“Affordable” Health Care
I’ve been seeing a bunch of single, relatively young men with comfortable incomes argue that the health care reform is “affordable.” But seeing Nate argue that the high costs the middle class is still being asked to bear under the Senate health care bill is just a matter of “having to cut back on vacations, entertainment and meals out versus filing for bankruptcy or losing one’s home,” I wanted to hit the question of affordability one more time, to show that this isn’t a matter of eating home more often, but rather of precisely the debt problems that Nate says reform will prevent.
Here’s a version of one family’s total household costs under the plan: a middle class family with two cars and some child care costs. Note, in this scenario, I’m assuming the middle class family will pay 7.9% of its income for health insurance premium, significantly less than the 9.8% the plan assumes that family could pay to get the subsidies available. This, then, shows what a family would be required to pay (or incur a penalty) under the 8% opt-out rule.
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): $7,712 (12% of income)
Home (assume a straight 30% of income): $19,275 (30% of income)
Child care (average cost for just one pre-school child in MI): $6,216
Health insurance premium: $5,243 (7.9% of income, max amount before opt-out w/o penalty allowed)
Transportation (assume 2 cars, 12,000 miles each, @IRS deductible cost of $.55/mile): $13,200*
Heat, electricity, water: $1,500
Phone, cable, internet: $1,200
Total: $64,276 (97% of income)
Remainder (for health care out-of-pocket, debt, clothing, etc.): $2,091
In other words, assuming this family had no debt (except for that related to the two cars), no clothing costs, and no other necessary costs–all completely unrealistic assumptions–it would be able to incur just $6,970 of medical care out-of-pocket costs before spending all that $2,091 and going into debt (the opt-out is based on an insurance plan that provides 70% of costs, so this assumes the family will pay 30% of health care costs). Yet that family would be expected to spend up to $5,882 more out of pocket before the “subsidies” started picking up its out-of-pocket expenses. (If the family paid the full 9.8% of its income on premiums–at which point it would become eligible for subsidies under the plan–it would have just $825 left to spend on all other expenses, including health care out-of-pocket expenses.)
This family couldn’t even go through a normal childbirth without going into debt.
Now, a few words about these costs. The transportation costs, while based on official numbers, seem high. But since I’ve used MI numbers–which are cheap compared to other states–for state income tax and child care, I thought it fair to assume this family had two fully average car mileages with associated costs.
The utilities costs are based on my own costs for a 1000 square foot, very well-insulated home, with the winter thermostat set at 64 degrees, and with no air conditioning use.
The one expense in here that might be high are the telecom costs–which I figured at $100/month. That amount would pay either a Comcast phone/basic cable/internet package, or a land line plus a family cell phone package with no internet or cable. So if a family did without any cable package, used dial-up internet access, and had only an emergency cell phone, the family might get by paying $45/month instead of the $100/month I’ve calculated.
Note what these calculations don’t include: First, there’s no budget line in here for vacations, and while the mileage probably would allow for visits to family, it would not otherwise allow for vacations. It also doesn’t allow for any meals out–the low cost food basket used to generate this cost assumes “all meals and snacks are prepared at home.” It also assumes the family doesn’t spend as much money on some more expensive food items–like sweets–that most Americans eat more of (the low cost food basket includes 58% fewer sweets calories than actually consumed). Admittedly, by assuming the family might have basic cable, it includes some entertainment costs, but even if it cut that expense, it would only save $360/year, not enough to pay the out-of-pocket costs expected under the plan.
In other words, this family is not doing without vacations or meals out to pay for health care: it is driving an unsafe car; it is eating less than even the USDA says it would spend; it is not paying off its existing debts. All of those things are ways for the middle class to fall out of the middle class. And this is all before it incurs any significant health care costs!
This is why the experience from MA is so critical: 21% of people surveyed had forgone necessary medical care in the previous year because of cost. That’s presumably what would happen with this family. It would pay almost 8% of its income for insurance premiums, already taxing its budget, but it would be unable to get any care aside from what did not incur any out-of-pocket care. This family would basically spend over $5,000 a year for yearly check-ups.
Obviously, this does not take away from the fact that the poor will get health care, with subsidies more realistically set to income levels. It does not take away from the biggest group of uninsured will get some kind of coverage. For those, reform is a vast improvement.
But for the middle class–those above 300% of poverty–this remains unaffordable, and the mandate threatens to put those families into debt without giving them health care in exchange.
*As dagoril pointed out in comments, the IRS is lowering the mileage deduction for next year from $.55 to $.50. So as of next week, these calculations would change, suggesting this family would spend $12,000 on transportation, giving them another $1,200 to spend.
Thank you so much for this, Marcy.
I am so tired of attempting my feeble responses to “yippee, it’s gonna be so affordable” at so many different blogs. Now I can link to you. Thanks again.
And BTW, folks, let’s all contribute again to the Marcy Fund to keep this fantastic real journalism alive.
What you describe as being necessary sounds like what my parents and grandparents used to tell about The Depression of the ’30s. However, they had large gardens, could walk to the Post Office, had bus service, lived in small towns with families their families had known for generations — all those things that do not exist over much of the country any more.
And oddly enough, there were actually local jobs with local ownership. You could make things and grow crops and stay alive.
You are right. The employment lifestyle is polluting our air, land, water and food making the planet, animals and people diseased.
That system is based on things God hates, debt, interest, insurance and seeking riches and honor. The solution is to turn back to a garden lifestyle with trees, plants and pets that provide fresh food around us. With the sunshine and light exercise we will be healthy.
It is the solution to all the world problems including “global warming.” If they were seeking survival and not control over people, they would adopt it as a solution for those who want it.
http://www.divine-way.com
Alright, you seem new here, so let’s make sure we are on the same page. This is NOT a forum to proselytize on. And we do not need a link to your website for the same in every comment either.
Happy to see you back, Ms. Wheeler. You were missed.
Many thanks for continuing to pound away at the shortcomings (which are going to create hardships) of the “health care reform” proposal. What challenges await us to try and get this thing right as it lurches off to a start and the shortcomings become very apparent!
FWIW, here is an interesting chart (too complicated for most people to immediately grasp, unfortunately) comparing the U.S. current experience with other nations.
We always hear about how much more we spend on healthcare than other countries, but seeing a graphic like this really drives home the message in detail…what is its source?
On the graph, upper right-hand corner: “Graphic: Oliver Liberti, No Staff, Source: ‘OECD Health Data 2009,’ Organisation for Economic Co-Operation and Development.”
It was published by National Geographic Magazine. If you’ll go here and scroll down just a story or two, you’ll find it.
I can’t understand why anyone in the House would vote for this. They’ve got mandates but no public option, which means (as atrios so aptly put it) they’re going to be forcing people to buy shitty insurance. They’re even calling it a “mandate”, which is just gift-wrapping it for the GOP. They love to campaign against “unfunded mandates”, which is exactly what this is.
You might as well just call it “massive librul tax increase by the Democrat party”. It’s pretty easy to see how this is all going to play out: The GOP is going to call this “the biggest tax hike in history”, and the Dems are going to be left sputtering silly things like, “That’s not really fair” and “Well, technically, it isn’t a TAX…”. And that’s just in 2010. By 2012 and 2014, the Dems are going to be getting blamed for every insurance horror story. And frankly, if they vote for this, they’ll deserve it.
That is effectively one of the things I have been saying; the thing is too complicated and too much of a hodgepodge of workarounds. Even if it would work, which is extremely debatable, it is butt easy to attack on a million simple sound bite fronts, and impossible to defend simply on any of them. It is a roadmap for defeat of Democrats across the board. It is not just crappy policy, it is an electoral death wish.
re: crappy policy
and i thought the original talk of a public-option-in-a-multi-payer-system was blindingly stupid as a matter of policy. crappy doesn’t begin to describe what i think of current house and senate bills.
You can’t expect insurance companies to accept pre-existing conditions without a mandate that individuals get coverage. That’s basically saying to all smart people – don’t worry, just get insurance AFTER you get sick. Why would anyone bother with insurance at all before they incurred some major cost?
I’m not willing to sacrifice the coverage of pre-existing conditions to the unlikelihood of a meaningful public option.
You do understand we have a mandate and no exclusion for pre-existing conditions, but also utter unaffordability if actually have a pre-existing condition — right?
I agree with that–but at the same time, the premise behind mandates everywhere else is taht the coverage is affordable and there is competition. That’s one of my biggest gripes about this. If the two other necessary preconditions for universal coverage existed, then we could expect both that the mandate would result in savings to consumers and the govt, and that families would actually get some kind of guarantee that they could afford to use the insurance.
Point being, the mandate is a ncessary precondution for this to work. But so is affordability and competition, and for some reason, everyone who has been saying that mandates are necessary aren’t also insisting on affordability and competition.
when it comes to health insurance i don’t think competition actually helps (unless maybe with a freaking level of regulation) – risk pools get smaller, adverse selection is more of an issue, and if price competition involves things like denial of care then competition can result in a race to the bottom.
some day, when it’s more on topic, i’d love it if you could explain what convinced you that this (po in a weakly regulated multi payer system) could actually work (and what exactly would be required). because right now, i just don’t see it. imo the whole approach is flawed. but i’ve been wrong plenty of times before and maybe i am again here.
