Health Care Bill

by Benny Arce

The cost of health insurance in the United States is increasing at a faster rate than either wages or inflation. This means that if this trend continues more and more Americans, particularly those who have to purchase it on their own, will be unable to afford any form of health insurance.

In the face of this, President Barack Obama and other Democratic leaders are trying to pass legislation aimed at making insurance coverage more affordable. Critics, however, argue that even with their proposals, such a coverage would still be beyond the reach of most of the middle class.

The proposed legislation, while requiring insurance coverage for all Americans –whether through an employer, a government program, or a private purchase— offers tax credits to help pay for the coverage.

Some Calculations

An online tool called The Health Reform Subsidy Calculator that was developed by the Kaiser Family Foundation provides an idea on how far the proposed tax credits under the Democrats’ health care bills can go to help families of varying income and age levels.

Using a family of four with a 45-year-old household head earning $63,000 a year as an example, the Calculator estimates that that family will need a policy worth $11,080 to provide sufficient coverage. However, under the bill proposed by Sen. Max Baucus, D-Mont., the family is only entitled to $3,970 in tax credits to help pay for the policy.

It will have to shell out $7,110. That is 11% of the family’s total income.

The Health Reform Subsidy Calculator does not even take into consideration co-payments and deductibles. Analysis by a Congressional Budget Office estimates that this could add another 9% to the total cost of coverage.

The Problem Sectors

In order to stay within the President’s goal of a $900 billion health care reform budget over ten years, Congress is trimming the budget for subsidies, at least in the Baucus plan. This leads to higher premiums than in earlier health reform proposals.

A Senate Health, Education, Labor, and Pensions Committee plan submitted earlier would provide the hypothetical family mentioned above $2,500 more in assistance.

Persons who need to purchase their own health insurance coverage such as small businesspeople and freelance workers are directly affected by the higher premiums. For those whose coverage is based on their jobs, their employers will continue to pay for the policy.

The bill provides the highest subsidies to those who are at or near the poverty line. These can be as high as $22,000 for a family of four. And here is where another problem lies. Of the uninsured, three-fourths belong to households that earn less than two times the poverty level.

Subsidies decrease as income rises. For a family with four members making $45,000, federal assistance is at 71%. If another family of the same size makes $63,000, the figure is 36%. For one that makes $90,000, the subsidy disappears altogether.

Not Soon Enough

If the Baucus proposal passes, tax credits aren’t forthcoming. The first will only be released in 2013 following the next presidential elections in order to keep costs down. The affordability of health care insurance has to be considered against the backdrop of its cost to the government.

It’s Not Over Yet

The bill is still being debated. Compromises and modifications might yet be necessary. Last week, for instance, Baucus’ committee approved provisions that would exempt a certain class of individuals from buying health insurance. This may end up exempting some two million, a far cry from the original plan to require insurance for all Americans.

Related articles by Zemanta

• Congress Gets Low Marks on Health Care (politicalwire.com)
• House, Senate Dems at Odds on Health Care Overhaul (abcnews.go.com)
• Single Payer or Strong Public Option (iflizwerequeen.com)
• Health Insurance Bills Could Be Hardship for Many (abcnews.go.com)