project, both in the ultimate fate of legislation – if it’s passed – and in the marketplace. Dean Smith, a health care expert at the University of Michigan, says of the penalty vs. coverage dilemma: “It’s really hard to gauge the public sentiment on this.”
But if people remain uninsured, Smith notes, they will often get care in emergency rooms. “And someone is going to pay for it – that’s the taxpayers.”
SOURCES:
Associated Press.
Kaiser Health News.
New York Times.
Wall Street Journal.
John Holahan, director, Urban Institute Health Policy Center.
Bob Laszewski, Health Care Policy and Marketplace Review.
Dean Smith, professor, senior associate dean for administration, School of Public Health, University of Michigan.
Kathleen Stoll, health policy director, Families USA.
Michael Miller, director of strategic policy, Community Catalyst.
Kaiser Family Foundation Reform Subsidy Calculator.
America’s Health Insurance Plans.
3 Comments:
The insurance companies are greedy but I hope this reform will help people that can not affod health care.
The above intellection is stylish and doesn't expect any advance element. It's perfect cerebration from my choose.
Rubic
wow gold
Health care is way too expensive.
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