It’s not all good news.

Let’s say you are a 60 year old divorcee in 2014.  You make $46,136, which is 401% of the poverty line.  You are therefore eligible for NO subsidy from the government.  Your premium will be $10,162.  Should you actually need care, your out of-pocket costs will be capped at $6250.

So in a best case scenario, your health insurance/care will cost you 22% of your income.  In a bad year (or a regular year if you have a chronic illness) your health insurance/care will cost you 36% of your income.  Um… that’s not affordable.

Granted, the cost is so high that you would likely not be subject to the mandate.  Great.  So you continue to have the option to be uninsured.

The people who are going to be hit hardest by this are those making just over 400% of the poverty line.  Because, ironically, if you make just a little bit less – say $45,906 (399% of the poverty line), then – due to subsidies – your premium will cost you $4361.  That’s less than 10% of your income.  And your out-of-pocket costs are capped at $4167.  So the most you could pay in a year would be 19% of income.

That’s still a lot.  But it’s WAY less than if you make just over the 400% line.

I have yet to see a good answer for what the government is going to do when people start asking for pay cuts to get under the 400% line.  I don’t see why it won’t happen.

There is a very insidious myth right now that there is a large group of progressive leaders who want to “kill” health care reform in its entirety. While there might be some progressive leaders out there who have advocated for this position, I have yet to hear from them. What I have heard from people like Howard Dean, Markos Moulitsas, Keith Olbermann, Jane Hamsher, etc… is that they simply want to kill the current version of the Senate bill. None of them, to my knowledge, have advocated ending all efforts to pass a health care reform bill. I believe each and every one of them have advocated for simply passing a different bill through different means. Do not heed those who are working to create a false dynamic where the only two options are passing this horrible Senate bill or passing nothing at all. The idea that there is a large group of progressive leaders trying to kill health care reform is a red herring.

The other great myth is that if this current Senate bill, thoroughly compromised to get 60 votes, does not become law it will be impossible for any health care reform to pass during this Congress. President Obama made sure to include instructions to pass health care reform using reconciliation in the budget for a reason. It is still completely possible to pass an arguably better bill with only a simple majority in the Senate using reconciliation. Progressive activists are demanding to “kill this particular Senate bill” because they know Democrats will not walk away from health care reform empty handed. If need be, they will use reconciliation. While Senator Harry Reid and Barack Obama for some reason think it is preferable to let Senators Joe Lieberman, Ben Nelson, and Blanche Lincoln gut health care reform; if they are forced to, they will use a special procedure that completely cuts these conservadems out of the debate.

That’s a legitimate plan, but darn risky.  If you want a full and thorough discussion of why that’s so, go read Nate Silver.  It’s long, but it’s thorough, and I’m not sure I could do it better.

If, however, you believe we can use reconciliation to pass a public option, or Medicare buy-in, or whatever, why can’t we just do that next year?  Or in 2011 after the midterm elections?  Of anytime before 2013 when the bills go into effect?

Why do those who support this plan believe we have to have that passed first?  Seems to me that using reconciliation might jeopardize the passage of the stuff in the bill now.  Things like the exchange, regulations on premium levels, no denials becuase of pre-existing conditions, subsidies for insurance, etc.  If you used reconciliation, I can pretty much guarrantee you aren’t going to get those things in a regular bill because you won’t get 60 votes in the Senate.  You will lose some votes.

So why not pass the bill instead of killing it, and then come back to reconciliation once those parts are safe?

Note – I’m not telling you to pass the bill.  I’m just curious why this wouldn’t be a better strategy for those who support reform efforts right now?

Incidentally, this is the hallmark of peer-reviewed literature and good science.  Clear methods allow you to judge the quality and soundness of the work as well as the results.  So if you disagree with his findings, you have to explain why his thought process and computations are wrong.  You can’t just have a different opinion.

Nate went and figured out how insurance will look to a family of four in 2016 under a number of plans:

What you’re looking at is the cost of insurance to a family of four making $54,000 in 2016.  The blue portion is the amount the family pays in premiums each year.  The red part is  co-pays, deductibles, etc. that a family might not pay every year; the amount shown is the maximum they would have to pay.  The diagonal portion is made up of subsidies from the government to cover the rest.

Under the Senate plan, premiums for this family would be $4000 a year.  In a bad year, they might have an additional $5000 in expenses.  That’s a maximum of $9000 a year.  I’m not saying that’s not a lot of money.

But it’s way less than without reform.  Assuming levels of inflation much less than normal, premiums for this family in 2016 would be over $13,000 a year.  In a bad year, add in about $6500 more in co-pays, deductibles, etc.  That’s now a maximum of $19,576 a year.  And – as Nate points out – the insurance they are getting is of lesse quality thanks to the fact that the regulations in the bill aren’t in effect.