Unfunded FORCED Mandate on individuals no less not on your local gov’t. The Dems. are crazy. Forcing people to buy Private shitty health Ins. from what are essentially state sanctioned and largely unregulated monopolies. This isn’t reform at all. Who do they think they’re fooling? I had to pay 18K last yr. for a Cobra policy because I was laid off 2 weeks before the Sept. 1 deadline for Any Gov’t subsidy. This 5k fig. is BS.
“This family would basically spend over $5,000 a year for yearly check-ups.”
WRONG You do us all a disservice by spreading false information.
Perhaps the republican option would be better suited for your needs… oh yeah they don’t have one. Seems to me that you are doing your best to stop health care reform, spreading bad infomation and everything. tsk tsk
Hi there interloper. You are welcome here, but don’t bring weak ass conclusory statements like that and expect one iota of respect. If you have facts, figures and intellectual arguments to dispute the content of the post, bring them. But don’t waste our time with any more simpleton fanboy pablum like the last comment; that isn’t going to cut it.
Hi bmaz
lol Perhaps Marcy can respond to her $5000 a year check ups. I say she is wrong and spreading mis-information. Do you have anything that backs her claim up?
Ross, go back and read the post again. That’s 5000 dollars a year for health insurance, which ew is saying is not going to pay for much beyond checkups, given that the Senate bill (which is a pile of shit) has no controls on the insurance companies and their charges.
It’s sounding more and more like what happened to my parents’ insurance: first it paid for 80 percent of the bill, then it was 80 percent of what Medicare didn’t cover, then it was ‘Medicare paid 80 percent, so we don’t have to pay anything’.
Why on earth would you choose to contest that? That works out to about $415 / month, and even COBRA is happy to charge you that. And if you don’t get sick and just get your checkups, what else does it amount to? Now, if you want to offer me unlimited care no matter what happens for $415 / month, then I’m going to be interested. But $415 / month is not at all unusual these days, and it doesn’t make you any healthier, and it makes me darned grateful for Medicare.
It’s misleading to say…
This family would basically spend over $5,000 a year for yearly check-ups.
Perhaps a better thing to say is: This family would basically spend over $5000 a year for health insurance including yearly check ups.
No, if the yearly checkups are the only benefit of the “insurance” they can actually afford to use, then it is valid to say they are paying all their money just for that.
So your telling me that this family will be forced to buy health insurance at $5000 a year and only get a check up for it? thats some check up!
Well, yeah, that is pretty much the point. Now, in reality, if there is something critical healthwise demanding this family obtain healthcare – doesn’t even have to be catastrophic, could be pregnancy, broken bones, burns, flu, infection etc – they will obviously do it. But that then means they are spending money allotted to something else essential because there is no other discretionary income, and they are going into debt; if it is something large, they are headed to bankruptcy. That is exactly the point being made, and that Marcy has been trying to make for a while. If it can be shown this is wrong, I would love to see it, because that would be a good thing; but, extremely unfortunately, I do not think it is wrong.
Yes, that’s the point.
If this family got insurance that guaranteed all costs after the premium, it’d be different. If this family got the first $5000 of care paid 100%, it’d be different. But as it is, the only requirement is that basic insurance cover 70% of the costs. And since there’s no subsidies available for out-of-pocket until after the family has already gone into debt, it means the only time the family will use the insurance is if something catastrophic happens (at which point the family will be in debt anyway).
The point being, for the middle class this will not end medical bankruptcies. It’ll make them slower, but bankrupt is bankrupt.
God forbid if they find anything wrong in one of those yearly checkups. Or even just need meds. Cuz we won’t be importing any. (Or is it re-importing, which would be even stupider.)
That is if you are lucky and nobody gets sick with something expensive. What about if somebody gets sick with something expensive, do the kids have to go without treatment, will the parents lose the home and lifesavings?
She supported all of her figures with links and explanation, with the exception of
And both of these are, by my experience shaded to the low side, not the high; which would make the family she described even worse off. The $5,000 per year check ups is premised on the thought that will be the only real care under the insurance this hypothetical family will be able to afford to utilize in light of the premise that the yearly wellness checkups are free under what has been assumed as the contents of the “reform” bill and other services are going to require either significant co-pays or large out of pocket expenses that, as the paradigm demonstrates, they will not have remaining disposable income left to use.
It is a demonstration and/or hypothetical, but it is based on pretty easily ascertainable facts and figures that, if anything, are probably worse for a real family with daily concerns and problems. Within those parameters, however, I challenge you to refute it.
I agree. Even in areas of temperate climate I think utilities would be double that amount.
I pay between 130-200 a month for power and heat, and that’s AFTER I personally improved the insulation in my apartment.
It was pushing 250 a month in winter before. Average cost was about 200.
That plastic window insulation stuff really does help, folks, I highly recommend it, though putting it up is a pain in the arse, as you might expect from using giant pieces of what is essentially shrink wrap.
So, yeah. I was spending almost twice what Marcy figures for utilities, and I don’t have a house, I have an apartment. Technically they can demand I remove all the plastic film according to my lease, too. And the blackout curtains that help with heat loss.
Ross
Maybe you don’t get how this works.
The point being that this family is required to pay premiums, or will be fined–the insurance is just short of expensive enough to be able to opt-out (that is, 8% of their income). So they either have to pay hte premium or pay the penalty.
So that is over $5000 for insurance.
But since this family is already tapped out, it will have no money to incur any of the out-of-pocket charges they will be responsible for. They won’t have to pay anything for yearly checkups. But they will have to pay 30% for anything else–hospital stays and whatnot. And, as the MA example shows, when you can’t afford those out-of-pocket charges, you don’t get the care.
In other words, the only thing this family could afford would be the stuff that comes without any out of pocket charges–the yearly checkups.
This family is not tapped out. This family can cut on housing expenses easily. This family can shed the 2nd late-model car, or leave it parked most days, or sell it and buy a used small car in fine condition for under $5,000, picking up liability but not replacement insurance. You’ve assumed an upper-middle class housing and transportation situation here and then decided that the family will have to scrimp on essentials and forego trips to see gramma because of the costs of the house and car. This simply isn’t realistic.
Talk to the IRS about the automotive assumptions, not me. Because that’s what IRS says the average person spends on a car.
Maybe. Depends on where you live, and where and what kind of job you have. Not everyone can afford to live close to work – while there’s housing (of a sort) close to where I work, it’s too expensive for most people to live there (unless you want to live in an SRO place), and the area is notably short of consumer-oriented businesses, other than restaurants.
My brain was sliding around on the ice trying to find the handle in ross’s comment, so thanks for pointing out that there wasn’t one. I’ll stop looking for it, now. ktnxbai
Perhaps you could use an actual argument to make your case, instead of just putting “wrong” in all caps.
Marcy,
Casa klynn falls close to your scenario. BTW, we do not have cable. Our food bill is slightly higher due to food allergies. We do not eat out that often (a few times a year for birthdays.) We do not go to movies. We wait until movies are out on video and get them from the library or buy them for a few bucks from used book and video stores. We often make our gifts for giving on holidays and birthdays. We salvage supplies for home repairs and home improvement and are extremely good at this too. We never pay full price for anything in the way of replacement appliances (usually 50-80% off full price) or clothes. If I don’t make the clothes, I get them super cheap. My kids always look clean and neat too.
We do have some debt due to an approved surgery that was then denied coverage after the fact. So we are one of those families that, one hit, will sink us.
We compost, recycle, have a rain catch system and a garden. WE rarely take vacations. We do have a zoo membership.
With this health care scenario, we, the middle class, will cut back even more. I know we will probably cut back on services like hair cuts (I use to do them but the kids thought I cut their hair TOO short!)and memberships to the zoo and museum. We will also probably cut back in our charity giving too. Such cut backs in services will hurt our economy even more. It will also sink churches and their outreach services to the poor. So hello churches, you should be standing up for single payer or a public option.
I will write this again. This legislation is about the MLR% and it’s relationship to health care investment banking. Health care investment banking was the only investment banking sector to ride the financial storm and make record profits.
Welcome back Marcy. Hope you are enjoying the 12 days of Christmas.
Initial delurk.
If we allow ourselves to debate Medical Loss Ratio, we have already conceded that health insurance is a cost plus industry. We grant them an incentive to have costs rise as the only allowable way for profits to rise. That way lies $400 aspirin. Recall the $400/gallon gasoline in Afghanistan.
I am not debating MLR. I am pointing out that there is a strong relationship between MLR and health care investment banking. The financial lobby is just as interested in this legislation going through with all the loopholes because it means $$$ for them as well as the health care industry.
Welcome to Emptywheel.
I quite agree with the importance of MLR as a profit reporting measure, but was alarmed at the discussion about using a MLR threshold to qualify an insurer to participate in the exchanges. It seems like a misguided factor.
Yep, I was not using it as a threshold to qualify an insurer to participate. I was addressing the “power factors” pushing the legislation. The Wendell Potter interview on Countdown a few nights ago made the same point I was trying to make. There is a relationship between MLR% and health care investment banking and at this point, there is no one measure to regulate anything relating to MLR or the relationship between MLR and health care investment banking. These are two industries which have been showing their colors as far as greed and profit at the people’s expense. Thus, over time, the middle class would continue to get less while the required coverage would cost more and both industries would continue to see record profits.
