Paying for Health Care

Paying for Health Care

Small Business

A friend of mine runs a small business, with about twenty employees.  He shared with me the costs of providing health insurance for his staff. 

 One employee, in their early thirties with a spouse and two children, costs $17400 per year for coverage, even with a $10000 deductible.  The cost is divided between the employer and employee, and has continued to rise at ten percent per year.

While my friend didn’t share the salaries of his employees, it’s a small business, and no one is making a huge salary.  This insurance cost is $1450 a month, shared by the employee and the employer.  It’s a big chunk, either out of the employee’s pocket, or in money not available to my friend to use for pay-raises.  And the cost just keeps growing.

For the past three decades, the United States has been debating the costs of health care.  As the nation has argued, the price we pay continues to escalate.  Today, the US has the most expensive health care in the world.  For those with good insurance, it is some of the best care in the world, but for those who don’t have insurance, the cost of care makes it inaccessible.  

The Problem

We know all of this.  13.7% of Americans DO NOT have health insurance (VOX.) We know that some of those Americans choose not to purchase insurance, “rolling the dice” and banking on their good health and luck.  But many do not choose, they simply cannot afford insurance, and aren’t “poor enough” to qualify for government paid insurance, Medicaid.  

And what about the Affordable Care Act, “Obamacare”?  If filled in some of the gaps, helping many of those caught in between having enough money for necessities, but not enough for insurance.  But it wasn’t perfect in the first place, and the present White House is slowly cutting away the supports of the ACA.  The prime funding for it, “the individual mandate” requiring everyone to either have insurance or pay a fine, is gone. And while the ACA is cheaper than competitive private insurance, it certainly isn’t cheap.

Medicare for All

Last week, twenty Democrats running for President debated health care.  All twenty agreed that changes should be made in how our nation provides it.  But that’s where the agreement ended.

The most “radical” plan calls for the end of private insurance.  Everyone would be enrolled in a government plan, “Medicare for All.” This is not the “free” medical care Republicans decry.  Medicare for All costs, and would be paid for by increased taxes.  The difference for most Americans would be that instead of paying for private insurance, they will pay Medicare taxes, presumably less than the private costs.

It has the benefit of “economy of scale.”  Everyone will be on some variation of the “same plan.”  Pharmaceutical companies can only negotiate with one entity, the government.  And private health insurance profits are gone.

“Everyone loves Medicare” is the battle cry of the Medicare for all folks, and that’s generally true. But there is a, perhaps fatal, flaw in the plan.  It would require that over two-thirds of the country (Census) give up their private insurance, and switch over.  Many, perhaps most Americans, are pretty happy with their health plans, even if they complain about the rising costs.  To ask almost 218,000,000 to give up their insurance for an “unknown” plan would seem to be more than difficult, and definitely bad politics.

Hybrid Plans

So there are multiple “hybrid” plans, including a “public option” allowing government sponsored insurance to compete with private insurance plans.  It’s difficult to see how this could be cost effective for the government, and has the drawback of folks paying for private insurance also paying taxes for government insurance (sort of like the parents who send their children to private schools, but still pay public school taxes.) 

Then there is the option of “re-booting” the Affordable Care Act. That allows the government to subsidize private plans. It also creates the incentive of requiring everyone to either have insurance or pay a fine, as the ACA was originally constituted.  The ACA’s biggest problem was getting insurance companies to participate in areas where there was little competition.  That created areas (particularly rural) where ACA costs were extremely high.

Republican Alternatives

While all of these ideas have their flaws, there is one thing for certain.  The President and the Republican political leaders haven’t offered any alternatives.  Their choice seems to be to go back to the insurance era of twenty years ago, when insurance companies could refuse to cover pre-existing conditions, and simply not cover those with higher risks. That leaves many Americans “bare” of coverage, pushing the cost of their limited care onto hospitals and government.

There doesn’t seem to be a “great” option, but doing nothing isn’t an option either.  My friend’s business is struggling with the cost of insurance, and his experience is typical.  Insurance is absorbing more and more of the income available for both the business, and the employee:  ultimately it is unsustainable.

One way or another, change will have to come.