Health Care Will Be (Almost) a Right Not a Privilege

We progressives are distraught over losing something that is important to our vision of health care reform: a public option that would compete with private insurance and hold down health insurance costs. Make no mistake, that was, indeed a loss. But the public option was not the only important feature of the legislation we have been supporting. Indeed, while holding down costs are important to this country, the fundamental moral issue is making sure that everyone can get affordable health care. And, if the conference committee process goes as we expect, on that critical issue we are going to win a major victory.

The reform bills before Congress will take this country close to the ideal of making health care a right not a privilege.

They will make health insurance affordable for almost all Americans and do more to help working and middle class Americans than any government program since Social Security. And they will do more to improve the well-being of working age Americans than any government program in our entire history.

The legislation before Congress takes a number of steps towards this end.

First, the legislation will expand Medicaid for families up to 150% of the federal poverty line (FPL) under the House bill and 133% under the Senate bill.

Second, above that level, individuals and families who do not receive affordable health insurance from their employer will be able to buy health insurance through a government run Insurance Exchange. The Exchange itself will lower premiums by allowing these individuals and families—and small businesses, too—to come together in one large insurance pool to purchase insurance at the same low rates that large businesses receive today. Insurance purchased by individuals and families in the Exchange will have to meet federal standards that define comprehensive health care benefits.

And third, and most importantly, individuals and families whose income ranges from 150% to 400% of the federal poverty line (FPL) will receive substantial subsidies in the form of tax credits that limit insurance premiums to a proportion of their income.

Premiums will vary on a sliding scale as show in the accompanying table, from 3% or $40.61 per month for individuals at 150% of the FPL under the House bill to 9.8% or $353.78 per month under the Senate bill.

*in comparison to average premiums in 2009 for in employer based insurance of $4824 per year / $402 per month for individuals and $13,000 per year / $1082 per month for families.

For families of three, premiums range from 1.5% of income or $30.44 per month at 150% of FPL under the House bill to 9.8% of income or $598.13 per month at 400% of FPL under the Senate bill.

These premiums are still costly. Health care is expensive and we have to pay for it. A single payer plan such as they have in Canada pays for it through taxes. Here in American, as in France, Germany, and other European countries, health insurance will be paid for by a combination of government, employers—for those who receive partly employer-paid health insurance—and the premiums paid individuals and families.

Individuals and families in the Exchange will pay premiums that are not cheap, especially at higher income levels. But comparing these premiums to the cost of average health insurance policies shows that this program will provide huge subsidies to working and middle class families. And these same families will be exempt from the new taxes and savings in Medicare that pay for them.

For individuals, these subsidies range $402 per month at 150% under the House bill to $48.22 per month at 400% of FPL under the Senate bill. For families of three, the subsidies range from $1083 per month at 150% of FPL under the House bill to $484 per month at 400% of FPL under the Senate bill. As health insurance premiums continue to rise, the value of the subsidy will increase. While the percentage caps can also increase–and thus premiums go up–there will undoubtedly be enormous pressure on Congress to keep premiums low. In addition, the legislation will limit out of pocket costs—deductibles and co-payments—to a percentage of individual and family income as well.

To see how extensive and unprecedented this level of help is for working and middle income people, the subsidy for families at 150% of the FPL is worth five times what such a family receives from the earned income tax credit. And at 130% of the FPL, the expansion of Medicaid will provide a benefit that is worth at least 35% more than the combined value of food stamps and the earned income tax credit. Moreover, this legislation will provide support for middle income individuals and families far above the cut-off point for these other programs.

Both the Senate and House bills include these affordability tax credits. But the provisions in the two bills are different. The House bill offer lower premiums and a lower limit on out of pocket expenses to individuals and families at the 250% of FPL level and below. The Senate bill, on the other hand, has lower premiums and limits on out of pocket expenses to individuals and families above that level. The figures above are drawn from the best, most generous provisions in the two bills. We in HCAN are working for final legislation that combines the best affordability provision in two bills.

We also hope that the House plan for Medicaid is adopted for three two reasons. The House bill raises the Medicaid eligibility limit to 150% of the FPL. It also includes money to gradually raise Medicaid reimbursement rates to the levels of Medicare, which will guarantee that most doctors will treat Medicaid patients.

Because subsidies for private insurance are so high at low income levels, the House Medicaid plan is actually less expensive than the Senate plan. If we do get the best of the House and Senate legislation, as we should, there is no question about it: in 2010 the federal government will take the boldest step toward improving the living standards of working and middle income people since Social Security was enacted in 1935.

This is a huge achievement. But that is not all that is valuable in the legislation before Congress. In another post, I'll point to the provisions in the legislation that will help reduce costs for people who have insurance now, and how the political dynamic set in motion by this health care reform bill will help us get more of what we want, including a public option or even tougher regulations on insurance companies, down the road.