We have gone through one very painful round with the finance industry. This will simply be another round through the back door. Once again, on the backs of the middle class.
I was not accusing you of using MLR in any way but by reference to profit.
A cost plus structure amounts to a profit entitlement for the industry.
All this is against the backdrop of various industries competing with each other for a fixed pool of dollars (ours), in an environment where every industry is asked by Wall Street to grow at 10%, while the pool is hardly growing at all. So each industry looks for its own path to indispensability, and avoid having to compete intra-industry. The health insurance industry has this almost completely locked up, at 16% of GDP. All other industries are envious, and the only dark horse coming at them is Monsanto, once they own the entire food supply.
Great points.
And the pool will actually shrink should the affordability issue not be addressed in the context of the mandate.
Speaking of pools, hope none of the people in these scenarios have a pool, cause that is going to blow the figures up. Takes a $100 a month minimum for me.
Welcome! A really good point you make.
Read:
(my bold)
I am not sure even these relatively healthy young men are healthy. This is anecdotal, but I feel like men traditionally have sacrificed and ignored their health in favor of work performance. Professionally athletes are the most stunning example, but there are reasons, aside from risk and violence, that male life expectancy is so much lower than female life expectancy. I found the resignation of Urban Meyer for health reasons refreshing and rare.
I assume that means perfectly healthy children and parents, no pre existing conditions, cars that never break down, a house in like new condition and an extended family in the same exact financial position that can fend for themselves until death.
Yes. And you cannot have a pet or support any charitable interests.
Right, with the exception of the telecom charges, this is all very best case scenario. I have admittedly taken one of the two income levels for which this bill is by far teh worst (those just over 300% of poverty, and those just over 400% of poverty). But I haven’t included a lot of the conditions the middle class is currently facing, such as ballooning ARM charges or unmanageable college debt or huge credit card debt. Plus, as I point out, the MI rates I used here makes this scenario much better than it is for a lot of states.
The rates you used would not cover half the yearly average in Phoenix.
For telecom? Yeah, I think a lot of families are paying closer to $200 or more a month. But my point is to use a likely frugal family, one taht is already forgoing stuff that many of the young single men calling this affordable consider necessities.
I meant on all of them! But we have heavy problems because air conditioning is necessary six months of the year, and water is expensive. But yes, cable/telcom too.
Well, by noting that the heat number came from me heating my 1000 square foot house that has 12 inches of insulation, I was suggesting that that number was not realistic for most families in MI. A lot of my neighbors are the kinds of family that fit into these numbers, and most of them don’t have updated windows, which leads me to believe they also don’t have as much insulation as I have, which leads me to believe they’re paying twice what I’m paying during the winter.
Plus, mr. ew and I are a bit neurotic about not using air conditioning during the summer and we have the perfectly shaded house to be able to do that.
Yeah, just try that here…..
When you say 12 inches of insulation, are you talking about the attic or sidewalls or both. If you’re talking about sidewalls, I’d like to hear more about how you did that.
Here’s hoping that family doesn’t have a fender-bender in one of those two cars. I just know they have state minimum coverage.
Heck, even a speeding ticket would be a minor catastrophe.
$415 / month seems low.
here’s the webpage for commonwealth choice (MA unsubsidized exchange) in case anyone wants to see what is available here:
https://www.mahealthconnector.org/portal/site/connector/
for a family of 3 with parents in their late 40’s and living in my zip, the lowest monthly premium is $793/month. $4000 deductible. doc visit co-pay is $25, hospital is 20% coinsurance. annual max out of pocket = $10,000 (includes deductible, hospital, outpatient surgery and emergency room costs only).
Ouch.
i guess that means they would be allowed to opt-out (under the 8% rule)?
selise,
Once had a friend who worked for a former director of CBO. I use to be amazed at how “out-of-touch” those high up at CBO were irt the average middle class citizens. Often the “costing” was way off from reality.
please excuse the probably stupid question…. but isn’t there some provision re federal income taxes where medical expenses can be deducted under some circumstances? does anyone know the rules off the top of their head? i’m wondering if our imaginary family would be able to deduct the cost of their premiums and any out-of-pocket expenses.
Only deductible to the extent they exceed 7.5% of your adjusted gross income; will not help this hypothetical family.
What bmaz said:
“You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income. You do this calculation on Form 1040 Schedule A in computing the amount deductible.”
IRS Link.
Yeah. $415 is about what a 65 yo who didn’t have enough weeks of paid Medicare premiums would have to pay for part A coverage. That would be for single coverage too, not family.
It might be a bit low for a family of four, depending on where they live. I think, if I were getting insurance through my employer, it would be costing me at least $150 a month (single, no dependents), depending on whether I wanted ‘Bad’, ‘Really Bad’, or ‘Only In Our Network’ for my insurer.
Yeah, MA is and has been one of the most expensive states. But it is not at all clear that this family would be able to find insurance for this cheap. So it would probably be faced with teh choice of opting out or paying even more for insurance.
don’t really know, but i expect part of the reason (not all) is that we have had decent regulations — modified community rating, etc. i have a pre-existing (cancer survivor) and a chronic illness (although not especially expensive as these things go) and i could get a standard individual policy (same cost as posted on line for my age, gender and zip) prior to the 2006 reform. but that means healthy people with no pre-existing conditions pay more. when/if insurance companies are required nation-wide to pay for our healthcare, i wouldn’t be surprised to see insurance costs (premiums and out-of-pocket) go up accordingly in other states.
Agree, the cost may well go up to compensate for pre-existings. And they’ll go up most in places where people can afford it–such as for those the govt is paying for.
i don’t understand why costs wouldn’t go up for everyone about equally (with state to state variations depending on the level of prior regulation).
This family would basically spend over $5000 a year for health insurance and only be able to afford to receive yearly check-ups and no additional care.
There. Fixed it. Not. Misleading. Now.
Well, I did a couple diaries laying out the idea that this budget you propose E.W, (excellent, by the way) comes without any thought of the 8 years of Bush, which never included the fact that “if you are poor you pay more”…by that I mean, the banking service fees, finance charges, and bad mortgage fees out there. Lots of middle class Americans have been duped by bad escrow accounting, illegal fees, and stuck in bad mortgages, and not to mention the fees attached to bad credit cards.
I would LOVE to get an accurate accounting of what those fees are costing the average American. (not the ones with spiffy credit who never had any kind of loan sharking occur in their lives). Yes, the favorite thing is to blame the middle income folks who fell victim to this stuff but someday it will be clear that these loans were intended to fail, and these companies did all that could to make sure that people WOULD fail, because that is how they make their money.
One last point. Almost every person I knew in my circle of friends went from having an basic 80/20% health insurance plan to having a high deductible plan. As health insurance costs increase even good jobs made the switch to these high deductible plans. At my work, there was no other option if you wanted insurance. The high deductible plans that would require you pay 5000 out of pocket expenses in an emergency surgery or medical problem meant that many, many people still have medical bill debt that they are paying on.
You did a great job, as not to muddy the water…and I know I am muddying the water in a way that many folks will argue…the blame lies with the stupid middle income folks who got themselves in to this mess…but the truth is, that unemployment, a few medical bills and bad loans adds up to a financial nightmare that absolutely SHOULD be considered in regard to the health care costs. Someone just on the line for subsidies…might really have a lot less income to work with when you take into account these other variables. Not to mention the cost of having kids in sports or any other thing that we generally say is GOOD for kids.
Thanks for shining the spot light…in the real world this is not going to play well with the folks in the middle class.
thanks bmaz and fatster for the smart, fast replies.
I recommend that we copy this post and mail it to all our congresscritters.
Over at tpmcafe they list the costs according to an MIT study showing how wonderful this turd will smell. EW, as number cruncher extraordinaire, can you address this?
http://tpmcafe.talkingpointsmemo.com/2009/12/26/obamas_art_of_the_possible/
PS: the link tool ain’t working for me
The prof did there after I had been hitting on calculators like this for months. By putting this in terms of “risk” rather than “reality,” it dismisses the entire question of affordability.
And it is true that the middle class family–assuming they didn’t opt out–would be on the hook for fewer charges in case of medical emergency. But in both cases, that family would be going into debt. And since the obvious outcome in both cases is bankruptcy, it’s not clear that that’s much big difference.
That said, I think those MIT numbers totally ignore that for a lot of middle class families like this, insurance will remain too expensive, and they will be forced to opt out, so for the kinds of families I’m looking at, the risk remains largely the same, because they still won’t be able to afford insurance.
Thanks Marcy.
And just an fyi, the IRS deductible for mileage is dropping to 50 cents per mile for 2010. It will actually be even more expensive next year for us.
2010 Mileage
From your link:
50 cents per mile for business miles driven
16.5 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations
Shows what their priorities are, doesn’t it? Driving around doing bidness: 50 cents. Driving around ’cause you’re sick and trying to get help: 16.5 cents. Being a do-gooder: 14 cents.
Sheesh.
Well, that’s just the percentage you can deduct. You can deduct ALL business expenses, but only some charitable driving expenses.
But the whole point is the IRS, using data from across teh country, says it costs $.50/mile to run a car.
