An important part of a magician’s trick is to keep the audience’s focus away from what he is actually doing. In the case of health care reform, the discussion of affordability has focused on how much the individual or family will still have to pay after our health insurance system has been “reformed.” Little attention has been paid to the how much those individuals will receive from their neighbors in order to entice them to join the rest of the insured.
The Congressional Budget Office (CBO) has provided a table that analyzes the subsidies and enrollee payments under the Finance Committee Mark that has just concluded. The table shows that CBO estimates the average cost of the “silver” plan for a family policy will be $14,400. A family of four with income between 100 and 150 percent of the federal poverty level will receive a subsidy equal to 90 percent of the cost, leaving the family to pay $1,400. That is a subsidy of $13,000.
But since the premium does not include additional costs such as deductibles or copayments, the family will also receive a “cost sharing subsidy” CBO estimates at $3,500 on average. In total, CBO estimates taxpayers will subsidize these families at an average cost of $16,500. Families between 150 and 200 percent of poverty will receive $13,000 in benefits. The benefits of course are tax-free to the family.
These benefits will spark new inequities among families that have received little attention. Other families in these income levels will be locked into their employer sponsored health insurance in which they may have to pay more for their coverage while others will go into Medicaid where there is virtually no cost-sharing.
Moreover, many of the families who will receive subsidies clearly are spending their own money on health care. It would be helpful to know how much of the spending will go to simply replacing private funds with public subsidies. The issue of affordability should bring us back full circle to where the American people think health care reform should focus—actually lowering the cost of health care itself. Unfortunately, costs are not being lowered, they are simply being passed around to someone else. Yes, Americans want a solution to the problem of the uninsured. But at a price tag of $16,500 per family? Isn’t there a better alternative?
