Via Ed Cone comes this interesting piece with an even more interesting graphic about the Senate's health care reform proposal. The graphic compares the projected annual costs of health care (defined as premiums and cost sharing) to a family of four making $54,000 a year in 2016 under three different scenarios: If the Senate Bill is passed, the Status Quo (nothing changes from today's system), Status Quo + SCHIP (the cost of insurance under the status quo if you qualify for SCHIP subsidies). Basically the annual out of pocket expense for the family under the Senate Bill would be $9,000 while under the status quo it would be over $19,500. The difference is due to a $10,000 subsidy the author identifies in the Senate bill. He also says that progressives, who generally don't have a problem with "big government," should be all over this thing instead of railing against it. Here's an excerpt from his breakdown of the "Status Quo" figures:
In 2009, the average premium for a family in the individual market was $6,328, according to the insurance lobbying group AHIP. However, this figure paints an optimistic picture for two reasons. Firstly, the average family size in the AHIP dataset is 3.03 people; for a family of four, that number would scale upward to $7,925, by my calculations. Secondly, the CBO's estimates are based on 2016 figures, not 2009, so to make an apples-to-apples comparison, we have to account for inflation. According to Kaiser, the average cost of health coverage has increased by about 8.7 percent annually over the past decade, and by 8.8 percent for family coverage. Let's scale that down slightly, assuming 7.5 annual inflation in premiums from 2009 through 2016 inclusive. That would bring the cost of the family's premium up by a nominal 66 percent, to $13,149. And remember: these are based on estimates of premiums provided by the insurance lobby. I have no particular reason to think that they're biased, but if they are, it's probably on the low side.
I'm glad to see someone finally putting some digestible figures out there. While the figures might just be estimates the author at least puts the argument in the proper context. As someone who has an average healthy family of five (two adults, three children) and who has been in the individual insurance market for years I can tell you that the $19,500 estimate is definitely in the ballpark since we've been dancing in the $12,000-$14,000 a year territory for quite a while.
Out of curiosity I decided to see how this health expense compares to a yearly mortgage expense. I went to an online mortgage calculator and put in $150,000 for a 30 year loan at 7% interest. The monthly mortgage payment would be $997.50 which my middle-school level math tells me is a little under $12,000 a year. So the projected "status quo" premium of $13,149 in 2016 is over a $1,000 than the annual mortgage expense on a $150,000 note. That's truly insane.
Oh, and the more the insurance is the higher the monthly expense the insured has to report on his loan application and that lowers the amount that he'll qualify for. That means he and the other average folks like him buy less house, which means the developers have to build smaller/cheaper houses, which means the developer's suppliers sell him less stuff, which means they employ fewer people, and so on. All so average people can pay out the nose for a piece of paper which tells them that they might not be bankrupted by a horrible illness as long as it wasn't some sort of preexisting condition or didn't happen during a full moon. That's not just insane, that's bat---t crazy.
