The MyBarackObamaTax
I did a post when Max Baucus first released the Senate Finance Committee bill, showing that for a middle class family of four, a significant medical event would leave the family with just $7,215 to pay transportation, education/child care, utilities, debt, and other necessities.
I wanted to do the same exercise again, because the Senate bill has changed to include more subsidies for those between 300 and 400% of the poverty level. As a result of those subsidies, the bill has gotten much better for the middle class. But it would still leave a family of four that had experienced a significant health care event with just $13,620 to pay for everything besides food, housing, health care, and income taxes.
I’m going to do two scenarios — one for someone just above 300% who will receive subsidies and have a premium limit, and one for someone just over 400%. While that artificially calculates the number for those who would be in the worst case scenario, as far as benefits (meaning they make just enough to miss out on some subsidies), it does give a basic idea of what this will do to middle class families (though it is inaccurate in that those over 400% of poverty have no cap on premiums, so those numbers could be higher). Since subsidies are figured on “silver” plans which allow actuarial values of 70%, this is what might happen to a family incurring around $39,666 in medical costs over the year, in which case they would pay the full out-of-pocket costs for their income level.
As with my earlier post, please let me know if you’ve got better estimates — but provide a link. Note the income tax for the lower income level is based on Brookings/Urban Institute/Census data. The state taxes are based on MI’s relatively low rates, so those numbers would be higher for most people.
301% of Poverty Level: $66,370
Federal Taxes (estimate from this page, includes FICA): $8,628 (13% of income)
State Taxes (using MI rates on $30,000 of income): $1,305 (2% of income)
Food (using “low-cost USDA plan” for family of four): $9,065 (14% of income)
Home (assume a straight 30% of income): $19,275 (30% of income)
Health Care: $14,477 ($7,973 out-of-pocket + 9.8% of income; totals 22% of income)
Total: $52,750 (79% of income)
Remainder for all other expenses (including education, clothing, existing debt, transportation, etc.): $13,620 (or 21% of income)
401% of Poverty Level: $88,420
Federal Taxes (really rought estimate based on this page, includes FICA): $13,263 (15% of income)
State Taxes (using MI rates on $45,000 of income): $1,957 (2% of income)
Food (using “low-cost USDA plan” for family of four): $9,065 (10% of income)
Home (assume a straight 30% of income): $26,526 (30% of income)
Health care: $20,565 ($11,900 out-of-pocket + 9.8% of income–though note there is no limit on premiums for this income level, so this could be higher; totals 23% of income)
Total: $71,376 (80% of income)
Remainder for all other expenses (including education, clothing, existing debt, transportation, etc.): $17,044 (or 19% of income)
I’m going to start collecting other likely costs below, to try to round this out.
Transportation costs (assumes 1 car, 12,000 miles/year, at IRS rembursement rate): $6,600
A little OT: you know why Barry wants this done before Christmas?
So people sitting around the dinner table can’t have a “should they pass it” discussion, with some wisenheimers telling the less-informed just how poisonous the current bill is, followed by a mass of calls to congresscritters on 12/28.
Just saying.
And, EW, if you want to find a resource for determining what stuff costs for a family, you may want to look at the tables your state uses to calculate appropriate rates for child support payments. Most states calibrate those by income and number of children. They won’t break out stuff by items (like car, cable TV, internet, etc.), but they will tell you how much.
It might even show you that the cost of keeping a family and kids already has been determined to be more than the Barry tax would leave.
Newspaper subscriptions. Must have items.
Also that very important paid television (Cable/Sat TeeVee) to get Fox News, MSNC, CMBC and CNN bone heads.
Hilarious that the whiny media who’s losing readership can’t figure out the shrinking middle class can’t afford what’s advertised; Macy’s Ads , the new cars or the newspapers’ 0.75 cover price.
You laugh, but cable TV is a standard item in child support and alimony calculations. Figure between $80 and $100 a month. Any lawyer who’d try to get through wihtout including cable TV would either get a cockeyed look (rookie!) or a good chewing out (for the experienced attorney).
I agree with you, not laughing at the cable TV as a middle class item, but at the talking heads and editors who don’t get “it”.
