the smedley log - suburban scrawl

A rubber bullet for healthcare gap

The Rascal King has asked Philly area bloggers to voice responses on the President’s most recent State of the Union Address. The responses being sought are not for broad policy or ideological critiques, but rather for reactions to specific points of the address. My response has been percolating ever since about two minutes into the speech (though I didn’t get to hear it live, so my response time is a bit slow).

Upon hearing Mr. Bush’s plan to bridge the healthcare gap, I initially thought, “That’s great! You mean he’s going to give me a tax exemption for having health coverage?”

Not so fast.

When the President said that “[w]ith this reform, more than 100 million men, women, and children who are now covered by employer-provided insurance will benefit from lower tax bills,” the caveat went unspoken. It’s highly unlikely that the 100 million cited by the President will see lower tax bills; in fact, many are likely to see higher tax bills, since “health insurance would be considered taxable income,” which would affect those with “health insurance through their jobs” (according to this White House fact sheet).

Upon reading that little bit of info, my next thoughts on Bush’s idea were a bit more negative. After all, I’m one of those with pretty good employer-based health coverage. In fact, as a single taxpayer, I’m confident that my coverage would not only price me out of the exemption, but also cost me more tax dollars. On the flip side, I could then brag that I make more money than I did before.

But let’s be realistic. I’m pretty fortunate to have great benefits at my job. So what if they tax me a little more? It’s for a good cause right? I mean, seriously, I’m not one of those rugged individualistic types that thinks, “I’ve got mine, so forget the rest of you unfortunate bastards.” If, by contributing a little more to society’s coffers, I can help alleviate a small part of the human condition, I don’t really mind.

Except it’s not that simple.

While the same fact sheet cited above argues that only 20% of Americans will see a tax increase through such a proposal, the end result (along with the 20% estimate) is questionable, given the cost of decent health coverage. In this morning’s Philadelphia Inquirer, Jeff Brown takes us through the following hypothetical:

If you were in the 15 percent tax bracket, you could save $2,250 with the deduction (0.15 x $15,000) – but only if you got health insurance.

How far would $2,250 go?

Yesterday, I went to www.ehealthinsurance.com to compare policies for a family of four. The cheapest was $3,360 a year for a policy with a $12,000 out-of-pocket limit. That means the family could pay as much as $12,000 in any given year despite having the insurance. Most office visits and medications were not covered.

At the other end of the scale was a policy covering just about everything for $15,864 a year. Maximum annual out-of-pocket expense was $4,000.

Brown goes on to wonder about folks in the lower tax brackets – the ones I’d assume need the most help to purchase insurance. Instead, they’d get less help.

Also, along with many other respondents to this facet of Mr. Bush’s plan, I’m highly skeptical that most of the uninsured who can’t afford coverage as is will be capable of paying the upfront costs to gain health coverage and thus benefit from the proposal. And even then the tax breaks would only kick back a small portion of their healthcare costs even if they do shell out the premiums.

None of the preceding takes into account of those of us (including me) with pre-existing health issues – a situation which can make health coverage much less affordable, or even unattainable in many cases. If that’s the boat you ride in, the minuscule relief offered under this proposal would be even more worthless.

Just listening to the President’s speech, many people probably got the impression that he was proposing something that had a chance to actually cure one of our most vexing modern problems. Except instead of a silver bullet, the President offered a rubber bullet to help eliminate the health coverage gap that’s now 46 million strong. But at least it came across well in the sound bite delivery of his address on Tuesday night. And for most passive listeners, that was good enough.

Howard, as the owner of a small business, I can tell you that healthcare costs are staggering. We pay approx. $5,000 a year in premiums for a single employee, around $10,000 for a married employee, and $15,000 for a family plan. That’s the premiums. I’m not sure how far $2,250 is going to go, but I can tell you that people are still going to be busted if they have a huge out-of-pocket. We provide a generous plan…we don’t want anyone to choose to not get health care when they need it, and we don’t want people to be shocked into financial ruin if they fall ill.

I’m not sure of a whole solution, but I’ve been tending more toward the Canadian model for years now, and I think short of everyone being covered, there are going to be a lot who are not, and a bunch of small businesses like mine financing those who don’t. Ugh…c’mon national healthcare.

Yours is the type of insight I’m glad to have, Frank. The more I hear from business operators (and I had a lot of contact with them in my former day job), the more convinced I am that any measure that’s every-man-for-himself in nature is only going to contribute to the problem, not solve it.

Isolating consumers in the marketplace only benefits the sellers. And like I suggested in the post, if you’ve got a chronic condition, the increased need for coverage seems directly proportional to the difficulty and expense of obtaining it.

All that said, I applaud your efforts to take care of your employees. I’ve met other business operators out there with similar dedication to their people, but they all seem to cringe at the cost involved – which tells me that there is absolutely a core issue that has yet to be addressed. (A single-payer system might not be as crazy as I used to think it was.)

yes Frank, I join Howard in applauding you.

I think the for profit model applied to human services does more harm than good. To see health care systems trash talking each other and spending elaborate amounts of money on marketing is disheartening. We need people with a passion for healing, not Ferrari’s…