The other day, on a plane from Ho Chi Minh City to Hong Kong, a flight attendant thrust a copy of USA Today into my hand. After being in Asia for nearly three weeks, reading an American newspaper was kind of a jolt. But this issue was meaty, and stories raised some serious questions about implementation of the health reform law and the financial reform legislation that’s moving through Congress. The parallels are striking. In America, we tend to take half measures that never quite solve the ailments they are supposed to cure.
As readers of my posts know, I have continually pointed out that any health reform short of a truly universal, national health system will leave many citizens over the line, and in the same pickle they are in now. They won’t qualify for this or that coverage for a lot of reasons, but mostly because Congress likes to preserve the market for private insurers and employers while ensuring the government doesn’t spend more than it has to on subsidies. In the end, reform won’t be very helpful for many. Two health stories in USA Today offered fresh evidence that the “over-the-line” problem has surfaced.
The paper ran an AP story on last week’s announcement about the tax breaks for small businesses, which will theoretically help them buy insurance for their workers. This is the same deal the administration hawked during the debate, trying to woo the business community. It turns out, the paper said, that “Even if it amounts to free money, many small businesses won’t qualify for the tax credit.” No kidding, I said to myself. Now we know exactly which ones.
The full benefit—the government’s subsidy of 35 percent of the premium—goes only to firms with ten or fewer workers who have average salaries of $25,000 or less. What about firms with twelve workers who have average salaries of, say, $32,000? Do they get a smaller benefit, even though these twelve workers may have the same trouble buying coverage as ten do? Congress further limited the benefit: A sole proprietor gets no subsidy, and neither do businesses with twenty-five or more workers with average wages of $50,000 or more. So how many firms will the tax credit help? The administration, usually on the cheery side of things, says four million; the National Federation of Independent Business says 1.8 million.
Down the page, money columnist Sandra Block tackled what arguably has been the law’s most talked-about provision—letting young adults stay on their family’s policy. Here again, some of these adult “kids” are over the line. In an informative Q and A, Block discussed the new rules. All children up to age twenty-six can stay on the family policy, or get back on it if they’ve gone off. But if they are working at a place that offers health insurance, they don’t qualify for mom and dad’s coverage, even if it is cheaper. The rules say they have to take what their own employer offers, even if they can’t afford it. In other words, they can’t shop around.
Of course, they can choose to skip the insurance, as many do now. You might say they are over the line, and so are the twenty-six- or twenty-seven-year-olds who are forced to shop in the still perilous and costly individual insurance market. How many of them might benefit from the cheaper family policy?
Two stories by the paper’s fine consumer finance reporter, Kathy Chu, illustrated the same consumer issues in a different way. Attempts by Congress and regulators to limit bank overdraft fees and credit card rate increases will simply mean higher fees on other banking services. Chu reported that the new credit card rules will cut bank fees by $5 billion. In another story, she quoted the senior vice president at Celent, a bank research company, who said: “What you’re essentially doing is squeezing the balloon, [so fees] are going to pop up somewhere else.” Why, that’s the same quote we’ve seen over and over about controlling health care costs. Limit fees on one side, and more costs pop up somewhere else.
Chu pointed out that banks will simply compensate for credit card restrictions in other ways, like eliminating free checking accounts and bundling other services to boost profitability. Jim Brush, an owner of Key West Key Lime Pie, in Big Pine Key, Fla., summed up the consumers’ dilemma: the government, he said, “put these restrictions in place to try to protect consumers, as we’ve seen, the banks and credit card companies have always found ways around them.”
A small business owner who needs help buying health insurance might feel exactly the same way.