Their customers are being squeezed and the product they sell and their advertisers are being impacted negatively.
As health care costs rise, cable TV, newspapers and their advertisers will suffer.
Health care is a significant chunk of income and increasing.
If you can’t afford cable or satellite, you probably aren’t going to be watching much TV anyway.
In many areas, without cable or a dish, your TV choices are limited to whatever might be available from a repeater, or to channels full of snow because the transmitter is forty or fifty miles away.
We’re seeing the middle class shrink, and health care costs eat into discretionary spending.
What’s there to cut? Cable and Sat TV. Newspapers. And all that stuff being advertised in those mediums.
What people cut first is movies and eating out. Those are discretionary. After that, newspapers and magazines. Cable and satellite and Internet are after that.
Well, with that number for food, there is no eating out, because it’s pretty bare bones.
I’ve had times when I was eating ‘rice and’, because what I was being paid wasn’t much more than I had to spend. The habits die hard.
Most weeks I spend about $45 on food, but that includes the weekend salads. Lots of eggs and cheese, not much meat. I buy store brands and sale stuff, and I avoid the chips and the cookies.
Exactly, that’s what I have cut out of my one person household budget as money is tight.
EW, you’ve been on fire all day! Some of the best stuff I’ve read on the state of play wrt HCR anywhere!
boy howdy!!
meat and potatoes cut through the foam from the mouth
Those numbers for the 301-percent group sound about right, from my own experience.
Transportation for me: 2600/year for train pass (for now, but will be increasing next year by at least 3%, plus the possibility of an additional pass for the two stops each way on the subway); 1200/year for car insurance (includes discounts, but it’s also pretty close to the minimum coverage). Current registration fee about 150/year. (I don’t drive a lot, and the car is paid for.)
Here’s a few items off the top of my head that are necessities, or “luxuries” that have come to be seen as necessary:
– television, the minimal channel spread if not one or more premium packages
– internet access
– telephone service, home phone and/or one or more cellular phones
– heat, water, and electricity if not already included in your 30%-of-income estimate of housing costs
– pet costs – food, veterinary visits, licensing and shots
– “indulgence” spending – take-out and/or fast food, movies rented or in theatre, books, gifts for Christmas and birthdays
Housing costs is just the cost for the shelter itself–realtors and landlords tend to use that 30% for what is affordable. So it doesn’t account for the millions who got stuck in something (or an ARM) that is much more than that, for those who own houses, it doesn’t include upkeep and property taxes (which for my 1000-sq foot house would eat up a third of the available 20%).
FYI They increased the subsidies for those between 300 and 400% of the poverty level by deceasing the subsidies for those between 134 and 154 percent of the poverty line.
Essentials?
Internet access? No. Lotsa people use Internet access that they have on the job, or in libraries. Via Al Gore (no kidding), under Clinton, the government did research on the Digital Divide. The Bush admin took it all off gov’t websites because they wanted to suppress the info.
Telephone service? Cell phones may have changed this situation drastically, but maybe not. Until they became ubiquitous, land line service was an option amongst the poor. I know because when I was doing survey research in the 1990s, telephone numbers was one of the most volatile elements of personal contact. One could almost calculate the half-life of a person’s telephone number, like this: Say you have a customer list of 1000 phone numbers, compiled at random from the entire population. How many of those would still be valid in 3 months? 6 months? One year? You might be surprised. I’ll bet this volatility still exists, even with cell phones. Check this out: You can get a cell phone and sign up for service without cash on the barrelhead, can’t you? How many cell phones do you think get used until the phone company cuts off the number because of nonpayment, and then thrown away?
Bob in AZ
FWIW, my wife and I are going through hell right now trying to figure out how to make ends meet. I was laid off in January this year and picked up a contract job that ended last month. We have depleted our savings, so now we are down to really scratching.
I am 57 years old, so health insurance is a must — but the COBRA costs $713 per month (almost half of what I get for unemployment). She works, so her check covers the mortgage and electricity and other basic essentials. We have been living pretty tight for several months, trying to make a go of it. Unfortunately, there is no way now to make it, even with unemployment.