Ah, thanks. I was using the 2009 number, obviously, though that would presumably make the transportation costs much cheaper–bringing it down to $12,000 for the year, and leaving the family with an extra $1,200.
Didn’t mean to question your math, since you were just using the IRS deductible to estimate travel expenses.
I was thinking more along the lines of the business traveler who at the end of the year deducts their mileage on their 1040, making the tax burden less. In 2010 for that person it will cost them an extra dollar out of pocket for every 20 miles they drive, just due to the IRS reimbursing less per mile.
ew, while this is a great summary, it misses one item that puritan scolds have been whining about for years.
“Americans don’t save.”
Actually they do, when they can, but what is missed is that the economy the whiz-bang wizards have created over the past 30 years (…creative destruction, you are a free agent, you’re on your own…) basically means that every houeshold is experiencing an episode of unemployment, oh say every 5 years.
Well, do a little math on your median income household at a 5% saving rate (which your household above can hardly support), and assuming 1 incidence of unemployment every 5 years lasting 6 months, and you’ll find the savings used up – because households cannot cut their fixed costs fast enough and so they have to use savings to tide over the period of unemployment. (Same thing happened to GM last year – cut aggregate sales deep enough across the industry and cash reserves are burned at an astounding rate due to high fixed costs.)
Now business knows this quite well, it is a concept called ‘churn’ describing the mathematics of customer retention. However, employee churn suits them just fine, because in the aggregate, it makes for dependent and fearful workers.
Not only that. but you pay income tax on the interest on those savings.
Used to be that there was an exemption for part of that income – $400 of it, as I recall – but that disappeared. And they blame us for not saving: why, when it just means more taxes?
Well, as my accountant always reminds in the occasional flush year, one wouldn’t be paying taxes if one weren’t also making money.
as far as I am concerned, unearned income should be taxed more then earned, unless of course we are in an inflationary period whence we would need to incourage savings, then I would temporarily exempt savings accounts till the situation was resolved or controlled
Marcy–Your numbers for insurance costs certainly don’t reflect my family’s experience. I live in Michigan (a high insurance cost state). My wife is 61 and I am 56. I am lawyer in solo practice–we get particularly hammered by increases under Michigan law. We have a daughter age 14.
Our insurance is a BC/BS PPO. Not bad, not great. High co-pays for just about everything. We could not even get other companies to quote for us due to preexisting (but not very expensive) conditions.
Total bill: $20,600.
Our total income is about $50,000 (even lawyers get hit by a recession).
You do the math. We are being eaten alive by insurance–we just spend $5200 of our savings every quarter on insurance.
Oh, I’m not saying you can get insurance for these prices. Only that, at higher prices, you would be able to opt out with no penalty under this bill.
I’ve actually been saying for some time that the CBO far underestimates the number of people who will opt out. Particularly for those at 401% of poverty–and therefore ineligible for any subsidies–it’ll be a lot easier to just opt out.
And btw, I’ll be headed in taht direction within a year. Me and the hubby are using COBRA right now, but that’ll run out and I’ll be on BCBS paying crazy amounts.
Assuming $19,000+ in housing expenses is quite a lot. It’s realtors who tell you you should spend 30% of your income on housing. $19,000 should correspond to a mortgage of $240,000, meaning a dwelling of $300,000, assuming putting down something normal like 20%.
I just plugged in a $300,000 sales price, 20% down, 30-year loan, 6% interest, $2,000 property taxes, $1,000 insurance, $500 in home association fees, $500 in repairs into an “annual ownership cost” calculator, and I come up with $13,500 or so. Maybe my assumptions are off. On the one hand, certainly there are some much larger home repair costs that can come up, but on the other, I haven’t run into them in my 6 years of owning an 1890 building in Chicago. I”m sure I will, but had I set aside $1,500/year, I’d have a pretty damn big pad for repairs. And the “home assoc. fees” presumably is a line for repairs done by a condo or duplex-owner group, so you’d count that too.
In Chicago, a family of four could easily rent a nice 3-bedroom apartment in many neighborhoods, including mine, for $800-1,100/month, meaning something more like $9,500-$14,000.
I’m not opposed to anyone buying more than a $300,000 house, or living in something bigger in a nicer neighborhood than an $1,100/month 3 bedroom apartment. But that’s more than most families with $64k in income would/should spend on housing.
It is not realtors, that is what the Federal government figures. Even the HAMP program, for people that are hard up, assumes 31%. Your dismissiveness is not supported by the common assumptions in society or by the Federal government that is ramming this shit down people’s throats. And not all Americans should be forced to live in your apartment you so blithely suggest either; and if they do, it should be by choice, not because they were forced into selling their home by a craven government.
As I said, this is housing payments for a $300,000 house. The average house in this country costs $200,000. So you’re asking for pity for the struggling family who has chosen a well above average home.
And, as Marcy calculates, and then presumes is normal, you’re expecting that it should be normal for a 2-wage family to live 20-25 miles from BOTH jobs.
I don’t live in a world like that. I don’t want subsidies to help people live in a different county from where they work. This is a Detroit-based blog, and maybe from a Detroit perspective, it’s great to assume that policy decisions should be made based on helping people consume far more petroleum, helping people buy big houses. I don’t.
I don’t expect people to live in “my apartment” as you say, with a weird tone that suggests it’d be a hellhole, but I don’t expect government policies to help subsidize them to live somewhere better either.
Most people DO live in that world though as to necessity for driving miles, especially when you consider there is driving for other than to and from work. As to the house, maybe your figures have some validity in some circumstances; I will grant that, especially rural and poorer areas. In other areas $250,000-$300,000 is a shack and it is not only rich people that have to live in those areas. But granted that, there is also a group of people that,under your scenario, will be forced to sell their family homes and farms, and move to an apartment or shack, or be homeless, in order to make the tithe to the insurance conglomerates Obama has mandated. That is wrong.
First, understand that the 30% is also what is used for renting. I did not include a number of costs–such as property tax–that would be included for those who owned their house. As I pointed out, my house is worth far, far less than $300,000, but when you add in things like property tax, it gets a lot closer to that. And of course, you’re assuming good credit.
Second, I did not make up the 40 mile number. That’s the number GM used for the Volt, having done a pretty extensive study of commutes across the country. 25% of the country has longer than 40 mile commutes. That said, I average 12,000 miles on my car, even though I work from home and drive only 2 miles to any frequent errand site, because I do a lot of long trips, including for my job.
Third, this doesn’t account for the many metro areas where middle class families have to have long commutes–far longer than 40 miles RT–to be able to afford a house. Chicago is actually fairly affordable as a metro area for housing. But in LA, a family would be lucky to get a 1000 square foot house within 20 miles of their job.
Not in Phoenix or Tucson either: isn’t even close for those in the San Francisco area.
You are aware that no one lives in an “average” home or drives an “average” car, right? It’s just a mathematical construct based on measurements of the real world. And that real world varies from place to place.
You’re projecting your own circumstances onto others. A few more years on your own and you’ll start to get over that. Either that or become a lifelong Republican.
Thanks–good point.
As I pointed out here, a more likely average family would have closer to $10,000 in childcare, maybe $16,000, assuming these two kids are both in child care full time, assuming that one of them is actually a toddler. So save money on the house and the car, you may pay far more than than for child care. Or college loans. Or other forms of debt.
You do not have to have family members in college to have educational expenses. With all the cutbacks in public school systems, there are now “fees” for activities, sports, books, bus service, projects, lab equipment and necessities and school food; all of which were free when I was a kid.
Nice, cheap housing you have there. Be a shame if anything happened, like your job moving to some other state where housing runs about twice that.
I don’t contest you could save more money–though in most markets, that’ll require a more reliable car and more mileage. Just that taht 30% is generally what we spend on housing.
I spend far less than that, for example, but pay $3500 a year in property taxes.
This is an incredibly stupid remark for someone who “supposedly” used a mortgage calculator.
You seem to always be on your way to Chicago, but you don’t seem to ever quite arrive.
Here’s the median price of a home in Chicago: $234,000
Now watch real carefully. Here’s a mortgage calculator.
Home Value: 234,000
Loan amount: 187200 (assumes your 20% down)
Interest rate: 6.5
Loan term: 30 years
Start date: Dec. 09
Property tax: 1.25 %
PMI: 0.5 %
Monthly Payment: $1,456.23
Yearly Payment: $17474.76 (just in case you can’t do the math, that’s $1,456.23 x 12)
$17474.76 which comes pretty damn close to EW’s $19,275 (the difference is $1800.24).
You assume a 20% down payment. That doesn’t jibe with what I’ve heard and read about down payments these days. Many folks who have recently bought houses pay much less down if any down at all.
So let’s do the numbers of 10% and 0% down.
Same mortgage calculator with the same terms.
A down payment of 10% results in:
Home Value: 234,000
Loan amount: 210600 (assumes 10% down)
Interest rate: 6.5
Loan term: 30 years
Start date: Dec. 09
Property tax: 1.25 %
PMI: 0.5 %
Monthly Payment: $1,638.26
Yearly Payment: $19659.12 (just in case you can’t do the math, that’s $1,638.26 x 12)
Surprise, surprise! That’s almost exactly what EW’s numbers were ($19,275).
