Network News

X My Profile
View More Activity

An example

A reader writes in:

I do not understand how this bill will affect my family and me. I am a self-employed single mother. I cannot afford health care for myself and my children. I made $38,000 last year and I expect to make less than $35,000 this year. What does this health care reform mean for me? Will I be able to get coverage for my children and myself in this first year?

Not in the first year, necessarily. But when the bill goes into effect in 2014, your situation will change dramatically. Using the Kaiser Family Foundation's premium calculator and a slightly stylized version of your situation (the calculator is not terribly flexible), here's what I can say:

First, you'll be buying insurance on the exchanges. That means no discrimination based on preexisting conditions, insurers who are being watched and regulated, lots of choices, and the buying power that comes from being part of a large risk pool rather than being on your own.

More specifically, your income would make you eligible for substantial subsidies. About $11,571 worth, to be precise (this is keyed to a family of four, I should say). The cap on your premium payments as a percentage of your income would be 4.4 percent. You'd be paying about $1,540 a year.

By Ezra Klein  |  March 22, 2010; 11:58 AM ET
Categories:  Explaining health-care reform  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: The five most promising cost controls in the health-care bill
Next: How it's playing in Peoria

Comments

just an example of why the Dems will lose big time this coming election.

So many people will incorrectly think this reform benefits them immediately (and by that I mean TOMORROW) and will want to blame someone.


This is the price to pay. 4 years of pain before the biggest benefits kick in.

Posted by: visionbrkr | March 22, 2010 12:03 PM | Report abuse


nah bro!

she gets small business tax credits right away! This year! Her salary is less than $50K and she's self-employed. She's eligible for a 35% reduction in her premiums assuming she has less than 25 employees.

Right?

Posted by: ThomasEN | March 22, 2010 12:04 PM | Report abuse

One would think that if the administration actually believed that the provisions of this bill would be popular, it would have insisted that they kick in before the next presidential election.

Posted by: tomtildrum | March 22, 2010 12:07 PM | Report abuse

So....who pays these subsidies? We do,the taxpayers of America! Taxes are going up and jobs (except for the IRS) will be lost! A pitiful example of Chicago-style politics!

visit: http://eclecticramblings.wordpress.com

Posted by: my4653 | March 22, 2010 12:12 PM | Report abuse

I believe Social Security was passed in 1935, began collecting payroll taxes in 1937, and first distributed monthly checks in 1940. some lump sum death benefit payments were paid between 1937 and 1940.

As ThomasEN observes, some things can be gotten done more quickly using tax expenditures of some sort.

Posted by: bdballard | March 22, 2010 12:13 PM | Report abuse

Slightly confused. Is that payment pre or post subsidy?

Posted by: EricS2 | March 22, 2010 12:15 PM | Report abuse

... aren't there some benefits for children that kick in immediately?

Posted by: NicholasBeaudrot | March 22, 2010 12:19 PM | Report abuse

You're certainly in full bore cheerleader mode today.

Posted by: ostap666 | March 22, 2010 12:27 PM | Report abuse

Ezra, can you please explain how the high risk pools with work? Who is eligible? When do they start?

Thanks.

Posted by: mayelinden | March 22, 2010 12:29 PM | Report abuse

@VB: The 4 year lag was to keep the bill revenue neutral (or deficit reducing) for the 1st 10 year period and keep the total cost under a trillion (mostly for political optics. I don't see why they insisted on the trillion dollar cap. republicans will pillory the bill as too expensive no matter how much or little it costs). Isn't it conservative to save money before making a purchase so one can afford the item (in this case health care). If it started sooner, the bill would have been bigger and would have added to the deficit. Would that have been better?

Posted by: srw3 | March 22, 2010 12:34 PM | Report abuse

I guess my4653 is in the "let people without insurance fend for themselves" camp. Hello, emergency room, the most expensive way to treat people and also supported by tax dollars (hospital tax subsidy) and the rest of the insured (cost shifting). Or just let them die far away from my4653's sight, so s/he won't have to be bothered with them.

Posted by: srw3 | March 22, 2010 12:41 PM | Report abuse

srw3,

yes the dems played political games to get it done. Long term gain for short term losses.

No, it would have been better (IF it was politically feasible) to actually truly affect what docs are paid, how long pharma's path to generics is.


