Missing The Point On Health Reform

(The New Republic)  Jonathan Cohn is a senior editor of The New Republic. This column is a collaboration between TNR and Kaiser Health News. KHN is an editorially independent news service and is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization, which is not affiliated with Kaiser Permanente.

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Health care reform looks like it's finally ready to pass the Senate, now that the Democrats have 60 votes in hand. But here on the left, not all of us are jumping for joy. Some think the Senate bill is just barely better than nothing. Others think it's worse than even that.

As this argument goes, health care reform won't do all that much to help people who need it. Insurance will still be expensive and even people who have coverage will discover they owe significant out-of-pocket expenses once they get sick. A public insurance option might have made this tolerable, since it would have provided better, cheaper coverage. Without it, many of us are arguing, reform is just a big giveaway to the insurance industry--one that produces little social progress.

It's certainly true that, under the terms of the Senate bill, insurance would cost more and cover less than many of us would prefer. But would it really produce little social progress? Is it really worse than nothing?
One way to answer this question is by comparing how a typical family would fare with reform and without. At my request, MIT economist Jonathan Gruber produced a set of figures, based on official Congressional Budget Office estimates. (Click here for a closer look at the impact reform would have, in dollar terms, on families of different incomes.) The results tell a pretty compelling story, particularly when put in human terms.

Let's imagine it's 2016 and you are an administrative assistant, a garage mechanic or perhaps trying your hand at consulting for the first time. You're married, just turned 40 and have two kids to feed on a household income of around $50,000. You want to buy health insurance, but can't get it through an employer. How much will it cost? And how much--or how little--protection will it provide?

If reform doesn't pass, according to Gruber's figures, the average premium for the non-group market--that is, the market for people buying coverage on their own--will be around $12,000 a year. Right off the bat, you're spending a fifth of your income on health insurance.

But what does it cover? Policies in the non-group market are notoriously spotty and unreliable. And benefit requirements vary enormously depending on the state. Many allow considerable, sometimes unlimited, out-of-pocket expenses. For the sake of comparison, though, let's assume you have a policy with a deductible no higher than that allowed for a Health Savings Account. According to Gruber's projections, that would mean you're on the hook for--wait for it--another $12,000, plus a few hundred in change.

Put it altogether and that's a total liability of around nearly $25,000--about half of your income.

That may actually be a best-case scenario in one sense. If you're going to hit that high deductible, chances are pretty good that someone in your family has a chronic medical condition. And if you or your family member has had that condition all along, insurers might not even sell you a policy. Maybe you have diabetes. Or you're married to a cancer survivor. Maybe one of your kids has asthma. Whatever the case, chances are you can't get health insurance at all. Your total risk of loss would be, well, every single penny you have.

So what happens if reform does pass? For starters--and this is no small thing--the insurance company will have to sell you a policy, no matter what pre-existing conditions your family brings to the table. And you'll know from the start that the policy will cover basic services because the government will be defining a basic benefits package. That package is going to include a broader range of services than the typical non-group policy would without reform. So when your doctor recommends a standard test or procedure, you won't have to panic it falls into some hidden policy loophole.

But what will that coverage cost? The basic premium is roughly the same, according to Gruber's calculations that he extrapolated from official Congressional Budget Office estimates. But that $50,000 income means you're also eligible for federal subsidies. Large federal subsidies. In fact, the government will cover about two-thirds of the price, so that you're left owing just $3,600.

Now, you could end up spending a lot more on medical care if you or someone in your family gets sick. But here, too, the federal government would step in to help. Under the reforms, the government would limit out-of-pocket spending to around $6,000 per year. Combined with the premium, you're on the hook for around $10,000 total, or about a fifth of your income.
That's not pocket change, for sure. A family making $50,000 will have to make serious sacrifices to find $10,000. But it's better--light years better--than finding $25,000 or more. It's potentially the difference between having to give up your home, get an extra job or declare bankruptcy. Just knowing the bills that could come will be the difference between getting care you need--and skipping it, at grave risk to your health.