Now a down payment of 0%:
Home Value: 234,000
Loan amount: 234000 (assumes 0% down)
Interest rate: 6.5
Loan term: 30 years
Start date: Dec. 09
Property tax: 1.25 %
PMI: 0.5 %
Monthly Payment: $1,820.29
Yearly Payment: $21843.48 (just in case you can’t do the math, that’s $1,820.29 x 12)
So to recap for you-who-never-seems-to-arrive-in-Chicago, with the median price of a home in Chicago at this very fookin’ moment of $234,000, the cost of just the monthly mortgage runs between $17474.76 and $21843.48 annually (0% down to 20% down).
That does not include any costs for maintenance and upkeep or costs associated with unexpected repairs.
$17474.76 and $21843.48 annually. And EW’s number of $19,275 falls right in the fookin’ middle of those numbers for you-who-never-seems-to-arrive-in-Chicago.
Fookin’ people who can’t do math…
Dang, girlscout, are you taking over in Freep’s absence?
I’m a boyscout…(better check just in case, looks down into his pants to make sure). LOL!
A ersatz bench warmer lacking his verve, chutzpah and snarkiliciousness.
There is no substitute for a Freep. *g*
You know, for a year plus, I thought you were male. Then, something made me think you were female.
Apologies, if needed.
No apology necessary!
Sometimes I let my feminine side slip out, but I promise not to do it again. *g*
Geez…
klynn looking down shaking her head saying, “Oh that MadDog. Silly man!”
I’m honored to have you say so. *g*
NYT:
I would like to see the same numbers run where one, two, etc. of the family members have pre-existing medical conditions. Because it just fries me every time I see some happytalk cheerleader crow about how it won’t be possible to exclude for that any more… but then they fail to mention that it’ll likely cost you 3x the ordinary premium… and then there goes the whole affordability argument.
The bill truly is a stinking and steaming pile.
Yes, I’ve not seen anywhere a clarification to the supposed rule that pre-existing conditions will not disqualify anyone from insurance. Does the insurer get to charge more for pre-existing conditions? Like, I have to accept you and your need for round-the-clock care, but my rate for that is, say, $15,000 per month?
Yes, they can charge more; how much more, i.e. is there a cap on increases for this, I have not seen addressed definitively.
Dammit.
House backers of public insurance option may yield
Link.
Until the profiteers are run out of the medical and banking industries, the slaughter of innocents shall continue. The main reason costs are out of control in America versus everywhere else in the civilized world is that the rest of the world doesn’t allow the rape and pillage of the average citizen by the healthcare industry. It can be done, but I’m doubtful this bill is even intended to do it.
Enjoy.
Christ, I hadn’t even looked at the assumption of $13,000 in transportation expenses, without which, they’re supposedly “driving an unsafe car.”
Yes, wealthy people may choose to spend $13,000 on automotive expenses in a year in a family of four. But a family of modest income can figure out a way to live near ONE of the two wage-earner’s jobs. You’re saying we should make policy based on the idea that the normal lower-middle class family should be assumed to drive 500 miles/week in relatively new cars.
500 miles/week = 100 miles/day (assuming a five-day work-week–and yes, I’m ignoring the weekend driving)
100 miles/day divided by 2 cars = 50 miles/day for each car
50 miles/day for each car = 25 miles one-way. And you’ve got to include going a few blocks out of the way to get groceries and other things, deposit and pick up the kiddies, and so on.
“For better or worse, America is a nation on wheels. To get where they need to go, 90 percent of Americans say they usually drive, reporting an average of 87 minutes a day behind the wheel. For car commuters, it’s an average of 100 minutes; for parents with children at home, an average of 104 minutes (compared with 77 minutes for people without kids at home). The average household owns two cars, trucks or sport utility vehicles — and one in four owns three or more.”
http://askville.amazon.com/average-commuting-distance-americans/AnswerViewer.do?requestId=2554434
You apparently do not know jack about the real cost of driving a car, and certainly don’ know about it in places where people depend on cars and the commutes are longer. We don’t all live in Chicago and we should not be forced to drive a decrepit old Gremlin in order to satisfy Obama’s desire to cram shitty insurance profit mechanisms down our throats.
Uh, you’re not going to make it as a financial planner.
The IRS per mile rate is a “top down” rate. That is, it includes all costs of operation, i.e., capital costs (the purchase price for the vehicle divided by the expected miles and useful life, financing costs (since where do the saving come from to buy it?), the cash operating costs like gas, oil, repairs warranties, and insurance.)
Now if you don’t like the IRS rate, you can build it up on your own (“bottom up”) but a used car is going to have higher maintenance costs and shorter life in years and miles, and thus a higher per mile cost for the same projected time period.
Oh I see, you suggest they move closer to employment. Well, they can move closer, but then typically housing and other costs rise (food, taxes, utilities, child care, etc).
When doing this type of financial analysis, there is no free lunch.
Exactly, dogaffer, and it assumes the capital costs of purchasing an expensive car.
On the bright side for you, you’re going to make it as a financial planner, because you do exactly what other financial planners do, regurgitate conventional wisdom based on rosy scenarios and get people to buy into things that are stupid for them.
You’re making the exact mistake I was taught 30 years ago not to make: buying used does not necessarily equate to less costly. Yes, a 20K new car has a lower total cost of ownership than a 40K new car.
But that’s not the comparison. The comparison is 25K new car versus a 10K used car that was originally 25K new. Buying used saves you upfront capital costs, but in exchange for increased operating costs and less useful life.
Now yours is a common mistake, I’ve seen Fortune 100 CEOs make the same mistake, and run their companies into the ground doing so. The mistake is the inability to run apples to apples comparisons, and to take into account how costs changes under various scenarios.
The reason people buy used is because they don’t have the cash to afford new, thus their higher cost of ownership is the penalty paid for the unavailability of surplus cash. True for business, true for households. Which is close to the point here that ew is making, no surplus cash results in higher unit cost. For many, the Senate plan makes them worse off, not better, because it sucks up surplus cash w/o a corresponding usable benefit.
This being the holiday season, go read Dickens.
No.
Those are actually LESS than the average family has in this country.
The average mileage for a car is 12,000 miles (average commutes are around 40 miles, which would use up 10,400 of those miles). Insurance companies actually figure average mileage as 16,000, but this is DOT numbers, reflecting the fact taht clunkers are driven fewer miles (that is, this includes teh 40 year old clunker you have in your driveway and rarely drive).
And the number used here–$.55/mile–is what the IRS says it costs to run a car. That includes purchasing it, maintaining it, insuring it, gas, etc. As dagoril pointed out upthread, this number will go down in 2010, so this family would have $1,200 more in spending money next year.
Also, as I pointed out, I used MI’s much cheaper child care and taxes in this calculation. Most states have higher taxes, some more than twice as high; most states have more expensive child care. So while I think a lot of families might be able to get by with cheaper car costs, that state is not most places in MI, which is one of the tradeoffs you get for paying so little in state taxes.
I just roughly calculated out our car expenses based on actual figures, not IRS baloney, and it came out to over $8,000 a year and both of our cars are paid for, that includes nothing for purchasing an/or depreciation.
IRS automotive assumptions have always been based on the upper-middle class people who are able to get most out of the deductions; and on ways of encouraging people to buy another car. It doesn’t mean it actually costs that much to own/operate a car.
You’re saying it’s normal that a financially-pressed family would choose to live somewhere where they both had to commute 40 miles/day, and where they couldn’t let their kids get to school on their own like healthy normal kids. I don’t.
Bottom line, you’re horrified that someone should have to pay $8,000/year for health care, because it might make them cut back on the $12-13,000/year you think is normal for paying for automotive expenses. I find that attitude bizarre.
So what you are saying is that people should live squalid crappy existences in order to pay for Obama’s crappy plan? This kind of argument is exactly why the Democrats are going to get their brains beat in by the GOP and tea baggers over this screwed up nightmare; and rightfully so.
If we were still in DC, $300,000 was going to buy us a home under 1000 sq ft but walking distance to a metro stop.
The house would have needed new windows, siding and doors plus mechanical systems.
About $250,000 was going to get us a 2 bedroom condo, not including fees, close enough to a metro stop.
We were in a two bedroom apartment when we left 12 years ago.
Oh, I agree. Still, if you take the national average, NextStop has a point on the housing. If you live in a rural or poorer area, he is right; the figures are generous. In many other areas, they are not even close. People live in both kinds of places. Problem is, most people cannot just up and leave their house, or move to a cheaper place because of their jobs and roots.
Klynn,
Understood that housing prices can be higher in some neighborhoods of some metro areas, but you do understand that you’ve completely undermined Marcey’s assumptions by saying this — that price was going to buy you something small — but on the other hand, instead of spending $12-13,000/year on transportation, you could have gotten by with maybe $4,000 — the cost of keeping a single car around, for a couple, and not driving it daily, while traveling most places on mass transit or walking and riding.
Also, it doesn’t cost nearly that much to live in most neighborhoods of most cities. But then, to pay less, you have to live in minority neighborhoods, which of course is unreasonable to our assumed normal American.
$4,000 a year for transportation, including mass transit and a car?
That’s a joke, I hope. Or lack of knowledge.
