The horizon is not so far as we can see, but as far as we can imagine

Comparing the House Bill’s Cost to the Baucus Proposal

Emptywheel has crunched the numbers on the Baucus plan, and has come up with how much money it will leave families if they actually have to use the insurance for any significant health care problems.  Here are her numbers for a family of four earning 300% of the poverty levels or $66,150.

Federal Taxes (estimate from this page): $8,710 (13% of income)

State Taxes (using MI rates on $30,000 of income): $1,305 (2% of income)

Food (using “low-cost USDA plan” for family of four): $9,060 (13.5% of income)

Home (assume a straight 30% of income): $20,100 (30% of income)

Bad Max Tax: $20,610 (31% of income)

Total: $59,785 (89% of income)

Remainder for all other expenses (including education, clothing, existing debt, transportation, etc.): $7,215 (or 11% of income.

Now, the House bill stops subsidies at EXACTLY the same level, 400% of poverty level. We can use Emptywheel’s numbers for all of this.  The difference is that the House plan limits premiums to 10% of gross income at 300% (pg 137, pdf), and out of pocket expenses to $10,000 per family.

So that makes the House Tax: $10,000 + 6,615 = 16,615 or 25% of income (as opposed to 31%).

The difference between the House plan and the Baucus plan is $4,025. Total expenses are $55,7607, or   The remainder for all other expenses is $11,240 or 17% of income.

It’s not a meaningless difference, $4,025 a year is $335 a month.  But it’s not huge , either.

Now, one might say the real difference is that the House plan has a public option, which will drive down costs.  At best that’s questionable.  I don’t think so, neither does Taibbi, and neither do various other people.  Yes, a good public option would, but the House plan has a crippled public option.  I strongly expect that most people at 300% are going to be paying 10% of their income, because that’s what insurance companies are going to charge them, since that’s what they can charge them.

If you object to the Baucus bill because it will force families to buy insurance that will still financially cripple them, then there’s little reason not to object to the House Bill for the exact same reason.

Update: Dave Johnson points out the following (which would be true of Marcy and my numbers):

It seems you want to deduct the $20K insurance premium from gross income before you calculate the federal tax, so fed tax shouldn’t be $8710, it should be

$66,150 – 20,610 = 45,540 * 13% tax = $5920 tax.

The difference is $2,790 to both the Baucus and House plan numbers. Which is slightly better for both of them. I leave it to readers to decide if it’s enough better to make either of them a good deal.


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  1. There is no good deal that’s being seriously discussed. (Only single payer can begin to resolve the problems, because otherwise too much rent is being extracted from the system. Otherwise, it is a shell game.)

    Today, Paul Krugman attributes this situation to Obama’s failure of vision and leadership. I couldn’t agree more. Obama talked hope and change during his campaign and even made a few campaign promises. But since they he and his advisors have been ensconced in the WH bubble making piecemeal back-room deals with the major vested interests.

    This is true not only of health care, but also finance and energy. The result is that Obama has lost the public and allowed the GOP to mount a populist revolt. The Democratic Congress is run by establishment Dems that have sold out, while the GOP sold out long ago and are digging in their heels against any change to the status quo that is not reactionary.

    Finance, health care, energy and everything else are going to continue to be gamed without presidential vision and leadership. As always, follow the money. As a result, the next financial crisis is in the making, health care reform is mostly a gift to insurers, and energy policy is being dominated by petroleum and coal interests. Change we can believe in?

    Progressive need to stand up and just say NO. This is not only a bad deal. These deals are leading the US and world off the cliff. Obama is continuing the same crony capitalism that got us into this mess. All the profits are going to the top and risk is being “externalized” by being shifted to the public. The inevitable result is that more middle class people are slipping into poverty, while subsidies for the poor are decreasing. This is heading for a bad ending as the dollar tanks.

  2. BDBlue

    Perhaps we should simply agree to hand over every last dime we earn (a decreasing number) to large corporations and then, to show their appreciation, they’ll let us run a lottery to decide which small percentage of us gets medical care, food, clothing, shelter, and some form of education, narrowly tailored to benefit the large corporations. I was going to add in retirement as a possible lottery benefit, but of course it would be selfish not to continue working until we drop dead for the benefit of our corporate overlords benefactors.

    Now that I think about it, perhaps they’ve already instituted this system and we simply don’t know it. That would explain a lot.

  3. BDBlue: “Now that I think about it, perhaps they’ve already instituted this system and we simply don’t know it.”

    Congratulatons! You got it. The reality is that FIRE (finance, insurance, and real estate), along with energy, are esssentially rent-seeking aka wealth extracting, rather than wealth producing. They are involved in gaming the system in such as way as to extract as much wealth from it as possible without anything substantial to it.

