Sunday, September 28, 2008

Good Health Insurance? That's for Rich People


John McCain opines,
[McCain a]ppeared to concede that his health care plan would result in higher taxes for some. McCain favors a $5,000 annual tax credit to help individuals and families afford health insurance, but that could leader employers to drop their current plans, including some that could not be replaced for $5,000.

"It depends on, on, on what plan they have," McCain said. "But that's usually the wealthiest people. Ordinary working Americans have the kind of, or an overwhelming majority have the health insurance plans that this tax credit, refundable tax credit, will actually put more money in their pockets for the purchase of health care than what they had before."
So as McCain sees it, most people have crappy insurance and thus would profit from McCain's proposal?

No offense, John, and conceding that you're a rich person who doesn't have to care, but how much would cost you to obtain insurance - even crappy insurance - on the private market? How much would the coverage you receive as a Senator cost if you had to purchase equivalent coverage as an individual? The official McCain campaign position:
While still having the option of employer-based coverage, every family will receive a direct refundable tax credit - effectively cash - of $2,500 for individuals and $5,000 for families to offset the cost of insurance.
A dose of reality:
In 2007, employer health insurance premiums increased by 6.1 percent - two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,100. The annual premium for single coverage averaged over $4,400.
Even if we assume that the cost of insurance won't rise for individuals purchasing coverage as individuals, as opposed to at group rates through an employer-sponsored plan, and even if we assume that the average cost of health care is misleading with a median cost of insurance considerably below the average, this doesn't sound like a good deal for working people or their families. If the goal is to lock working people into policies with minimal coverage, though, it sounds like a heckuva plan.

8 comments:

  1. I'm not sure of your age, Aaron, so I'm kinda going out on a limb here, but...
    ...I am 36 and my husband is 40. Our parents' generation was the last to have pensions (yeah, yeah, I have a teacher pension that should have about 19 cents in it when I retire in 20+ years) and I honestly think that my generation is the last to get employer-paid health benefits--and it may not even last for us!

    The scary thing is that "kids these days" routinely say that people should be responsible for their own retirements--not the places they work for. I wonder if, in a generation or so's time, kids will be saying that people should be responsible for their own health care....

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  2. The Great Sleep9/28/08, 8:59 PM

    This comment is going to wreck my reputation for knowing what Im talking about, but can someone please tell me what a premium is? I would tend to assume it's the amount deducted from one's paycheck over the course of the year, but it sounds unreasonably high. Does the average single full time American worker really pay $4000 out of their incomes just for health insurance for themselves? And I assume that if so, there are people who pay even more than that? Wouldn't it make more sense for most people to just drop their insurance and pay for everything as it comes?

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  3. Many workers get no health insurance.

    The premium is not just what the worker pays. Typically the worker pays a portion of the cost, and the employee pays the balance. For example, under the Federal Employees Health Benefits Program, "The Government pays 72 percent of the average premium toward the total cost of the your premium, but not more than 75 percent of the total premium for any plan" You can review the premiums, and how they are divided between employees and the government, here.

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  5. The Great Sleep9/29/08, 6:03 AM

    Ah, thank you.

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  6. Getting back to the earlier comment, the "ownership economy" may be a harder sell after the current drop in home values and bailout of the financial industry. It's easier to sell people on the notion that their own investments can carry the day for retirement, when home prices consistently go up and the stock market seems to provide reasonably stable returns in excess of the return on treasury notes. But this is a reminder - what if the financial equivalent of Hurricane Katrina hits the real estate and stock markets?

    A few years ago I was paying a ridiculous amount for COBRA coverage, and priced out private policies (supposedly at a group rate). I was quoted prices I thought were pretty high for policies that had really poor coverage and benefits. I was also quoted for policies that cost about the same as the coverage I was paying for through COBRA (a pretty high end BC/BS policy), but they fell far short in terms of coverage and had much larger copays.

    I've previously tried to purchase insurance as a self-employed person, and ran into the same type of thing. The policies were so expensive and so bad, it made sense to self-insure - that is, not buy insurance and hope for the best.

    The people who are eager to to throw American workers into that type of "system" - buy your own insurance, preferably substandard, and self-ration your care based upon your ability to pay - are almost all covered by fantastic subsidized health insurance policies. They show no sign that they are willing to give up that coverage. That, right there, should tell you all you need to know.

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  7. Yep! Congress gets sweet pensions, sweet health care...to hell with the rest of us.

    Sorry. A little bitter (and scared) today.

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