ThomasEN,

not sure. it says "up to 35%" and I'm guessing that you're assuming she's incorporated and a small business? She didn't say that. If she just works somewhere and is a 1099 employee or a w-2 employee does it apply? Don't know.

Posted by: visionbrkr | March 22, 2010 12:44 PM | Report abuse

@my4653: if this woman gets sick, gets pregnant, her kids get sick, who cares for her? who pays for that? Does she just evaporate from the rolls? No- maybe she goes to an ER (another type of cadillac care with terrible outcomes), or she loses her home, her business, and becomes eligible for Medicaid. So in the end we're all paying. And in the meantime her family suffers, all b/c she doesn't happen to work in some big corporation with a nice plan. Is that fair to small business? Isn't health care reform ultimately pro-business, pro-family??

Posted by: Lonepine | March 22, 2010 12:46 PM | Report abuse

1. If a corporation (with more than 50 employees) does not provide health care insurance, they have to pay an annual penalty of $2,000. Right (or was this scrapped?) For an average family of four, the cost of health insurance is anywhere between $1k to $2.5k a month. Isnt it cheaper for the corporation to just pay the penalty? What is to prevent this (employees dropping health care benefits) from happening on a large scale?


2. I am having trouble understanding this pre-existing condition rule, and structurally what happens to someone's rates. If I am self employed, by the 2014, I will be required to purchase my own insurance or face a max penalty of 2.5% my household income. Suppose I make $100k per year. It is monetarily beneficial to me to go without insurance and pay the penalty until I get a health condition. An annual checkup is around $100 plus another couple of hundred for incidentals such as pharmaceuticals. Suppose I get ALS a year later. With your new rules, insurance companies are required to insure me. What will my rate be then? Is there one rate for everyone?

Posted by: davidgearey | March 22, 2010 12:49 PM | Report abuse

"One would think that if the administration actually believed that the provisions of this bill would be popular, it would have insisted that they kick in before the next presidential election.

Posted by: tomtildrum"

They couldn't have done that without exposing the lie that the bill will reduce the deficit.

Posted by: bgmma50 | March 22, 2010 12:59 PM | Report abuse

@VB: Isn't controlling doctor fees, medical and device manufacturers charges, and hospital bills the dreaded socialist takeover of health care that you warn of? Are you actually advocating this move?

@DGerey: I hope that before 2014, that there is an open enrollment period built into the exchanges. If you don't sign up, you have to wait a year before you can get insurance or a mandatory 6 month to a year waiting period before it comes into force, unless you are changing from another plan. This will hopefully discourage the "wait until I am sick" gaming of the system. Clearly this is one aspect of the plan that needs to be addressed before the exchanges kick in...

Posted by: srw3 | March 22, 2010 1:03 PM | Report abuse

First, to recap a point made here quite some time ago, yes, it is far cheaper for a business to pay the fine than it is to buy the insurance.

Second, a small business MAY qualify for a TAX CREDIT of up to 35% of the cost of insurance for its employees: the credit has value only if the business actually has a Federal income tax liability. The Census Bureau offers data regarding the number of small businesses which typically have Federal income tax liability (the overwhelming majority do not).

Posted by: rmgregory | March 22, 2010 1:04 PM | Report abuse

"Suppose I make $100k per year. It is monetarily beneficial to me to go without insurance and pay the penalty until I get a health condition."

It will be monetarily beneficial to you to do that no matter how much or how little you make. Even the lady who is the subject of this post, who expects to make less than $35,000 per year will be better off paying the penalty than the $1540 Ezra calculated she'll pay. Just ask the 40% of new enrollees in the Massachusetts system who have already figured out the math.


"An annual checkup is around $100 plus another couple of hundred for incidentals such as pharmaceuticals. Suppose I get ALS a year later. With your new rules, insurance companies are required to insure me. What will my rate be then? Is there one rate for everyone?"

Yep. This thing has been sold on the basis of guaranteed coverage and community rating. Congratulations. You are in the vanguard of folks who have already figured out how to game the system. By 2014, we all will have.

Posted by: bgmma50 | March 22, 2010 1:06 PM | Report abuse

Immediately, her kids couldn't be rejected for pre-existing conditions. She might qualify for the high risk pool. I don't know if self-employed = small business? Anyone? It seems like her kids might be covered now under Schip? No? That depends on what state your are in and what percentage above poverty level they allow. Also, day one-ish- she won't be discriminated against for being a woman.

