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Senate healthcare bill: mandates and penalties to force and coerce the healthy into subsidizing the unhealthy

 The Senate version dropped the public option but it looks as if they also dropped the low income exemptions on the $750/individual, $2250/family fine for not buying insurance, although there will be some aid or subsidy to individuals making less than 43k/year and families of 4 making less than 88k/year.  Anything over those limits, buy insurance with no subsidy or pay a fine.  No mention of what is an allowable policy, but my understanding of the House version was that it specifically disallowed high deductible, low premium policies (the type that result in the most efficient use of healthcare).

 

The strategy is to essentially coerce young, healthy individuals into subsidizing old, unhealthy individuals with big insurance companies as the middle man.  It’s not grandma and grandpa getting the shaft.  It’s the 27-50 year olds who make over 43k/yr and are either going uncovered, or opting for a high deductible, low premium “disaster plan.” 

Excerpted from
:  http://finance.yahoo.com/news/How-the-Senate-Bill-Would-usnews-3662333789.html?x=0&.v=1  Italics are my commentary.

 

Required coverage (the "individual mandate"). American citizens and legal residents would be required to have health insurance, or pay a fine. For an individual, the fine would be $750 per year or 2 percent of household income, whichever is greater; for a family, the maximum fine would be $2,250 per year or 2 percent of household income. The fines would go into effect gradually, starting in 2014. The House bill is similar, with exemptions for certain low-income people.

 

Force and coercion.  So much for free will.

 

Employer obligation. Companies with more than 200 employees would be required to enroll their workers in a health insurance plan, with no ability for employees to opt out. Companies with more than 50 but fewer than 200 workers would not be required to offer insurance, but if they didn't, they'd have to pay a fee of $750 per employee each year (with some variations). Companies with fewer than 50 workers would not have to offer insurance or pay any fees. Those rules would go into effect in 2014. The House bill would place similar requirements on employers, but with a different way of determining which companies are required to offer insurance.

 

While I lack the data to calculate the precise employer labor cost increase, this is inarguably an employer labor cost increase.  To increase employer labor costs at a time when 1/10th to 1/5th of the country is out of work makes my head explode.

 

Subsidies to help pay for coverage. In general, government subsidies would help cover the cost of insurance for individuals earning as much as 400 percent of the poverty level. (In 2009, the poverty level for an individual in most states was $10,830; for a family of 4, it was $22,050. So an individual earning less than $43,320 or a family of 4 earning less than $88,200 would qualify for some aid.) The House bill has a similar income threshold for subsidies, but a different formula for determining how much the subsidy would be.

 

Bottom half of wage earners get some sort of subsidy, top half get no subsidy to comply with mandate.

 

Insurance for high-risk patients. People who can't get traditional coverage on account of a pre-existing medical condition would be eligible for insurance under a new "national high-risk pool," with rates comparable to those for the general population. The pool would go into effect quickly--within 90 days of a bill becoming law.The House bill has a similar provision, with different ceilings for allowed premiums and deductibles.

 

A much higher cost pool that will charge premiums comparable to everyone else.  So who pays for it?

 

Lifetime limits. Insurance companies would no longer be allowed to cap the amount of lifetime benefits or cancel coverage, unless the patient defrauded the insurer. Those rules would go into effect in 2010. By 2014, there would be tougher limits prohibiting annual caps on benefits, in addition to lifetime caps. The House billhas similar provisions and would go a step further by severely restricting insurance companies' ability to deny coverage on account of pre-existing conditions.

 

Once again, who picks up the increased cost, and what is the increased cost?

 

New taxes. To help pay for increased coverage, a number of long-standing tax credits and deductions would decline, while taxes on some other benefits would increase. One of the most prominent changes would be a tax on "gold-plated" health insurance plans that provide lavish benefits but are expensive; the threshold at which the surtax would kick in would be $8,500 for an individual's annual premium and $23,000 for a family's. There's a lot of fine print, however, and some people with gold-plated plans would probably end up exempted from the tax. The House bill doesn't tax gold-plated plans, but raises funds through an additional 5.4 percent income tax on individuals earning $500,000 or more per year, and families earning $1,000,000 or more. All of these new taxes are controversial, creating more flash points for negotiators.

 

This is a misdirection, smoke and mirrors play so we can focus on the tax increases on millionaires and lose sight of the fact that the penalty fines for not complying with the mandates are a tax on those with incomes starting at 44k/year.