It's a difference you'd feel at other income levels, too. If your family of four makes more money--say, around $75,000--your premiums and out-of-pocket expenses will be higher, but still a few thousand less than it'd be without reform. If you make less money-- $35,000--the savings would be much larger. (If you make less than that, you'll probably be on Medicaid, which offers even more protection.)

Could the deal be better still? Of course it could. The House bill, for example, offers substantially better protection from out-of-pocket expenses.

That's an argument for improving the Senate bill in conference committee, when its members meet with their House of Representatives counterparts, and for improving the law if and when it goes into effect. Those of us on the left can, and should, fight for both. But we should also recognize the Senate bill for what it is: A measure that will make people's lives significantly better. Surely that's worth a little enthusiasm.


By Jonathan Cohn:
Reprinted with permission from The New Republic.

[noloyalisti]

The American people can simply no longer afford to pay for the rich to have health care. We can no longer afford to let rich, inefficient big corporations run death panels for profit. Take ALL profit out of health care, it is a human right that should not be subject to the corporate sharks.

[noloyalisti]

Yeah, the social programs for the rich corporations also cost a lot more that we thought. In fact, the corporate welfare programs are bankrupting us. It is the double whammy, they get all our tax money to send overseas and then they start invasions and occupations for their profit that we pay for.

No wonder we have no money for education, health care and food for the 1/6 of our children living in poverty.

[luadda22]

I thought that Obama promised that there would not be any tax increases for individuals making under $250K a year. Remember it is a mandate that you must purchase health coverage under penalty of the IRS. If you use Jonathan Cohn's example he states "combined with the premium, you're on the hook for around $10,000 total". How many families making $50K can afford to take a $10K hit (and remember this is a mandate, you have no choice)? He also states "But that $50,000 income means you're also eligible for federal subsidies. Large federal subsidies. In fact, the government will cover about two-thirds of the price, so that you're left owing just $3,600", (remember the $6K out-of-pocket expense is added to this). Sounds good, but government only has money that is confiscated from someone else. Only 2% of tax payers make over $249K a year, now how can you raise taxes high enough on just 2% of the people to cover these "large federal subsidies"? Add the fact that almost 50% of the population pays no federal income taxes at all and who does that leave to cover the short fall. Your right the remaining 48% of so called "middle class working people". It's just plain wrong, wrong, wrong on so many levels and be careful what you wish for. Some may say "well it's a start", if you believe that this government can fix what they can't get right in the first place (just because they are in a hurry to protect Obama), then I have a bridge I'd like to sell you. Remember if they really cared about you, the benefits from this plan would go into effect in 2011 instead of 2014 (even though the taxes and fees start in 2011). Harry Reid stated that "on average every 10 minutes, without end ? an American died as a direct result of not having health insurance", if he really cared, why the three year wait? It's just a power trip for these people.

[govmess]

We've heard Reid and Pelosi and Obama say it over and over again...we need to pass a health reform bill.......they could care less what is in it....this is the biggest sham hoisted on the American people...these unashamed hypocrits are without any doubt going to get their pink slips come election time

[jschmidt27]

Every social program we have had has cost way more than the original estimate. This will be no different.
http://reason.com/blog/2009/12/22/obamas-latest-health-care-lie Obama's Latest Health Care Lie

Matt Welch | December 22, 2009

That would be in remarks the president made yesterday:

Let me be clearThe Congressional Budget Office now reports that this bill will reduce our deficit by $132 billion over the first decade, and by as much as $1.3 trillion in the decade after that. So I just want to be clear, for all those who are continually carping about how this is somehow a big spending government bill, this cuts our deficit by $132 billion the first 10 years, and by over a trillion in the second. That argument that opponents are making against this bill does not hold water.

There are actually multiple lies and deceptions in this paragraph, beginning with the verb "reports" to describe what the Congressional Budget Office does. The CBO, as Peter Suderman documented in his foundational Reason feature on the organization, does not "report," it "projects," in highly speculative fashion, what a proposed piece of legislation may cost. What's more, as Suderman detailed in a more recent piece that every American should read before listening to a word the president says, the CBO is bound in its "scoring" to take at face value what every living politician?Obama included?knows to be a stinking lie. That is, Congress' promises to make hundreds of billions of dollars worth of unspecified future spending "cuts."Cue ABCnews.com's Jake Tapper:

Not Doug ElmendorfBut the deficit reduction number cited by the president has been disavowed by CBO.

