What does a $13,375 premium mean for reform?
Employer Health Benefits
2009 Annual Survey
Kaiser Family Foundation
September 15, 2009
Premiums for employer-sponsored health insurance rose to $13,375 annually for family coverage this year.
http://www.kff.org/insurance/ehbs091509nr.cfm
Report (238 pages):
http://ehbs.kff.org/pdf/2009/7936.pdf
Comment:
By Don McCanne, MD
Employer-sponsored health plans insure not only the largest sector of our society, but also the healthiest: the healthy workforce and their young healthy families. Because of the greater purchasing leverage of employers, economies of group plans, better regulatory oversight, and the lower average health care needs of the beneficiaries, premiums being paid for employer-sponsored plans represent the greatest value that we can expect in health care financing. Today a working family pays $13,375 for its coverage (which includes the employer contribution paid indirectly by the employee in forgone wage or salary increases).
Keep in mind that, in addition to the $13,375 premium, the family also pays the deductible, co-payments, coinsurance, costs of out-of-network care, and costs of products and services that are not benefits of the plan.
Many perceptive observers of the reform process are beginning to realize that the proposals may have a significant negative impact on the finances of middle-income Americans. What would a $13,375 premium mean to a middle-income family?
The House bill, HR 3200, cuts off premium subsidies at 400% of the federal poverty level, which is $88,200 for a family of four. That family, under the House bill, would have to pay over 15% of its income just for a $13,375 premium. Under the Senate Finance proposal released by Sen. Baucus today, the cutoff is at 300% ($66,150), so that family would pay over 20% of income just for the premium.
But wait, there’s more. The legislative proposals also provide for an annual maximum for out-of-pocket expenses, and they remove the life-time maximum on health care coverage. Since some of the care over those limits represents the 80% of health care that is used by the sickest 20% of the population, those costs can be very significant. The insurers will have no choice but to add those costs to the premiums. But the family also will have to add to its health care bill the costs below the out-of-pocket maximum, plus the costs that are not covered by the plan, even though they exceed the maximum.
One method of controlling premium prices is to strip benefits out of the plans. As an example, the Senate Finance proposal released today would make available a “young invincible” catastrophic plan for young adults. Measures that reduce benefits might make premiums more affordable, but they do so by shifting more costs as out-of-pocket expenses to those who need care, costs which would be unaffordable for many middle-income Americans. For those who say that the out-of-pocket maximums would take care of that problem, keep in mind that the balance would have to be collected in higher premiums.
Anyway you slice or dice it, a $13,375 health care benefit package plus out-of-pocket expenses are no longer affordable for tens of millions of middle-income Americans, even with subsidies. Depending on the final details, that could be over half of our population!
Congress must quit low-balling us. Let’s demand a legitimate analysis using the most credible numbers available and then see what this program will cost each of us.
Once we have those numbers and compare them with what a single payer system would cost each of us, there would be no contest. Of course, similar studies have already been done, and everyone except the wealthiest would pay less. And the wealthy would never know the difference unless their accountants singled out those numbers for their perusal.