 Under proposed healthcare reform, millions of low-income Americans may get coverage for the first time, and high-income Americans may face higher taxes to help pay for it; but less certain is whether middle-income Americans, already strapped by other economic hardship, will get any help at all, reports Kaiser Health News.
Millions of Americans who won’t qualify for expanded Medicaid under reform measures now in the reconciliation phase in Congress and ineligible for federal subsidies may be forced to pay health insurance costs they say they can’t afford or face a penalty. If they qualify for the hardship exemption, healthcare reform would mean nothing for them – they still would be without health insurance, note experts quoted by Kaiser Health News.
(Kaiser Health News is editorially independent of Kaiser Family Foundation.)
“More Costs, Less Coverage”
A July 2009 report by Kaiser Family Foundation, “Healthcare and the Middle Class: More Costs, Less Coverage” outlined a multitude of ways in which the American middle class stands to be worse off under proposed healthcare reform, principally by being mandated to have health insurance coverage, which many may now forego to pay other basic living costs, such as for food, shelter, and childcare.
Although much of the popular focus in discussions about the uninsured is on low-income families, KFF has found that almost three-fourths of the growth in the ranks of the uninsured from 2004 to 2007 was among middle income Americans.
Middle income families who do manage to have health insurance through employers have seen an erosion of this coverage (in both good and bad economic times), as well as a dramatic run-up in premiums and out-of-pocket expenses, according to the report:
• From 2000 to 2008, premiums grew more than three times the growth in wages and employee contributions to employer-based insurance consumed 7 percent of pre-tax wages (and rising)
• Another worsening problem is how many middle-income Americans are faced with spending more than 10 percent of their income on medical expenses. In 2004, one-third of the 45 million people who fell into this category were middle-income Americans.
“Even when premium increases have moderated over the last decade, the rise in healthcare costs and premiums has far outpaced the growth in wage earnings, creating a growing gap between worker’s incomes and the cost of health insurance – which means workers have to spend more of their income each year on healthcare in order to maintain their current level of health coverage,” the report noted.
The percentage of income these families must devote to healthcare is continuing to rise, but they are not eligible for Medicaid and not likely to benefit under healthcare reform.
These families are in need of help. According to June 2009 KFF polling data, cited in the report, middle-income working-age adults (with incomes from $40,000 to just under $90,000) are experiencing recession-related hardships and will be further burdened by the requirements on them under healthcare reform:
• 1 in 6 has lost a job
• 1 in 5 is having trouble paying credit card or other debt
• 1 in 10 lives with a family member who has lost health insurance
• Almost 1 in 10 is having trouble purchasing food
• 1 in 4 report difficulty paying medical bills
Facing the Unknown
A 2007 Cato Institute analysis asserts one problem with a mandate for health coverage is the determination of what constitutes the “minimum benefits package” that Americans would be required to have.
Adding additional benefits will increase premium costs, but drawing the line narrowly around minimal benefits has proven difficult.
“All states together have created nearly 1900 mandated benefits. Given that medical interest groups have found it worth their time and money to lobby 50 state legislatures for laws affecting only voluntarily purchased insurance policies, mandatory insurance will only exacerbate the problem,” according to the analysis, adding that existing mandates “have increased premiums by an estimated 20 to 25 percent, depending on the state.”
Justification for Mandate in Dispute
One longstanding justification for mandating health insurance coverage for all Americans is that the uninsured incur healthcare costs that are much more expensive; because they can’t pay, these costs must necessarily be borne by insured Americans in their own higher premiums.
The amount of this so-called “hidden health tax” is greatly in dispute. Families USA said this burden amounted to more than $1,000 in costs for a family of four and $368 for individual coverage in 2008; however, FactCheck.org points to a KFF study that finds the figure is vastly inflated and is closer to $200 per family.
That means, according to KFF, the uncompensated healthcare costs account for less than 1 percent of private health insurance costs; thus, mandating health insurance for this reason will only negligibly affect overall healthcare costs, if at all.
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