What it boils down to is that we have a lot of unsecured debt that will not get paid. Maybe it is our own fault, but it is what it is.
I have been reading up on bankruptcy laws, and the Republican party has really hit a home run for the banking business — people in trouble have no way out, unless they want to put up with 6 months of crap from collectors and others. What it amounts to is that if I go back to work, there IS no way out, even if I file Chapter 13.
We contacted Chase Bank, which I have a credit card with and owe about $3,000. They were willing to work with us in any way possible.
Then, we contacted Citibank. They were complete assholes and immediately threatened to raise the interest rate to 29.9% and tack on a $39 late fee to boot.
This is going to get interesting… As far as I am concerned, Chase will get paid before Citibank does.
WTF is this?
A threat.
Bob in AZ
And a (future) excuse, ya think?
Can’t have my way so I’ll blame it on youse.
HITYLHMIHTP?
Yeah, that’s the new version of the mushroom cloud.
I don’t respond well to threats. I have this tendency to go medieval on the person threatening me. I figure, at the time of the threat, it is also the time to resolve the issue immediately and explosively. I don’t accept threats.
It’s a lie. See this.
The middle class should still be worried about the variables, such as another doubling in oil prices, war escalation into Iran as well as Pakistan which is a big question mark, climate change costs coming down the pike, unemployment increases, and the way the economy is being managed in general, which has been a basic free for all for banksters. We had better keep kissing China’s ass as well.
EW,
You know that with each new piece of the health care picture, we keep punching the numbers at casa klynn and your figures are lining up with ours. We have been making all kinds of home improvements to get our house in a “ready” state because, if our numbers are correct, we will not be able to continue to afford our home in three years based on the current proposals.
And if we cannot, a whole bunch of people will not as well. Which means a collapse of our economy like no one has ever seen.
The powers-that-be and their punditry puppets would have us all believe that after bailing out all the banksters with trillions of the public’s money (debt that you and I will pay for eternity if they have their way), the “economic outlook” for the US is “rosy” once again.
But it is they who are simply wearing rose-colored glasses.
Wall Street got all the greenbacks they need to paste over the cracks in their foundation, but on Main Street, us dumb yahoos are hanging over the side of a cliff with a grip consisting only of our fingernails.
And they want us to smile for the camera.
I’m sorry MadDog, help me out. What is Main Street? :)
That is what runs down the middle of corporate company towns.
Ahhh! Now I understand!
I’m not some brilliant economist, so thanks for talking about this issue. I live in a small town and we were having some trouble before 2008. Most of our small businesses are hanging by a thread and many have gone under. Now that discretionary income will be sucked up by the insurance companies instead of the neighborhood restaurants and stores, I believe that more will fail.
1. This looks like the “trickle down” theory that never works. The insurance companies will hire more people – the hospitals and medical facilities will hire more people – I see this logic coming down the pike. It hasn’t ever worked and never will.
2. Seriously, the government forcing us to buy a private product, and a really crappy one at that, would seem to be a magnet for a million lawsuits challenging the law.
3. Health insurance involves so much more than just paying the monthly bill. Insurance doesn’t really work if you can’t afford the co-pays, 80/20 plans, deductibles, drugs, etc. Is someone going to subsidize these things? If not, there will be many, many more bankruptcies on the horizon.
Howard Dean is correct. This is just another transfer of funds from the working class to the corporations.
Sorry about the extra ///, I’m a first time commenter working on a mac.
Welcome diav! Good commentary!
And as bmaz often says, don’t be shy about joining right in!
As for that “extra ///” thingie, that is a known bug here in Preview mode whenever it encounters a single quote (i.e. ‘). It doesn’t actually display when you finally submit the comment.
Really important point.
For some people this will mean no longer being able to afford house payments/property tax.
But for others it’s a diversion of money that is keeping communities afloat.
Thanks for commenting.
EPU on a another tax issue – check oot my posts on the Billion Dollar Tax Break for the richest americans over at the Seminal. It is a big story that is not being reported.
Do you mean this post: Billion Dollar Tax Break for the Forbes 400
Good stuff, and flying under almost everybody’s radar!