I pay $3000 a year for mass transit (heavy-rail commute), and that’s excluding a car. The car adds another three thousand or so in itself, and it’s paid for.
Have you perused the sale and rental listing in the WaPoo lately? ‘Cause things HAVE changed.
Folks have wised up to the value of being near a Metro stop, and prices near those have sky-rocketed.
Metro [and bus] costs have risen dramatically, and give every sign of continuing to do so.
Oh, I know. My point was, we were looking at a “modest” living set-up then and it was sky high.
Bmaz,
You’re so out of touch you don’t know what a crappy existence would be.
You think a $10,000 car with 50,000 miles on it is “an expensive car” and have the freaking gall to say I am “out of touch”?? Hilarious.
Yes, I know that you’re out of touch. The only way I can see to explain your ignorance is that you looked at friends, perhaps friends who don’t do as well as you do, and assumed what they do is what moderate income people do. It’s ever that way with higher income people — how could a family get by without a $10,000 car that only has 4 years left in it? Is it possible?
As a matter of fact, the families in my neighborhood, actual moderate income families, don’t buy a 2006 Taurus, assume that’s the best they could do for gas, and assume that it’ll be beyond it’s near the end of its life in 4 years. But that’s what someone who believes a $10,000 used car that only has 4 years left has to assume. So yes, I’m very comfortable in stating that you’re utterly out of touch.
Your tripe is so ludicrous as to not even be worth responding to anymore; and you don’t know dick shit about me or my friends and exhibit a great deal of belligerent hubris for assuming you do.
And, by the way, your assertion was not that it was an average car, but an “expensive car” like it was a Benz or Bimmer or something.
A $10,000 used car with only 4 years of life left in it is probably a collector’s car.
A used car with that kind of price tag is generally a fairly new car, which means it should have closer to 10 years left.
(FWIW, the current blue book on mine, which is coming up on 8 years old, is $10000: it’s a high-demand car. It also has a big-ticket maintenance item coming up in a few years, after which it should be good for several more.)
bmaz, we’ve had a few threads over at the lake discussing how we might try to move obama to the left (which would actually be toward the center since his policies are far to the right as of yet)
anyway, it seems obama’s brain (rahm) has not made obama aware he is losing far more support then he can afford and the democrats will lose their majority next term
and he is not aware he is as of now a one term president with little time to make up ground
we need to somehow get around rahm, obama is all about power, he believes ceding to corporatists insure his second term and continued democratic majority in the houses, we need to disabuse him from that fantasy
that will move him over more to the left and closer to center
as far as this chicago chap, he’s obviously here to derail a constructive conversation
Obama will probably win a second term unless the Rs nominate a non-crazy candidate, which at this time, seems unlikely.
Oh goodness, you’re suggesting that the IRS rate for a deduction is overly generous?
Let run some numbers.
$10K used car with 50K miles left before it starts to seriously require repairs;
$0.20 per mile
Annual Insurance on said vehicle $500 year @ 12K miles (can’t drop collision because that’s the point of insurance – covering a catastrophic loss, but as you’ll see below, it doesn’t make much difference if you do)
$0.042 per mile
Gas, $2.70 a gallon at 20 MPG
$0.135 per mile
Oil change and check ($160 per year) plus one $500 repair.
$0.055 per mile
Financing cost on 10K purchase price @ 12% (since used)
$0.10 per mile
Total cost per mile @ 12K miles per year = $0.532
Huh. Thanks for doing that math. I just sort of figured the IRS knew what it was talking about bc it’s not generally in the business of giving money away for free. And given that they’ve been adjusting this on a six monthly basis with the fluctuations in gas prices, they do keep it tied to real world conditions.
Oh goodness, dogaffer, there you go again. $10,000 for a car that only has 4 years left before it’s a mechanic’s dream? Maybe in your world, nobody can “drive safely” if they don’t spend at least $10,000 on a car that has only 4 years left in it’s useful life. But in the real world of middle-income people, $10,000 gets a car with a hell of a lot of life left in it. Many $14,000 NEW cars would come with 10-year warranties.
20 mpg assumes buying a car without any reference to gas mileage – which may be the norm in your circles. But for people who need to think about costs 20 mpg was crappy mileage in 1976, let alone today. So no, $0.50-55 mile doesn’t reflect real costs for a normal family of moderate income.
And again, all of this assumes that 24,000 miles/year is normal for a family of moderate income. As EW says “you have to pick up the kids.” But you don’t. You don’t actually have to drive the kids everywhere. You don’t have to drive yourself everywhere. You don’t have to choose a job a county away, and while you can pretend this is callous, it’s absolutely not callous in a macroeconomic way – because if you don’t take that job, it won’t go away. Somebody closer will get it, who also needs a job, so society is left in the same place. Or, you’ll choose to buy a $300,000 house that’s in the same county you work in (which will likely be a denser, more walkable neighborhood where not only will you not drive that far to work, you’ll also be able to walk to the grocery store, and your kid will be able to ride a bike to school.
Now you’re just shrill, w/o any numbers to back up your argument.
Where did you grow up, Stalingrad? I don’t know about others, but I don’t want to live in your pissant crappy bleak and dreary world. You want to motor in a Ford Pinto and live in a hovel, that is your choice, but don’t presuppose as to impose that shit on me..
bmaz replied:
It’s not just his pissant crappy bleak and dreary world, it’s the pissant crappy bleak and dreary world the oligarchs intend for everyone but themselves and their loyal corporates.
Think about it… the takeaway from the discussion here is not that the bill will destroy the unions or wreck the middle class (although both are high on the “to do” list of the powers-that-be) but that through the corporate writing of laws such as the HCR crapfest the actual meaning of what it is to be considered middle-class is being rewritten to a standard more appropriate for a developing nation.
How’s that walking and bike riding going to work in Michigan — or even Chicago — winters?
Or in southwestern summers, when it can be 80 degrees (F) at sunrise.
I don’t think ‘not getting to Chicago anytime soon’ has ever had to carry groceries home from the store on foot, or walk to a transit stop in the rain (or snow!), or drive a car that’s old enough to vote and has more than 90,000 miles on it.
There is no such place in Arizona.
Once the blue book value is low enough, dropping collision coverage makes sense.
Basically, if it’s a clunker, or more than about 10 years old, you might as well do without it, and put that money into saving for the next car.
EW,
wavpeac @ 33 and dcgaffer @ 46 make some very important points that the Repugs and blue dogs own. Could you work in an update that points to those realities?
Quite honestly, that should be the selling point on fixing this legislation. The, “after eight years of the Bush hit to the economy,” we cannot afford to not fix the issues in the bill that hurt the middle class. If the Repugs scream about the corrections, then just state, “Hey folks, it’s your own hit to the economy over your eight years of leadership that requires the corrections.”
A few words about the Senate Bill:
It sucks, and they know the insufficient wiggle room will have to be fixed before the piper comes calling in 2014.
oh, yeah: and F**k them.
As far as I am concerned, HCR is just a really bad joke and I’m the punch line.
First off, if you’re paying $100.00/month for phone, cable, and internet, please write a post about that. My jaw dropped to the floor.
Second, we pretty much fit your scenario, but Istopped reading after “Health insurance premium: $5,243”. We don’t have insurance; we’re cash pay. This would create a new bill for $436.92/month in our lives. We don’t have that. Now what do we do.
Over the last couple years we’ve gotten out of debt and this past year have even saved about $200/month. But I live in constant fear over a leaky roof, my furnance breaking down, car trouble, or a major health care cost. We don’t have $436/month, period.
(my bold)
Repeat this point often and loudly.
Thank you, Marcy.
Friends, with all customary respect: why are you letting this Chicago person degenerate the thread?
On topic: Here’s a question I haven’t seen asked before. In California where I live, no group health insurance plan may exclude any applicant on the basis of pre-existing health conditions, only individual plans. IIRC the pre-existing-condition applicant can’t be charged a higher premium within the group plan either. Now my question is, would that state-law protection for pre-existing-condition insureds change under the House or Senate bills?
As I understand it, probably. But then I can’t figure out the plans offered by my employer, either. (Choice: BC/BS, Pacificare, and Kaiser. Or, ‘Bad’, ‘Worse’, and ‘Only Our Network’.)
Thanks, I find it weird that this important point hasn’t been addressed in any of the “What would the bill mean for me” stories that I’ve run across so far. And I sympathize about choosing a plan — I’m half grateful I got turned down for a new individual plan since it means I can stay on COBRA (subsidized, for which I’m 100% grateful) as long as it holds out before having to face picking a new plan.
I was thinking seriously of moving to Costa Rica, but the latest info I’ve found says their otherwise excellent public health insurance / health care system will exclude foreigners if and only if there’s a pre-existing condition. Can’t really blame ’em for that, who’d want a bunch of sick uninsurable gringos streaming into their country?…
Frickin’ apnea.
I have 1.5 acres for sale in Marbella if you change your mind!
Ha! I knew you and I were similar thinkers, that’s why we tend clash so very hard on our rare differences… Costa Rica seems to make an awful lot of sense for a disappointed American, even despite the pre-existing HI exclusion.
damn.
I know.