    Personal expenditures for consumption (PCE) account for 70% of the US economy. This is divided into maintenance costs and discretionary spending. Maintenance costs include food, clothing, shelter & heat, transportation, insurance, medical, etc., as well as debt service. The money left over is what you use to buy computers, TV’s, etc. The scam is to use state capture through campaign finance and lobbying, along with “gaming the system,” to force allocation of as much personal income expenditure to your industry/company as possible. Obviously, some sectors are more vital than others and they have the “competitive advantage” unless they are restrained. They do everything in their power to avoid restraints.

    It is virtually impossible for the public to break this lock. However, this game adversely affects other sectors, especially discretionary items. The only hope is that other sectors will band together to restrain the overreach of FIRE and energy, which are eating their lunch. But that’s just changing one game for another.

  4. Not quite OT, but some of you may be familiar with this already. If not, it is quite interesting:

    These are the talking points of a benefits-providing employers’ organization.

  5. masslib

    Where do you get the 10%? The CPC was saying they got the bill out of committee to reduce the premium ceiling from 12 to 11%. This is what I have said all along. It’s still not affordable. I live in MA w/out insurance and I can not afford the Connector insurance for just this reason. I keep having people from MA tell me(who I have to guess have very good employer insurance) yeah but before it was even more expensive. Ok, so how does that help me if I still can not afford it?

  6. jo6pac

    2009 September 8 masslib permalink

    Yes, I have great insurance, I work for an insurance company. The day I get outsourced then I need insurance, I want the best plan Money can buy. If there’s money for endless wars around the globe well there must be $ for health care if that bad habit is cured. I’m sure that this isn’t happening any time soon, Sad.

  7. dblhelix

    can not afford the Connector insurance for just this reason.

    The MA Connector was comparable to MD’s guaranteed issue for high-risk, transients, etc for the age bands I looked at, which brings up another issue.

    How can the “exchange” (even w/ public option embedded) be affordable? It’s been made quite clear that we shouldn’t expect premium decreases, just restraint in future increases. This means that states that currently have pools for the uninsurable already have some form of an exchange, that presumably, would be expanded a bit by unattached workers (small business, in between jobs).

    So, I looked at 5 states: MA, MD, MN, IA, WV. MA, of course, has the Connector.

    MN has the ‘best’ guaranteed issue in the nation w/ rates capped at 125%-130% of private offerings for the healthy. MD is pretty close. Both were comparable to MA Connector rates. IA and WV were a disaster — competitive within their class but a good deal more expensive than MD/MN.

    One factor in setting rates is level of mandated benefits, but MD has far more mandates than IA, so that didn’t answer the question for me. In fact, in IA, I’ve read that their guaranteed issue plan at one time set the premiums independent of gender but ultimately removed this because premiums were spiraling out of control. So now it’s expensive for men, and ridiculous for women.

    So, we’re told that: nothing changes for those who get insurance via their employers. And we’re told that cost savings will be in future rate increases. The exchanges will be open only to those who don’t have insurance through their employer. So, why would a small business prefer the exchange to the private small group or individual market? Why would a small business want to “associate” w/ a high-risk pool instead? If the exchange will be the only option for purchasing new policies for small business, to what extent is today’s guaranteed issue in 34 states a fair representation of what to expect in future state-level exchanges?

    masslib — do you have any idea what happened in MA? Did you have a high-risk pool before “reform?” I would guess that prices dropped a bit to get some small business/some healthy in, but then shot up again.

  8. dblhelix

    I should make clear that I’m assuming that even if the exchanges dissolve the small group/private individual markets that currently exist, that there will be a window of opportunity to buy a policy in these markets long before the exchanges are up-and-running.

  9. Ian Welsh

    Masslib, 10% is the limit at 300% of poverty level for the House Plan. The Baucus plan has different levels.

  10. dblhelix

    The CBO answered my question today:

    a public plan is also apt to attract enrollees who, overall, are less healthy than average (for the same reasons it would attract a substantial number of enrollees). Although the payments received by all plans in the exchanges would be adjusted to account for differences in the health of their enrollees, the methods used to make such adjustments are imperfect. As a result, the higher costs of those less healthy enrollees in the public plan would probably be offset partially but not entirely; the rest of the added costs would be reflected in the public plan’s premiums. Correspondingly, the costs and premiums of competing private plans would, on average, be slightly lower than if no public plan was available.

    Pretty much as I thought. Dumping ground, high-risk pool, as we already have in a number of states. I wouldn’t count on slightly being, you know, anything small.

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