That is it. I just tried to get the folks at the TaxNotes blog to look at it. Do you think Huffingtonpost or NYT would be interested?
Good question.
HuffPo more likely than NYT in my view, unless you can get the NYT’s Gretchen Morgenson or their Paul Krugman interested in it.
But in either case, it is likely to be an uphill climb. Their typical response is likely to be:
“If it isn’t about sex or crime, we ain’t got the time. If it bleeds, it leads.”
That shouldn’t stop one from trying, but be prepared to find the door slammed in your face, or just not even answered, over and over again.
As with most things in life, persistence is what pays off.
I’ve called my state senators to protest including the white house and even thanked Olbermann for his special comment about the latest changes to the health bill the insurance companies love and Lieberman almost loves. This bill will help the GOP more than it will help people struggling to pay or get fair health insurance.
Liarman has put together a panel with Alan Greenspan on it this morning to discuss our national debt. What fucking nerve. Liarman’s support of Bush’s tax cuts, the illegal and immoral war. have cost this country billions. Would someone please kick Liarmans ass. Just kick his lying arrogant ass. He is the slime ball of slime balls
http://www.c-span.org/Watch/C-SPAN.aspx
I have heard Senator Brown, Harkin, and a few others indicate that many Dem Senators are absolutely furious with Liarman
Senator Voinovich (the Rethugs are going down next fall in Ohio Jennifer Brunner is going to clobber Portman) has joined Liarman as well as Senator Collins in this absolute charade.
These are the very people who have brought this nation to the economic brink.
Conrad is talking about Empires going down. Hello Conrad you brought us to the brink
EW,
This post and your neo-feudalism post boil the points down to the reality for the “person on the street.”
Have you talked to Krugman at all? I would think he would find these two posts insightful.
An aside: The one element that has not been addressed in-depth is the “play” the health care investment banking industry is invoking in the big legislation picture. I think it is playing a bigger picture behind the scenes and I have read little to nothing about it but have read plenty on the record profits this arm of investment banking has made since 2008 and how it was the only sector of investment banking to “weather” the financial storm over the past 2 years.
There is an interesting diary over at Seminal which pulls at the flow of power threads and weaves a compelling pattern.
Thanks.
LOL i ran across THIS and found i had to agree with mcuh of what was said. oh god help me the wingnuts were right.
enjoy:
http://barackobamaantichrist.blogspot.com/
Could you please add the significant student loan debt that most young middle class families now have? I owe $140K for college and law school, and the monthly payments will be around $1600 per month. If these expenses are factored in, many people who are above the 400% of poverty line will fall well below it.
I mentioned debt as one of the things not included in this–thing is, I’m not sure how to generalize it for this family of four, which is young enough to likely have college debt, as well as credit card debt.
One thing is certain. This family is not saving. For college, for retirement, for anything. Which, as you point out, is a guarantee they’ll slip out of the middle class.
Marcy, your basic costs don’t take heat into account. Winter power/propane/gas/fuel oil costs can be a significant, necessary expense in most parts of the country.
I’m trying to find a generalized number for utilities. In some parts of the country, that’ll be air conditioning, not heat. But that’s one of the things I’m trying to find a good number for.
OT,
16-7 bernake out of committee. DAM.
Facts like these are what we need to get on TV.
Where does the cap on premiums come from? Is there anything in the bill that forces insurers to offer premiums at a fixed price???
The cap on premiums is what the govt will subsidize at a given income level. It starts at 2.8% for those just above the new Medicaid levels (13% of poverty), and goes up to the 9.8% I’ve used here (which is why I’ve picked these income levels).
But it’s important to note that for those making more than 400% of poverty, there is no cap for premiums. While a person or family that had only policies charging 8% of their income could opt out with no penalty, if they really want care there is little preventing insurance companies from charging high rates.
I actually think the CBO underestimates the number of people who would be charged more then 8% of their income who would opt out.
And one more thing–that “cap” on premiums doesn’t meant there’s a cap for what the insurance companies will receive. The federal govt picks up the tab for the rest.