I really should give a cite for that info, for others’ benefit, and there’s more to it than what I said. This is from Erin van Rheenen, “Living Abroad in Costa Rica” (Moon, 2007):
But there is also the Caja (Caja Costarricense de Seguro Social):
Evidently most expats use some mix of these, plus self-insuring and using international insurance coverage.
Oh, to live in a rational country…
If you want to go to the previous thread, we can chat. (Hope that’ ok.)
thanks for the info.
I vote for Kaiser. It’s less expensive and far better quality. They actually send me notices about when it’s time for mammograms, etc. I’ve got my doctor’s email address! I’m able to cover my early-twenties daughters on a catastrophic plan- $2700 deductible-once a year checkup for $85 each.
Well, it’s going to have to wait. They run open enrollment the first week in November. And good luck figuring out the ‘information’: it’s a 90-page PDF file.
The Sweetie reports excellent experience with Kaiser both as a patient as an insured. FWIW.
Merry Christmas, Emptywheel,
Thanks for all of the great work that you do. Please keep up the good work.
I know I’m late to this thread but anyhow . . .
I really appreciate your understanding of how health care costs affect working families. Not very many people in DC or in the press seem to get it, so I’m grateful that you do understand the problems facing working families w/r to health care costs and have the courage and intelligence to clearly articulate the problem that working families have w/ health care costs.
Sincerely,
$5243/year for a family health insurance policy? That’s a lot less than BC/BS of MI charges.
an important thing to remember and point out on a thread like this marcy, because of “retaxation” or as the progressives like to use, “regressive taxes, the middle and lower class pay somewhere close to 50 percent of their wage to tax, the wealthy, since they are only retaxed on the percentage of income they spend, are actually taxed somewhere closer to 25 percent, (even when you add to the mix our progressive income tax)
here’s what most people don’t understand;
the wealthy only spend a fraction of their inome on taxable serives and goods, they also enjoy deductions lower income individuals don’t enjoy
he perentage that is not spent is not “retaxed” and therefore, over all, they pay far less percentage of wage then the labor classes
this becomes an effective tool when trying to point out how inequitable the current regressive tax code really is, even though the wealthy consider it “progressive”, it obviously is not
there is a sure fire way to get rahm out of the picture;
fox hates obama, fox hates rahm, fox hates fanny mae
if we can somehow get them on the “rahm is stealing from fanny mae” theme, it will be one of the few times their critisism is correct
we can bring rahm down bmaz, all we have to do is get fox to realise the value of that story
Figures from Florida, which based on my casual stroll around the internet appear to be slightly on the high side of average – use the middle-lower end of these ranges:
Normal vaginal delivery: $6,000 to $11,000
C-section: $12,000 to $20,000
Does not include the cost of monthly pre-natal checkups and vitamins.
My C-sections in early/mid-1990s cost about $6000 and the only things I paid out of pocket were co-pays on my monthly checkups of $25 and the phone for my hospital room. I was discharged 48 hours after delivery both times because I was doing better than average.
Those single guys ought to consider getting neutered now because they can’t afford this.
(An aside: The rate of C-sections has also grown ridiculously over the last 10 years, from something under 25% to as high as 40% as cited in that link provided. This suggests that there are either an increasing number of at-risk pregnancies and/or that doctors are more litigation-adverse. Whatever the underlying reason, this is not healthy and it’s very expensive.)
Good article. Step by step people need to see that.
Isaiah 5:20 “Woe unto you that call evil good and good evil.”
God is against insurance, “surety.” Insurance is based on fear, not faith; it is the devil’s territory. “By faith are you saved.” (Saved from a trap and the bondage and disease it creates.) If you fear losing your health, (house, boat, car, child etc) you insure them. You have to deny God’s power and His promises including “by Christ’s stripes, you are healed” to accept insurance.
Insurance is counter productive. One of God’s laws is, “That which you fear shall come upon you.” Also, “That which you sow, you shall reap.” It requires that you receive (reap) a sickness etc. for which the insurance will pay. We cannot solve the health problem using what God hates.
God warned against debt, interest, insurance, seeking riches and honors, pride and vanity. Our whole national system and most of the world is anti-God; anti-God is evil. Only terror and 4 x 7 curses are pronounced by God against the nation that rejects His commandments and wisdom. UNTIL we turn to Him in truth. (Leviticus 26)
God’s way is freedom; the devil’s territory is force, oppression and compulsion. Compelling people to buy insurance works against God’s law. It forces people to help others and makes enemies instead of close friends. It adds extra costs. It creates a way for major corruptions and bribery. It also pays huge salaries etc for administration costs for those who scramble papers around and decide who gets how much. It pays profits to investors. It brings confusion and hatred for the government like the IRS program. That is not helping the poor; that is using the poor. Health Insurance and other insurance is evil. It denies that God is our source and our protection.
HEALTH CARE REFORM conforms to: “Psycho-Politics-Address on
Health Care and Control.” by LP Beria at Lenin University
(Says only Faith Healing through the Bible can stop
control of the people through health care.) AND
HEALTH CARE REFORM also conforms to “45 Communist Goals For the
Take Over of America.” (control of courts, media, education, medical fields.)
See both at http://www.divine-way.com
Marie Devine
http://www.divine-way.com
God has solutions to world problems we created by ignoring His wisdom.
Would somepone who knows with some confidence list for me the date (year) the middleclass family we are discussing will first have to pay the health insurance
tithes beimg discussed here.
2010?
2011?
2012?
2013?
2014?
I keep thinking of john conyers’ criticism of Obama that health insurance reform won’t take effect until 2014.
The penalty for not having insurance can be calculated a couple of ways. The only dates I can find are in the percentage of income method. Here they are:
(i) 0.5 percent for taxable years beginning in 2014.
(ii) 1.0 percent for taxable years beginning in 2015.
(iii) 2.0 percent for taxable years beginning after 2015.
That info is from the Manager’s Amendment for the Senate bill but should be accurate. (I can’t find a copy of the final Senate bill anywhere online yet)
Hope that helps.
I’ve raised two sons into college on a hope and a prayer, the wife and I always being self-employed. I used a combo of high deductible catastrophic insurance w/an accident policy which covered a lot of stuff…. but then whammo, rates went up and up and I cancelled when they got into college (where they are covered) but me and the wife are skating on a wing and a prayer now…. we have often exceeded the 7.5% of gross income IRS rule.
We are better off being deliberately at the lowest end of “middle class”. I can tell you I will not buy any of this POS insurance being shoved down my throat, there will be massive non-cooperation with this “mandate.” It’s BS, short and simple.
We don’t go on vacations, I have a garden. I buy all my clothes at Goodwill. I drive my 13 year old pickup truck 7,000 miles a year. ETC.
So that’s the trend for for many of us formerly barely middle-class people… I know I’m not unique. The gov’t can kiss my arse.
OT — At FDL, Cynthia Kouril on the Ocala mortgage oopsies I mentioned a while ago.
Thanks, fenestrate.
I like the nom de plume;
I interpret it as
“throw the bastards out the window”.
I think that’s defenestrate. Which I always read instead as “to remove their windows.”
To throw a person or thing out of a window
Link.
I know, I know… just my private bad joke. “Fenster” = window, “de” = remove.
Sorry. I’m slower than usual tonight, I guess. Thanks so much for your good humor, and kindness, too.
Well, if I were truly funny, this sentence would be a surprising and nasty personal remark about you. Alas, I’m just too nice for that… just like yourself…
Well that’s a good alternate version.
But then I think that ‘burglarize’ should mean turning someone into a burglar, so what do I know?
I found the word in an alternate history book (think science fiction). The author claimed it meant to sneak into a window. Ostensibly, it was a thing engaged couples did. :D
Oh well,
We can all agree it’s
SOME
Sort of verb form, with bodies moving in or out of windows.
For me the hidden issue is:
Is the insurance “reform” bill a sincere first effort
Or
A kabuki drama ochestrated by the white house and medical industry lobbyists?
If the guts of the bill are political folly,
But the essential parts of the bill
Don’t go into effect until after the 2012 prez elections,
Then this whole year-long effort is a whitehouse or hestfatec sham.
HERE is a basic calculator for premiums. Don’t know about you, but it indicates my premiums may be 14% under one scenario and 17.5% under another scenario of my total income and I will not be eligible for any subsidies whatsoever.
People are going to HATE this junk and take it out on every Democrat in sight
And that was totally predictable from the get-go, so… like… WTF?
Where’s the APP* when you need them?
(sigh)
*American Progressive Party
I think you may be associating with them right now…..
Way cool :)
I knew there was a reason I liked the FDL family of blogs the best. (Well and Balkinization) And of the FDL family, EW the best of all.
You are clearly a person of discriminating taste.
You mean like when Chuck defenestrated the midget in Orlando?
(Okay, I have no clue on the word, I just love this Barkley story)
Yes, that would be your basic classic defenestration. First I heard of it, it was a way of carrying out capital punishment on monks in the middle ages. Take ’em up the tallest available tower and toss ’em out (“de”) the window (“fenestre”). Splat!