Yes, some families in this situation qualify for SCHIP for their kids.  For those families, premiums would be over $8500 with another potential $5100 in cost-sharing for a potential maximum of $13,690.  And they’re getting the crappier less regulated insurance, too.

If you think he’s fudging it, go read his methods.  He’s pretty open about them.

Once again, I’m not telling you to support of oppose the bill.  But people on the right who reform would raise their costs need to look at this.  And people on the left who claim the Senate bill is now immoral and does more good than harm need to take a deep breath, too.

Think hard before you rant.

Group coverage from employers

• This is what most people who get insurance through their jobs have.  The CBO says that in 2016, the average small group market premium would be around$7,800 for an individual and $19,200 for a family.  Without reform, these numbers would be about $7,800 and $19,300. In the large group market, it’s about$7,300 for an individual and $20,100 for a family with reform, and about $7,400 and $20,300 without.  Not much difference at all.
• Additionally, some people (about 12 percent) with coverage in the small group market would get a small business tax credit.  For them, insurance would be about 8 percent to 11 percent lowerthan without reform.

Nongroup (individual) policies

• These are the policies people would get on the exchange.  In 2016, the average individual policy under reform would be about $5,800 and a family policy would be about $15,200, compared to about $5,500 for an individual and $13,100 for a family without reform.
• Most of those people (about 57 percent) would get subsidies, which would cover about two-thirds of the total premiums.
• Now that’s an increase without the premiums, but most people would see a significant increase int he quality of their insurance.  That increase in quality is more than the increase in the cost.  So they still reported it’s a reduction in cost overall.

Se here’s the recap.  For most people there is going to be no difference in the cost of premiums.  Some will benefit slightly from the small business tax credit.  For people in the individual (nongroup) market, actual premiums might rise, but less than the increase in value of their insurance.  Moreover, most of them will be getting financial assistance, so that even so – the cost to them will go down.

Yes, it’s confusing, but likely good news for the administration.

The bad part, however, is that they estimate that the average premium for a family employer-provided plan will be over $19,000 in 2016.  Now it’s just over $13,000.  That’s a big increase.  And it’s still a huge amount of money.  This bill will do very little to contain costs.

And then along comes Nicholas Beaudrot to make things easy.  Here is a chart showing what the monthly premiums are for families making different levels of money under the Massachusetts plan, Senator Baucus’ plan, and his plan with different tweaks that might come from the House or Senate reconciliation:

See that red bar  The big one?  That’s the monthly premium under Senator Baucus’ plan.  As I’ve discussed before, the reason it’s more than the other plans is that he made the bill cheaper by reducing subsidies.  So, yes, the CBO scores the bill as less expensive, but it achieves this by making working class families pay more out-of-pocket every month.  How much more?  Look at the chart.  A family earning $61,000 a year will be paying almost $700 a month just in premiums; this doesn’t include co-pays, co-insurance, etc.  It’s a lot of money, and we will be mandating them to pay it.

(h/t Matt Yglesias)

Since you desire questions and answer them so well, I have one for you now.  Dr. Carroll, in any of the healthcare reform bills, is there a provision that caps the amount of premium that an insurance company can charge an insured?  After all, if insurance companies are forced to cover applicants with existing health issues, those folks will pay a hefty price.  Probably more than they can afford.  Add in the additonal taxes/fees levied on insurance companies that the Baucus bill is proposing and you have the potential for health insurance premiums going through the roof. Hopefully, there will be a ceiling on how much an insurance company can charge, based on some fixed formula that isn’t inflated by the expectation of government tax credits or subsidies to insurance policyholders.   Thanks again Dr. Carroll for being a calm, sensible and intelligent contributor to the healthcare reform debate.  If you could pin your radio and/or television schedule to the blog permanently, that would be awesome.

As far as I can tell from the bills so far (I’m still working my way through the Baucus bill), there are no maximums set on how much premiums can be. There are provisions on the minimum amount of services that must be covered. There are also maximums that some people could be expected to pay at some levels of income, as a percentage of their income. This is one of the main arguments for the public plan. It’s a way – theoretically – for the government to make sure that at least one plan is still “affordable”. Otherwise, they may all cost too much.

There are regulations, however, as to the ratio between what a plan can charge based on risk. In the House bill, the most a company can charge based on age, tobacco use, or family composition is twice the cheapest amount. In Senator Baucus’ bill, that ratio is 7.5 to one. This means that premiums can likely go much higher in the Senate Finance Committee version, as described at this time. It’s still got a ways to go.