We are in the season of high drama where everyone–understandably–is focused on the politics of getting health legislation done. But it’s important not to take our eyes off the substance of what is being talked about as well. That’s why Jordan Rau’s story today on Kaiser Health News is so important. It takes a look at one of the fundamental dilemmas of the Obama health reform effort: If you insist that everyone have coverage, aren’t you also obliged to assure that everyone can afford it?
This is done, under all the versions of the bill that are under consideration, by providing subsidies to help people buy coverage. The cost of those subsidies is one of the reasons that health reform carries such a hefty price tag. But as Rau notes, even the most generous of the bills, which is the House legislation, still could leave families of modest means staggering under the weight of huge medical bills.:
Patrick Gilbert, an uninsured lumber company worker in upstate New York, is in a predicament that President Barack Obama and congressional Democrats believe they can solve. Gilbert and his wife have two children, but he says that on his family’s $50,000 annual income, he can’t afford the $600 monthly premiums for his employer’s coverage.
“If I could find some reasonable insurance for about $100 a month, then I would do that,” says Gilbert, 38, a lymphoma survivor who lives near Lake Placid. “Something reasonable, not with high deductibles. Something fair.”
The House’s health overhaul proposal would allow Gilbert to obtain family coverage for $250 a month, with the government picking up the rest of the premium costs. While that subsidy would make insurance more affordable for Gilbert, he could still be stuck with huge medical bills if he or his family members got seriously ill. In the worst case scenario, Gilbert could end up paying $4,400 in co-insurance and deductibles on top of $3,000 in annual premiums — adding up to 15 percent of his family’s income.
As the story notes, that is currently the situation faced by many people with private insurance. And there’s a good policy argument that consumers should be on the hook for a non-trivial share of their medical expenses; it’s probably the best way to make sure they are shopping wisely for care.
The story’s real cautionary note is heading forward. As lawmakers look for ways to trim the cost of the bill, the size of the subsidies is likely to be a major target.:
In July, the House Energy and Commerce Committee reduced the portion of premiums the government would subsidize. This month, under pressure from Republicans and conservative Democrats to draft an even less expensive bill, the Senate Finance Committee may also lower the maximum annual income a family could earn to qualify for subsidies, from four times the federal poverty level (about $88,000 for a family of four) to three times of poverty ($66,000 for that family). That would mean millions of Americans would have no possibility of being eligible for subsidies.
Keep an eye on this element of the bill — one that is getting far less attention than the public option, but one that is potentially far more important to making a new health system work. Cutting subsidies too much could jeopardize the whole underlying idea behind health reform, which is that you can’t really bring down costs unless everyone (or nearly everyone) is in the system.:
…Without adequate financial support to buy insurance, millions of people would have to be exempted from the mandate and left out of the pool for insurers to spread their risk between healthy and unhealthy enrollees. A diminished pool would make it hard to lower premiums for everyone, and for Congress to require insurers to sell policies to everyone regardless of their condition. It might also jeopardize the measure’s political viability.
“Affordability, in our judgment, is going to be the number one basis on which people decide whether health care reform is helpful to them,” says Ron Pollack, director of Families USA, a liberal advocacy organization pushing for comprehensive health care legislation.
So I’ll say it again: Keep an eye on the subsidies. They are more than numbers. They are what hold this whole endeavor together.