Tuesday, September 22, 2009

More on changes

Wash Post has nice article that clearly summarizes the economics and distributional realities of paying for expanding coverage.

Washington Post has story of changes to increase subsidy for persons forced to buy insurance via individual mandate in Senate finance committee bill. This is easy to do, but it costs money, so the calculus is figure out what you think is affordable and then figure how you pay for it. The high premium tax on health insurance is wobbling. I would scrap it in favor of more simply and clearly saying that we will limit the tax exlcusion of employer paid premiums. I would put it at the average premium, which is a lot bigger whack than what they are talking about now. Without the tax on higher premium plans or capping the tax exclusion, you lose the only, completely predictable cost saving attribute of this approach. I get that this hits you worse if you live in a high cost state.....but high cost states are part of the problem that make our current system unsustainable.

For comparison, my back of the envelope noodling shows the following affordability amounts in Baucus as written now, Senate HELP, and what Massachusetts has in their connector.

Amount family of 4 has to pay if income around 300% of poverty level ($60,000ish).
*Baucus as written $7,100
*Senate HELP committee $5,800
*Massachusetts $4,400

Easy part is increasing subsidy....harder part is paying for it. My proposal to cap tax exclusion at the mean would do it. In the end, it is unfair that people with employer paid insurance get unlimited subsidy via the tax code, while the uninsured get none. Call it a tax....I think it is closing a tax loophole. But, whatever you call, it leads to some being overinsured, which drives up health care costs.....while others are uninsured and underinsured.

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