Tuesday, February 23, 2010

Obama's Plan - How'll It Works For a Family of Four

The White House
The President's Proposal
February 22, 2010

Policies to Improve Affordability and Accountability

Example for a family of four with income of $66,000:

Maximum percent of income paid for premiums: 9.5%

Percent of costs paid by health insurance plan: 70%

Penalty for remaining uninsured: (in 2016) the higher of $695 (with indexed
increases) or 2.5% of income

Hardship exemption - threshold income below which the penalty is waived: The
income tax filing threshold ($9,350 for a single or $18,700 for a married
couple in 2009)


Comment:  The greatest significance of President Obama's health care reform
proposal released today is that he has now formally placed his stamp of
approval on the fundamental policies already contained in the House and
Senate reform bills. While remaining silent on some of the third rail issues
(public option, Medicare buy-in, pregnancy termination, etc.), he and his
staff merely tweaked the bills and added insurance premium rate review,
whatever that's worth, and some rhetoric on waste, fraud, and abuse.

His proposal still falls far short on two of the most important goals of
reform: 1) insuring everyone, and 2) ensuring that health care is affordable
for each of us. Merely tweaking the Senate version, which is what they did,
could not have attained these goals since the most effective policies were
already traded away before serious negotiations began.

That said, let's look at what the President expects a family of four with an
income of $66,000 to pay for health care. The premium contribution would be
9.5% of income, or $6270 for the basic plan with an actuarial value of 70%.
If they wanted or needed a better plan, they would have to pay the full
difference in the premium. At an actuarial value of 70%, they would also
have to pay an average of 30% of all health care costs. This can vary
considerably because of plan design in the form of deductibles, copayments,
coinsurance, non-covered benefits, stop loss, out-of-network care exempt
from stop loss, and other factors. If they either elected not to or were
unable to pay the premium, they would have to pay a penalty of $1650, but
then, of course, they would have no protection at all against potential
health care costs.

Clearly, President Obama has not done any better than Congress in protecting
families from financial hardship should they have the misfortune of
developing significant medical problems. Unaffordable underinsurance is not
the change that we needed.

1 comment:

Karen said...

Very well done. I'm sending it about.