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Health Care: At What Price?

Posted By David Green On October 7, 2009 @ 9:24 am In Obamacare | Comments Disabled

Food or health care? For many of the poorest working families, that may no longer be an option should Senator Max Baucus’ health care bill [1]become law. Through an individual mandate enforced by tax punishments, all adult Americans will be required either to purchase a health care plan or pay a fine. While only a nuisance for more affluent families, this has the potential to injure low-wage workers by decreasing real wages, increasing layoffs and reducing job opportunities. Should the poorest American workers be responsible to fund health care form?

Baucus’ plan would require all Americans between 133% and 400% of the Federal Poverty Level [2] to pay a sliding percentage of their income for health care, increasing as the worker earns more. For an individual earning $19,915 annually, they would be required to spend as much as $1,145 [3] on health insurance premiums, the rest to be covered by their employer. Based on the Bureau of Labor Statistics Consumer Expenditure Survey, an individual in this salary range spends roughly $268 [4]per month on food. That comes to over four months of food, spent instead on mandatory health insurance.

Of course, this same individual could opt out of health insurance, but they would be responsible for a tax of $750 for a service that they do not receive. These numbers are mimicked even for a family of four at 300% of the Federal Poverty Level earning almost $70,000, which could be responsible for an $8,337 [3] mandatory health plan. With BLS data, this sum could feed this family for almost a year [5], but should this family opt out they could be on the hook for a $3,800 fee to remain uninsured. Never before have Americans been obligated to pay so much for nothing.

All of the numbers above were based on this individual keeping their job, but even this is not guaranteed. [6] Firms would be required to pay the difference between their employee’s contribution and the actual cost of health care, and since employees from affluent backgrounds would foot more of their own bills, employers would be less inclined to higher those who need work the most. This low-income worker trying to support a family would not be able to compete against another job candidate already covered as a dependent on the policy of a higher-income parent or spouse. Moreover, money does not grow on trees, and firms must cut their newly acquired losses [7] by either raising prices for their goods or lowering wages. Employees just above 133% of the Federal Poverty Level, the new cutoff for Medicaid, would likely see their wages cut to move them onto government programs, and in states with high minimum wages, this could drive firms to layoff or reduce hours to maintain profits. A provision that caps firms compensating for health insurance at $400 [1] times the total number of workers would provide yet another incentive for firms to hire individuals and families able to pay their way, rather than those most in need.

Health care reform is needed, but changes that would endanger the well-being of the poorest working class are not the correct way to fix the system. While a single-step fix may be attractive to politicians, problems with the health insurance industry are far too widespread, far too interwoven into the fabric of our economy; a one-time fix would be like slapping a band-aid on an amputated limb. What we should do is tailor our reform with systematic alterations to enhance the delivery system and lower costs. Health reform is absolutely necessary, but we should not require that those least capable finance the changes.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/10/07/healthcare-at-what-price/

URLs in this post:

[1] Senator Max Baucus’ health care bill : http://finance.senate.gov/sitepages/leg/LEG%202009/091609%20Americas_Healthy_Future_Act.pdf

[2] Federal Poverty Level: http://aspe.hhs.gov/poverty/09poverty.shtml

[3] $1,145: http://www.heritage.org/Research/HealthCare/upload/wm2628_table1.pdf

[4] $268 : http://www.bls.gov/cex/2007/Standard/income.xls

[5] almost a year: http://www.bls.gov/cex/2007/Standard/cusize.xls

[6] even this is not guaranteed.: http://www.heritage.org/Research/HealthCare/wm2628.cfm

[7] firms must cut their newly acquired losses: http://www.heritage.org/Research/HealthCare/bg2325.cfm#_ftn2#_ftn2

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