When CBO first guesstimated by how much the Senate health reform legislation would reduce the deficit, they said it would be about half a percent of GDP -- $1.3 billion, said Democrats.

But on Sunday, CBO Director Doug Elmendorf issued a correction, downgrading the estimate from half a percent of GDP to between a quarter and a half a percent. The reason is that CBO misinterpreted when recommendations from the Medicare Advisory Committee would kick in.

[lbsghd]

You are right if you believe the CBO report as being the true estimate. The problem is it is not an accurate estimate and here is why. The CBO analysis assumes the 21% physician pay cuts for Medicare patients set to go into effect on January 1st, 2010 and the subsequent cuts that were originally put in place under the Clinton administration. Problem is this will not happen. If it does, physicians will stop seeing Medicare patients (The Mayo Clinic has already said it will stop seeing new Medicare patients) thereby decreasing access to care for many Americans, not increasing it as congress claims. If the physician cuts are aborted or fixed, the actual cost of healthcare reform as it stands will be far greater than the current estimates. The really kicker is that congress knows this and has decided to deceitfully address this issue by proposing to fix physician pay cut problem by putting a provision in the DEFENSE SPENDING BILL (not the healthcare reform bill) which separates this cost issue away from healthcare so as to distort the true cost of healthcare reform to the American people. So in reality, all of your points are mute. The true cost of healthcare reform has not been calculated and absolutely will be more expensive and the American people are watching congress blatantly falsely advertise the cost to the American people. Time to hold them responsible.

[burneb]

It ain't perfect and never could be, will all the competing interests fighting over it, BUT the important thing is to get at least SOME reform measures in place, including many pilot projects to experiment with promising suggestions.

Health coverage and care will still be expensive in the future, more than today, but hopefully less than it would become otherwise. TANSTAAFL - there ain't no such thing as a free lunch, but we don't have to pay steak prices for everyone when some get hamburger and others just the ketchup.

Many of the benefits may come in hidden areas that get overlooked in the debate, as well as ignored in the outright lies and slander we've all been subjected to.

We will probably see less bankruptcies and home foreclosures caused by unpayable medical bills and denied coverage. Maybe less bogus "marriages" and "divorces" to get around coverage limitations.

Our County Sheriff will no longer have to defer locking up dangerous criminals who have expensive medical problems when their budget can't cover the prisoner's care.

Less people will take unsuitable low paying jobs they aren't very good at, just to get insurance coverage.

Many less people will waste their education and skills in the insurance industry cooking up slippery reasons to deny other people coverage, and hopefully go on to productive work.

[noloyalisti]

If ALL the mentally disabled Republicons are against it, then it must be good. Those CON are bent on the complete destruction of American workers and middle class. The prime directive is to **** them off so they continue to go down the toilet of history. They are a threat to freedom and to the security and health of our planet.

[sjc_1]

The U.S. spends 2.5 trillion dollars per year on health care, about TWICE what other countries pay per person. This is insurance companies, drug companies, hospital corporations, doctors, nurses, suppliers and everyone else overcharging. This will make insurance companies more accountable, but we need to get everyone doing their part to make it more affordable.

[jntlw]

If the government pays the difference for this family then you and I through some tax will end up paying for these people anyway. The difference I see is instead of paying the government with no middleman involved (thus saving the taxpayer money), we are paying the government but at the price of the price-gauging insurance companies want and thus the tax payer is actually feeding the greedy insurance companies at their rate. That is an abomination and the exact opposite of reform!

[aj4321-2009]

If the government pays the difference for this family then you and I through some tax will end up paying for these people anyway.
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You have little understanding of the progressive U.S. tax code. If you do qualify for subsidies, you are not paying much in taxes!!!

Your comment shows exactly how Repubs "con" people into voting for them.