Posted by: cminmd1 | March 22, 2010 1:09 PM | Report abuse

srw3,

oh please. When have you ever seen me talk of a socialist takeover? Personally I'd be fine with telling providers to start with that they need to disclose when/if they own a stake in a surgery center/lab and refer to places outside of there to stop them from gaming the system like they do. Also we could hit up pharma for their true fair share too.

I think we'll eventually be forced to get to fee scheduling but that's years down the road (IMO).


rmgregory,

I've already had 5 clients call me to explain to them the "if i drop my employees" how would that affect me. I wonder how bad employee dumping on the exchange will be.

Posted by: visionbrkr | March 22, 2010 1:13 PM | Report abuse

High risk pool? Who runs that? How does it work? Who sets rates? When does it kick in? Etc. etc.

Posted by: ADCWonk | March 22, 2010 1:17 PM | Report abuse

This mother with children probably already qualifies for Medicaid or CHIP and may be one of the 11 million Americans who are already eligible but not enrolled in public programs.

Don't forget the other big health policy success of this Congress - CHIP reauthorization - which contains a lot of outreach and enrollment initiatives that are already taking effect. The administration has already begun a $100 million initiative to expand kids enrollment (http://www.insurekidsnow.gov/) and I bet you will see these initiatives ramping up now that health reform is passed and the public wants to see immediate results.

Posted by: HealthPolicyWonk | March 22, 2010 1:20 PM | Report abuse

... aren't there some benefits for children that kick in immediately?

Posted by: NicholasBeaudrot | March 22, 2010 12:19 PM | Report abuse


maybe the taxes? wait, kids don't pay taxes do they???

yes i'm kidding.

Posted by: visionbrkr | March 22, 2010 1:32 PM | Report abuse

I've got a question/idea for a post. Can we get a succinct overview of the reasons for such intense republican opposition. If this bill does all that it claims to do by Democrats and is technically cost-neutral, then why such furious opposition? What are Republicans looking at that supporters of the bill are disregarding? Is it really simply ideological differences or is there concrete evidence that this bill may cripple our economy? Thanks.

Posted by: chrisnxn | March 22, 2010 1:33 PM | Report abuse

This reader's children are most likely already eligible for public health insurance through the Children's Health Insurance Program!

According to the Kaiser Commission on Medicaid and the Uninsured and the Center on Budget and Policy Priorities' 2009 study, 47 states cover children in families with income at 200% of the federal poverty line or higher ($36,620 for a family of three) and 24 states at 250% or higher ($45,775).

However, keep in mind that only 16 states do not require children to be uninsured for a period of time before they can enroll, whereas that will not be a requirement anywhere for the new subsidies.

Posted by: denagreenblum | March 22, 2010 1:34 PM | Report abuse

@vb: I think we'll eventually be forced to get to fee scheduling but that's years down the road (IMO).

SOCIALISM, COMMUNISM, FASCISM IS COMING!!!
;-)

Making pharma pay its share also sounds like capping charges for medicine [more of the shouting above is inserted here]

To the fine payers...do you think that businesses would rather pay the govt $2000 per worker for nothing or 2500 for those workers to have insurance. Its a selling point to get quality employees and helps reduce turnover ( benefits have a way of doing that ). I hope that the fine goes up with inflation so it doesn't become too cheap to not provide insurance. Is this a burden on companies? Yes. That is why a single payer or VA style system is better, it doesn't rely on employers to provide care. I am all for getting rid of the employer subsidy for providing insurance as long as there is a cost effective alternative available to workers. However, I seriously doubt that wages will go up by the amount that employers save through any insurance interventions.

Posted by: srw3 | March 22, 2010 1:35 PM | Report abuse

"insurers who are being watched and regulated"

Insurers are being watched and regulated now, implying that a lack of watching and regulating insurers is part of the problem now is blatantly dishonest. (But becoming par for the course here).

Posted by: ab13 | March 22, 2010 1:39 PM | Report abuse

I cannot afford health care for myself and my children.

Statements like that have no meaning.

