Growing and strengthening west Michigan's middle class
Sean Egan (IBEW 275) is the chair of the Kent-Ionia Labor Council.
Statistically, the wealthier you are the healthier you’ll be. There are certainly a lot of reasons for this, but it doesn’t mean we have to accept it. The Republicans’ healthcare plan—the one they’ve secretly cobbled together as a replacement to the Affordable Care Act (ACA)— is garbage and sadly is what you would expect from this radical-right Republican party.
The ACA, often referred to as Obamacare, is a self-funded, deficit-neutral program designed to bring everyone into the health insurance market. This is the logical way to drive down health costs. Even if you have employer sponsored and/or paid coverage, having large numbers of people uncovered by insurance ultimately drives up your cost too. People will get, and deserve, treatment whether they are insured or not. But if they’re not insured, their higher cost for treatment is passed along to those with insurance coverage.
First, insurance is simply a pool of people with various risk. The higher risk individuals—those in need of care— are “subsidized” by the lower risk— those that are currently healthy. The more participants a plan has, the lower the overall cost for everyone, as the costs are spread across a larger base.
Second, all of us will need medical care at some point in our lives so it makes sense that healthier people pay into a system that they will later get the benefit of. Think Social Security and Medicare: We all pay in to get a benefit later.
Healthcare is similar. If you skip paying in when you are young and healthy, the costs of care and insurance are borne entirely by those in need of care as they age.
As much as I don’t like to admit it, I’ll get older and slowly (or perhaps quickly) start to need medical care. Also, young does not necessarily mean healthy but it is fair to say that for the purposes of this write-up, younger people, on average, require less care.
Under the ACA, individuals are mandated to get coverage for this reason. You cannot have affordable care provided to people with pre-existing conditions if you do not expand the insurance pool to include those that are currently considered healthy.
But, the law included taxes on wealthy people, Cadillac plans, multi-employer plans, and others to help fund it and remain deficit neutral. The Republicans’ main complaint seems to be the tax on the wealthy.
They also seem to have a problem with the government subsidizing health costs based on income, and want to drop that subsidy and shift to a tax credit based on age.
This Republicans’ plan to offer tax credits to help with the cost of purchasing insurance is complete hogwash for working people. Imagine you make $60,000 per year, are a family of four— two adults, two children— with no smokers. Right now, you would be required to have insurance and you would get a subsidy covering roughly 60% of the cost of a family plan that costs $12,151 per year. Monthly, your cost would be $404 with the subsidy vs. $1,013 without. Also, the subsidy is built in, so you don’t have to pay the money up front and wait for a tax credit at the end of year. (Source: Kaiser Family Foundation Health Insurance Marketplace Calculator www.kff.org/interactive/subsidy-calculator) These numbers change with income so the subsidy is more if you earn less and less if you earn more.
Under the Republican plan offered today you would get a tax credit; there would be no exchange on which to buy the insurance; healthy individuals would not be required to get in the risk pool; the wealthy would get a huge tax cut; and the built-in subsidy goes away, which means individuals and families will now have to pay the full cost of coverage up front. They propose age brackets (rather than income brackets) for the tax credits that start at $2,000 for people in their twenties and creep up to $4,000 if you are over 60. (www.kff.org)
So, back to our family of four, who are in their thirties, earning $60,000 per year. Under the Republican’s new plan, they will now have to come up with the $1,013 per month, and save their receipt in order to get a tax credit of $2,500. This hits the family with a premium cost of $804.25 per month (an increase of $400 from the ACA), or an additional $4,803 per year. And, because it is based on age, not income, there is no proportionality for need until it starts to shrink for people with very high incomes.
So here is the Republican’s replacement for the ACA: Lower the number of people in our risk pool, cut taxes for the wealthy, and require working families to pay more. Sound good to you?
Keep up the pressure on Congress. This type of “free-market-will-save-us-all” logic dooms us all to failure, and apparently poor health.