The Senate Bill Saves Families Money

[one...two...tree 2,762]

Jonathan Cohn, Senior Editor of The New Republic

This column is a collaboration between KHN and The New Republic.

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. 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.

http://www.kaiserhealthnews.org/Columns/20...122109Cohn.aspx

[Ban Hammer 14,665]

why yes, let's believe everything the new republic tell us!

[Pinocchio Liberal 268]

Is that before or after we pay for four years of receiving nothing? Steve are you buckin for the Obama butt kissin Czar job thats open? Your a natural!

[one...two...tree 2,762]

Is that before or after we pay for four years of receiving nothing? Steve are you buckin for the Obama butt kissin Czar job thats open? Your a natural!

Sad Trombone sound bite  Sad sound bites

[dalegg 143]

What about the taxing of existing insurance policies? Is that going to happen or not?

[one...two...tree 2,762]

What about the taxing of existing insurance policies? Is that going to happen or not?

I don't think it made it in the final bill.

[dalegg 143]

I don't think it made it in the final bill.

How about forced enrollment? I'm guessing not since 20 mil are still not covered.

[one...two...tree 2,762]

How about forced enrollment? I'm guessing not since 20 mil are still not covered.

Yeah, I don't think that made it in either.

[dalegg 143]

Yeah, I don't think that made it in either.

Well, I guess I'll just have to wait and see what the difference is to me...if any. Carry on.

[scandal 951]

Great post, Steve. Very informative.

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.

That says it all to me.

Pass healthcare now. It's undoubtedly better than what we have without it.

[Pinocchio Liberal 268]

Yeah, I don't think that made it in either.

I think you would be better off by not thinking! After all its got you this far! GO MEAT! I think theres a tromBONE in this song!

Play that BONE! The more you blow the betta it gets! Never GIVE UP! Of course there is always HOPE!Spittin IMAGE!

Edited December 22, 2009 by ={Rogue}=

[Sofiyya 1,687]

Is that before or after we pay for four years of receiving nothing? Steve are you buckin for the Obama butt kissin Czar job thats open? Your a natural!

He's got his lips glued firmly to Barry's azz. From that vantage point, there's not much more to see than BS (Barry sh!t).

I don't think it made it in the final bill.

There is no final bill yet. More sucking up to follow.

[Pinocchio Liberal 268]

He's got his lips glued firmly to Barry's azz. From that vantage point, there's not much more to see than BS (Barry sh!t).

There is no final bill yet. More sucking up to follow.

The only thing he is FIRM about is LOOKING for something to FOLLOW! Teachers really do need more MONEY! Heh big BOY!