Posted by: jwogdn | March 22, 2010 1:43 PM | Report abuse

I checked the link. I'm one of those ones Nancy Pelosi was talking about - I've worked my whole life. I got sick once about 25 years ago but fully recovered. However, my preexisting condition precludes any coverage. I can retire any time - but not without health insurance. Now maybe I can start to plan rather than wait for 65.

Not many presidents have done things that have impacted me personally. Bill Clinton gave me FMLA. The Bush tax cuts were targeted mostly at the very wealthy, or people with lots of kids, and I didn't really get a piece of that. So this is one thing that I can say a politician did for me.

Thanks President Obama!

Posted by: luko | March 22, 2010 1:45 PM | Report abuse

srw3,

My God I'm a socialist? I had no idea. My mother would be so proud (the bleeding heart liberal that she is).

No making pharma pay to me means putting policies in place to reduce their profit margins from 20% to maybe 5-10. That could include shortening the time frame to generics for regular drugs as well as biologics. It could also include forcing brand name manufacturers to stop paying generic manufacturers not to make generics (I'm thinking that this may be in the legislation or at least it was talked about).

Posted by: visionbrkr | March 22, 2010 1:50 PM | Report abuse

Not to mention the added benefit to the company of having a potentially healthy workforce.

-----

To the fine payers...do you think that businesses would rather pay the govt $2000 per worker for nothing or 2500 for those workers to have insurance. Its a selling point to get quality employees and helps reduce turnover ( benefits have a way of doing that ).

Posted by: JohninMpls | March 22, 2010 1:56 PM | Report abuse

TTTT, many American's do not even know about the effects of passing this legislation. I think the government should engage in an effective awareness and educational campaign for the public.

Posted by: amesshawn | March 22, 2010 1:59 PM | Report abuse

From Newsweek:

-Self Employeed People-

These may be the most hard-off people under the existing system and the biggest beneficiaries under Obamacare. Lacking bargaining power, the self-employed are subject to the worst practices of the insurance industry, like huge price hikes, big out-of-pocket expenses, denial of care, and getting dropped from the plan. Under Obamacare, they'll be eligible to purchase a plan through an insurance exchange, where anyone earning less than 400 percent of the Federal Poverty Line (roughly $88,000 for a family of four) is eligible for a federal subsidy. The level of subsidies depends on the amount of coverage. The plans must cover 'essential benefits,' which include preventive care, outpatient- and inpatient-hospital care, ambulance services, prescription drugs, and maternal care. If an individual refuses to purchase a plan, he or she must pay a price—either $695 or 2.5 percent of income (as of 2016), whichever is greater. (When people talk about an 'individual mandate,' they're really talking about this penalty.)

http://photo.newsweek.com/2010/3/healthcare-reform.html

Posted by: afedarcy | March 22, 2010 2:02 PM | Report abuse

srw3 and JohninMpls,


who said employer sponsored insurance was $2500 per year? if it was would we even be having this discussion?

I'm not understanding where you're getting this figure.

Posted by: visionbrkr | March 22, 2010 2:07 PM | Report abuse

@VB: No making pharma pay to me means putting policies in place to reduce their profit margins from 20% to maybe 5-10.

Isn't it socialist industrial policy to target specific industries for regulation to reduce their profits?

I think you are going over to the dark side...;-)

Posted by: srw3 | March 22, 2010 2:12 PM | Report abuse

@vb: who said employer sponsored insurance was $2500 per year? if it was would we even be having this discussion?

It was just a hypothetical number. I don't know how much employers pay per employee on average. 4k, 7k, 10k, 15k? If it is this high then we need to up the penalty substantially.

Posted by: srw3 | March 22, 2010 2:18 PM | Report abuse

srw3,

it varies from state to state. I know from my experience in the employer market I've seen single rates that range from $4200 a year to $7500 a year and family rates that range from $10,000 a year to $20,000 or more per year.

I preface that with saying NJ's mandates for benefits is what drive our cost along with no mandate for coverage. We've been experiencing for years the "death spiral" that you recently heard about in CA with Anthem.

And in our states the costs are absolutely justified with MLR's in the combined individual and Small employer markets of 85% and the largest carrier was 88%.


I've always agreed (as has AHIP) that the penalty is too low. People will absolutely opt out in many instances especially if its made easy for them to get in and out of the exchange.

The penalty should be regionalized (IMO) and increased.

