Health Care Reform: Premiums Are Still Too High

(MoneyWatch)  Don't thank Senator Max Baucus for tweaking his proposed health care plan and lowering premiums for moderate income households. According to my math, the price tag is still far more than most of those family budgets can handle.

In the latest proposal, a household earning between $66,150 and $88,200 would be on the hook to spend up to 12% of their income on premiums before government subsidies kick in. That means these families would need to earmark between $661 to $882 a month toward health insurance. And if these payments are treated the same way they are today, a family would have to use post-tax dollars to pay the bill. (While workers with employer-sponsored plans can use pre-tax money for premiums, those buying a policy on the individual market need to use post-tax money.)

Want to know how much federal employees, including politicians, pay for their insurance? According to The New York Times, members of Congress spend $216 a month for family coverage under the basic HMO plan and $357 a month for one that covers some out-of-network charges. The government picks up the rest of the tab. (Not only do members of the House and Senate spend less on their health insurance than moderate income families would under the Baucus bill, the rank-and-file also earn considerably more and bring home $174,000 a year.)

Families covered by employer-sponsored health plans pay on average $293 a month in premiums, according to a 2009 study from The Kaiser Family Foundation. The remaining $9,860 is picked up by the company.

When judging affordability, premiums are only part of the equation. Under the Baucus plan, families would also be on the hook to shell out even more money as they pay for co-pays, deductibles, prescriptions and other out-of-pocket expenses for benefits insurance plans are under no obligation to cover.

Families would also have to sort through health insurance options and choose a private plan they hope is right for their needs. My fear is that these folks would not be familiar enough with industry jargon to make a smart purchase that would offer them sufficient benefits and protect them financially in case they developed cancer or some other very expensive illness. (Yes, there is a proposed cap on out-of-pocket expenses. But will it only count toward covered expenses?)

Frankly, I don't think many employers, especially small businesses, are informed enough to purchase high quality insurance for their workers. Too many plans are riddled with coverage loopholes that leave all of us vulnerable for thousands of dollars in out-of-pocket expenses.

So is the latest Baucus bill affordable? Not as far as I can see. What do you think?

Senator Max Baucus image Center for American Progress Action Fund, CC 2.0.