Hey EW: Slightly O/T: Your piece on the new feudalism has been ringing around in my mind (such as it is). First-class analysis, as usual.
“The cap on premiums is what the govt will subsidize at a given income level”
emptywheel, what if this subsidy isn’t big enough to cover the premiums? Especially for lower incomes, how shall they come up with the difference?
If they can’t afford the premiums and those premiums are lower than 8% of income, they will be fined.
Experts say 3% in premiums is affordable. So there are likely to be many who can’t afford the premiums.
Guess the kids will have to go to a community college.
Whoops. Sorry.
Good quality public higher education has already been priced beyond the reach of the vast majority of kids.
So I guess the kids won’t fare any worse under OBAMATAX.
Have to cut back on food a little, but hey — it’s good to be hungry. It gives one the proper appreciation for a good meal.
Merry fucking Christmas, Mr. President.
My sister had some numbers for minority men starting at a community college and eventually getting a degree.
I can’t recall them now but I’m guessing that for minority men with felony records a huge part of the African American vote that number is even higher.
In a two job world especially if your poor going to school is tough assuming you have the jobs people with felonies find it much harder to get good jobs.
I would have thought that an African American organizer from Chicago would have had some plans to address this and healthcare in a way to help the most needy.
Interesting.
I’m not down on community colleges, btw.
They play a valuable role.
Just the opposite the proposed bill provides for tripling premiums if you have a pre-existing condition such as obesity or high blood pressure, or just getting old. It also provides for a total annual pay out limit. You get half your cancer treatment this year and the other half next.
The Insurance campanies get a huge win because their enrollments are droppiing, and this plan requires us to become their customers.
In addition, the insurance companies can drop their sales & marketing expenses to zero, becuase of the forced purchase.
A wonderful business. Look, we can win too. All we have to do is set up a mutual (customer owned) health insurance company.
Welcome diav, your comments really resonated with me as another small town dweller. When I moved to my current small town just about 5 years ago we still had a little grocery and even an independent pharmacy. Those have both closed.
All these expenses associated with mandated insurance may seem trivial to our rich ruling elite, but here in the “real world,” they will result in far more bankruptcies and financial hardship. And to be honest, with copays and deductibles, I really doubt this legislation will do anything to get more people seeking treatment earlier when that treatment tends to be cheaper and more effective.
As I see it the current legislation really doesn’t provide any benefit, but lots of harm.
²emptyhweel:
Yup, those who have big expenses for, say, their mortgage are screwed. But this still misses the point: There is NOTHING in that bill that forces insurers to offer affordable plans! If their premiums actually are 30% of the income of a poor household, then what? The subsidies aren’t big enough, so those people can’t afford this. Ok, they won’t have to pay the fine, but they would still have no insurance!
civil meet disobedience.
disobedience meet civil.
(shake hands)
Jane has a fresh cross-post up and at ’em: “MSNBC’s Dylan Ratigan Says It For Me….”
Those responsible Americans who don’t want to pay a fine or have a record as a criminal that will haunt their criminal background and credit checks for years? But they haven’t the money, yet want to be responsible? They’ll borrow it. From their credit cards, of course. Suddenly, that 30% number sounds like the gold Batty Beck is selling. Elizabeth Warren will never lack for work or research topics.
I have heard nothing to indicate it is a criminal sanction.
Thanks for that correction. The government can impose a civil fine and collect it via any funds the government owes you, is that correct? Tax refunds, Social Security, etc.
Yep, that is my understanding of what is being contemplated; however, that is one of the provisions that I do not think is totally clear yet.
Odd how secretive Mr. Reid is keeping such a major bill. You’d think the public had no interest in it at all. I suppose he wants to have private chats with Ms. Pelosi and friends before he spills the beans over the Christmas, New Year’s holiday. Or better yet, before he announces that reconciliation is over and the bill is on the president’s desk and he’s just signed it. Transparency and eleven-dimensional chess, oh my.
I find myself developing secessionist leanings with all this fascist corporate shit being thrown in my face. DC can rule DC. The rest of us can go our own ways.
Thanks for the analysis, emptywheel, I’m much obliged.