Posted by: visionbrkr | March 22, 2010 2:49 PM | Report abuse

srw3,

ya it is a little socialist but I'm sick of pharma and their crap personally. Studies I've seen in NJ show that 10 years ago pharmaceutical costs were about 10% of the cost of premium and now they're 25+%. That's a large share of what's driving costs too that people mostly ignore and its only going to get worse.

Posted by: visionbrkr | March 22, 2010 2:51 PM | Report abuse

"Not many presidents have done things that have impacted me personally. Bill Clinton gave me FMLA. The Bush tax cuts were targeted mostly at the very wealthy, or people with lots of kids, and I didn't really get a piece of that."

What you got "a piece of" from George W. Bush was the bill you now pay for the interest on the debt he charged to the national credit card, and the reduced prosperity that we all continue to encounter thanks to the collapse of the economy in 2008.

W and the Republican majorities gave you gifts that keep on giving, never "mis-underestimate" the continuing direct personal impact on your life from the Republican-Bush legacy.

Posted by: Patrick_M | March 22, 2010 2:54 PM | Report abuse

Patrick_M - what I *didn't* get a piece of, you mean. My tax cut amounted to one can of soda outta the machine every two weeks. Grats me. I think you read my comment wrong...or I wrote it wrong. I am happy about the prospects of real reform even though it is more insurance reform than anything else.

Posted by: luko | March 22, 2010 3:33 PM | Report abuse

Besides how the the HC bill will help, it helps to remind people that the form of SCHIP in your state would probably cover her kids with co-pays.
In some states the income limit is fairly generous.

Posted by: vintagejulie | March 22, 2010 11:07 PM | Report abuse

I used the health insurance calculator linked above, and the federal income tax calculator at http://www.hrblock.com/taxes/tax_tips_calculators/index.html# for a family of 4 to come up with this:

Income 35000 fed tax -4793 (credit) Maryland state income tax 1610 health ins payment 1699. Net income 36484

Income 50000 fed tax -1130 Maryland state income tax 2322 health ins payment 3618. Net income 45190.

Income 60000 fed tax + 370 Maryland state income tax 2798 health ins payment 5294. Net income 51538.

So he keeps 58% of the next 15000 in income, or he keeps 60% of the next 25000.

(Maryland tax brackets here: http://individuals.marylandtaxes.com/incometax/ratesbrackets.asp)

Are these marginal tax rates high enough to discourage the worker from (for example) working overtime to increase his income?

Posted by: hleathers | March 23, 2010 10:31 AM | Report abuse

Ezra, I am a 51 year old single mother of 3. I make 92,000 dollars/year. I paid for parochial school for my children. I worked two jobs. I never received one bit of government nor asked for any government help.
I am ineligible for any entitilments, if I want something I work more than the 60 plus hours I do now. Now I will have to pay an extra 200-300 month when I am already being reamed because I choose to work more and not beg. This is a disgrace to the actual working people.

Posted by: nurs2000theresa | March 27, 2010 6:58 PM | Report abuse

Dear Single Mother:
Congratulations! You now have Obamacare.
- You will have coverage, but you probably won't be able to find a doctor, as no doctor wants to have to earn money from the Govt
- You can start paying taxes now, but will get your "coverage" in 4 years
- Don't lose your job! Because you probably won't get re-hired. Obamacare puts a further cost on every worker hired, so obviously, there won't be more people hired.
- Don't protest! You will be labelled a racist and a "hater" by the liberal facsists now in charge.

Posted by: pgr88 | March 28, 2010 11:57 AM | Report abuse

Actually he writer may want to read the bill. A family of 3's income needs to be under $30K a year for a subsidy that high.Now consdering that insurace companies have raised their rates by 40% this year in anticipation of this bills passage she really isn't going to be able to afford insurace but be required to carry it or be fined or jailed for non compliance.The best part for everyone is that the subsidies are paid in your tax return so you get to figure out how to pay for it all year then get the money back on your return.Good luck telling the bank, the landlord and buying food for your family. Now you know why so many were opposed to this, this will make many Americans homeless but they will have inbsurance!How's that Dope and Chains working for you?

Posted by: seraphina2 | March 28, 2010 12:40 PM | Report abuse

Single mom: you probably qualify for SCHIP. Go to the welfare office and check into it.

Posted by: kentuckyliz | March 28, 2010 2:54 PM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company