Appleby explained that the first year the legislation takes effect (2013, as of now), people getting subsidized coverage would have to pay between 2 and 12 percent of their incomes for the insurance, depending on how much they earn. The government, of course, would pay the rest of the cost—that’s the carrot to entice people to buy in the first place. Those with lower incomes would pay less; those with higher incomes more. Okay—seems reasonable.
But in the second year and afterward, Appleby reports that the subsidies will be “based on a percentage of the premium that was paid the first year, no matter how far premiums rise.” Because wages don’t go up as fast as premiums, families, particularly those at the lower end of the income ladder, could easily find themselves paying far more for coverage as a percentage of their income than they were led to believe they would pay. And with premiums going up and up, which is the likely scenario, they will struggle and perhaps forgo insurance altogether. It’s possible these families will have to choose between paying the electric bill and satisfying the government mandate to buy health insurance. Is this the 2009 sequel to The Poor Pay More? (Historical note: that was the title of a 1967 book, by David Caplovitz, that detailed the consumer practices of low-income families.)
The point of this sleight-of-hand is to keep the total cost of the government subsidies as low as possible, and shift the burden of the rising cost of medical care—and thus insurance—to the consumer/patient. The best quote in Appleby’s piece came from Karen Pollitz, who directs Georgetown University’s health policy shop:
‘They did this to make subsidies a little cheaper. But it means that if you’re (a low-income policyholder) struggling in the first year, it will get harder and harder…unless we have some massive breakthrough in cost containment and the growth of premiums slows.’
Folks, that’s not likely to happen. As Campaign Desk has reported many times, there is little serious cost containment in the reform bills. This budgeting trick courtesy of the U.S. Senate needs some scrutiny and fast. Assignment editors take note: Why not send a reporter out to see how this devil in the details would treat families in your area—and while you’re at it, explain the games lawmakers are playing with family budgets in an attempt to give a patina of acceptability to the federal government’s budget. Sounds like a great story to me.