I’m reminded of staff meeting back when I was a dementia care-certified nursing assistant. Already understaffed and failing to provide such niceties as were prescribed by physical therapists, to keep people out of wheelchairs, for example, nevertheless, at every damn meeting, we’d be assigned even more duties.
We already were failing, and they’d pile on more demands. Then, of course, when a family member came in and found that their loved one had lost their mobility, who’s standing right there to take their fury?
I’m already bankrupt. Seriously, I file the papers in February. With what money am I supposed to pay NOT to be able to get preventive care from providers?
Coverage has been substituted for care, and even then, I’ll get nothing but a fine. Will that fine go to a fund to provide me with care? HA!
Here in Washington state, we have mandatory auto insurance. If you can’t pay it, and get caught, you’re fined over $500. And still uninsured!
Neo-feudalism is right. Looks to me like a Perkinsian economic hit job, converting the middle class into serfs unable to assert any rights as self-sovereign citizens.
This approach to reform is this far — >< — from McCain's idea of reform. Obama even praised McCain earlier this year for his solution.
Do not forget childcare/daycare in the equation if you have kids not old enough for school. $7,000 – $10,000 a year. That’s just for one going full time. That leaves someone in your 301% poverty level (like me) with about $6000 for all other expenses.
I’m one of those making over 400% of poverty level.
Aside from the mandate, the provision that allows insurance companies to charge 3x what someone healthy gets if you have pre-existing conditions means that my coverage combined with my family’s coverage will run up about $25,000/year. That’s in addition to the $11,900 out-of-pocket expenses allowed. That’s over 40% of my income. If you throw in Federal taxes (thankfully, I don’t pay state taxes, or at least, not income taxes), utilities (sewer, gas, electric), car note, rent, etc., what I will have going out is about $1000/month more than I make.
My choices with the bill as it stands are to either accept the fine or to declare bankruptcy (most of my payments are either for rent, utilities, or existing debt that is residual from when my wife lost her job over two years ago and hasn’t been able to find a replacement job yet).
Essentially, I don’t see how this will do anything except to push the bankruptcy Obama talked about down from the government to the individuals. Instead of doing the right thing, the Senate and the Obama Administration have managed to do the wrong thing at every single step of the way. So long as we continue to worship at the altar of capitalism, and refuse to recognize that some things are best handled as government programs, we are going to fail to stop the spiral of health care insurance costs, and we will bankrupt the people of this country.
Check the tax rate for single, self employed. That describes large numbers of the 55 and up (age discrimination makes getting a job near impossible). For the 301% my fed taxes hit just over $12,000.
Also add female to calculate insurance rate. Good health does nothing to help. In Massachusetts, in a group, in an HMO, with some restrictions (i.e. not the best plan), I pay close to $1,000 per month. Deductions can mount up very quickly.
Many GOPers have no idea what insurance payments are if they are military Veterans.
Many of the GOoPer congresscritters were never in the military. They’ve probably been covered by their parents’ plans, their employers’ plans, the federal plans … but never buying on their own, and they don’t know what the real-world numbers are, or if they do, they think that’s the cost of the ‘cadillac’ plans.
We just got the news on our allegedly “high-end” coverage for the new year. It appears to be de facto catastrophic/junk coverage.
Many “services”, ranging from routine colonoscopies to psychological services, have their own deductibles, copays, and coinsurance, none of which appear to apply towards the overall annual deductible or maximum out-of-pocket costs. By my rough calculations, once you allow for the high copay, large coinsurance, and spcieal annual deductible, the colonoscopy is effectively an uncovered, out-of-pocket expense ($2-3K every 3-10 years). The psych services come with additional limits on number of visits, the first ten aren’t covered, and there re no in-network providers. I calculate that this “coverage” covers about 20-25% of the cost to the subscriber.
Remember: this is not coverage with the mandate and the benefits excise tax in place. I don’t know what the actuarial value is (I don’t think that Colorado regulates that). But what if this is what “Cadillac” coverage looks like BEFORE the Senate bill. Think what it will be like on a Silver plan.
By November next, voters are going to have settled into their new plans. The Democratic party can expect a terrific reward.