Outstanding!
orionATL
I may have steered you wrong. If Thomas is right, not all of the Manager’s Amendment made it into the bill. Here’s the penalty info as passed:
From http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.3590:
Given EW’s figures, and going with the numbers from the bill as reported by thomas.loc.gov … with a penalty of $2,250 per year (assesed per month) in 2016 before adding in an inflation adjustment …. what are the odds that the family might forgo insurance?
dagnabit! I don’t trust thomas … the bill as presented there has absolutely no MLR numbers or provision. On that note, I’ll bow out until wiser heads can clarify the situation.
(I’m used to tax code. While sometimes difficult to make heads or tails of, it’s never as bad as this mish-mash.)
mabelsigman spammed thusly:
Very nice article about medical insurance industry.
Worthy of defenestration! Ot at least an IP ban… :)
Thanks for zapping that, kitty. EW’s place doesn’t see much spam. Naughty, naughty, mabel.
Hmmm @ 176, for the longest time I wondered why there was such a word in the first place — it didn’t seem to me that there was such a need for it, y’know? But you’re right: it was a favoured method of execution during the Middle Ages. Before I had bothered to look it up, for some reason I thought it meant “to castrate” — I figured it was the “drawing” part of hang, draw, and quarter. Dunno why.
For some reason I also remember that the Czechs have long debated whether Jan Masaryk was defenestrated.
If you fall from a window or jump from a window, are you also defenestrated, or does the word only apply to executions/murders?
Always I’ve seen it applied to a murder/execution. Never to a suicide.
Oh, wait …. autodefenestration …. that would be suicide.
Just for historical edification …. as recorded in the book of Kings II in the Bible, Jezebel was defenestrated by her own servants at the urging of Jehu. (2 Kings 9: 33) That would be the first recorded defenestration.
Man, I’m even putting myself to sleep…….
emptywheel one of the best writers and investigators on the tubes.
Distorting Nate’s words to fall in line with the group think. How disappointing!
So, here’s Nate’s exact sentence:
And here’s what Marcy says he said:
I don’t see that as a gross distortion. What am I missing.
Those two quotes could be put into agreement with each other by changing Nate’s “but” to “because” or “indeed,” and by deleting Marcy’s “just” (or changing the resulting “is a matter of” to “amounts to”). Would those two little edits make the intent of the two authors clearer, or would they upset the original meaning(s) of one or both sentences?
The point is Nate assumes that middle class families, in their current budget position, are spending all that much on eating out or going on vacations. Many of them are already struggling without having this extra charge added on, and so have already given up what they might have, in past years, been able to to make up for the cost of the mandate.
Somehow I missed the place where “mandate” got itself (re-)defined. This isn’t any use of the word I’ve ever encountered, and I just have to think that there was another perfectly good word out there that would have expressed whatever-it-is better. More 1984-ish Newspeak?
How you wrap your head around all of this is beyond me. I get swamped with junk(?) mail purporting to explain all my medical coverage “choices”, and I don’t have a clue what is going on in the 4+ pages of tables in an average mailing. I feel like calling up AARP and saying, “Just get me what you think is the best arrangement, then everybody else get out of my mailbox.”
And in my defense of my difficulty in comprehending what the dickens is going on, I’ll note that my scientific papers, published books, unpublished novels, computer programs, and newspaper columns would take up a few feet of shelf space. If it were easy to understand the “choices” we U.S. citizens face in medical coverage, I trust that I would have figured it out by now.
AARP partners with United Healthcare to provide insurance. They supported medicare part D that forbade negotiation of the price of drugs. AARP is not on your side. They are on the side of UHC.
Yep. they sold out their membership a long time ago.
AAR
Pgh.Right. And this looks to multiply that confusion; that alone is going to drive people into an insane rage, with Democrats that passed this junk as the focal point. I am a lawyer, and I look at this shit and my eyes glaze over. What the heck is the ubiquitous Joe SixPack gonna do??
From behindthefall @ 222:
Man, you can say that again. I try not to say too much on this subject, but I just can’t believe what you guys have to go through even to understand what is being proposed, much less pay for it. Somewhere up above Anne from Quebec says she feels panicked to read this, and that’s pretty much how I’ve felt through some of it.
The only upside I see is that you have all become very smart about budgeting. I’m learning a lot from reading you all, and getting scared about how little I understand some of my expenses. But wow — as bmaz says, what are most ordinary people gonna do faced with that paper onslaught behindthefall describes?
How on earth did so many North Americans become convinced that bureaucracy is a feature of “government” and socialism, when it’s pretty clear that it’s the private corpses that will drown you in paper?
Who trusts polls these days. Since they can be easily bought..everything else is related to govt….I go with Marcy.
Gross fanboying without support; how disappointing!
I know that for a lot of people 8%-9% is a lot of money – however I’m on COBRA right now, which is actually a good deal as plans go, since by definition it was arrived at by negotiations with a very large company with a lot of buying clout. My COBRA is over $20,000.00/year for a family plan – I expect my health care costs under current conditions to go up for comparable non-group coverage when COBRA is gone. That $20,000.00 figure is a GREAT DEAL larger than 8% or my former income, so for comparable coverage I’d take that 8% happily.
The commie in me keeps wondering why it would be such a bad idea to pay this in taxes rather than premiums and have single-payer…
Thank you Marcy for the breakdown / break up of our ability to live .
This reminds me of France right before the heads rolled.The nobility lived lives of luxury and used their money partying. The peasants were squeezed more and more to pay for the nobility to keep on keeping on.
I do think that we as a country are waking up to the fact that we have no representation in DC.People are trying to figure out what has happened…and not liking what they are finding.
As an example , my son uses a public library outside Raleigh, NC. He could not renew a book by Chalmers Johnson.So many requests for it. From what little I have read of Johnson’s writing…he is a super smart writer of truth re. our government’s sorry state. I would have never thought in this wealthy republican area..there would be that much interest. But NC used to be solid dem. back when that meant something.
You’re way out of your league taking on Nate and I would recommend Paul Krugman’s take on the HCR bill too, and if you want to go head to head with a liberal Nobel Laureate, hey, know yourself out. I would just ask you to remember, the other option is the status quo……you must have health insurance, huh?
I love when people assume that because I think this is a turkey because I know my neighbors can’t afford it then I must be totally covered.
No.
I am 10 months into COBRA. This time next year, I will be on the private market myself, as someone with a pre-existing condition. So I am precisely the kind of person this bill would purport to help. And it probably would bring what I’ll have to pay next year down.
But that doesn’t mean my neighbors can afford this mandate.
And I have okay coverage, at best, but it is private/individual and is affordable only because of very high deductibles. My policy will not stay affordable though when there are mandates; I will be forced into the program at rates well over double, maybe triple, what I now pay for effectively the same amount of, or less, usable coverage. I know a LOT of people in the same boat and they are mad as hell.
I have utterly fantastic coverage and I’m mad as hell. This bill will likely not affect me at all, until eventually we get hit by the excise tax and lose that care, but that should be years down the road and I think this mess will be repealed fairly fast.
I’m mad because this is a lousy bill that sells out a lot of Americans to our corporate overlords. I’m mad because there’s no effective cost containment, as Jon Walker has been documenting for months. I’m mad because our system, where we pay 16% of GDP to let 45k americans die a year, that’s 15 WTC attacks a year folks; this bill does nothing to get us into a sustainable model. I’m mad because my dad just lost his wife and he’s going to lose the house to pay for her hospital bills, and under this bill, he’d probably still have lost it. Most people are less than 20% of their annual income from bankruptcy, and he has employer insurance now, so under this bill it gets grandfathered in.
Wonderful stuff.
To everyone who says that ‘you must have insurance’ if you’re mad about this bill? So what? I say if you’re NOT mad you’re suffering from a near total lack of empathy. This is a disgrace.
There are several costs here that are clearly inflated. In 2008, I made very close to the median income, and I am married with one child, sole income. For eight months of that year, I worked in CA, which has a relatively high income tax. My total state + federal income tax burden, including FICA, was somewhat less than 10%. The only way I could have hit the federal tax burden in the table is if I had nothing but the standard personal deduction… which doesn’t describe any family with children.
I now live just outside of Seattle, which is a relatively high cost area. Your housing budget is a bit over $1500/mon… and in most Seattle suburbs, that will rent you a really nice house for a family of three or four; you can rent a decent house for several hundred less a month.
And the IRS reimbursement figure assume that you buy an average new car, depreciate it at the normal rate (five years, IIRC) and then replace it with another new car. The only people I know who do that make a hell of a lot more than the median household income. If you buy decent, high mileage used cars, maintain them, and drive them until the fall apart, you can spend a hell of a lot less without driving an unsafe car.
Depending on what you consider “nice”, maybe. But as demonstrated up the thread by MadDog, you sure can’t buy a decent house. So, we have traded the American Dream of home ownership for the American nightmare of being indentured tithers to an insurance company, and you find that a good thing? Amazing.
So you have a gripe with: 1) The Urban Institute and the census bureau, 2) typical pracices of realtors (not to mention Obama’s own HAMP), and 3) the IRS.
Not me. The only rates I made up are telecom and utilities rates. And I admit that a family could get by with cheaper telecom rates.
And you don’t account for the fact that many of these costs–like child care–will be far more in other states. This is one family that is plausible and for which many of the charges (such as utilities) would be cheaper than average.
I have a couple of questions (apologies if this has been discussed previously, I’ve been busy with other things lately and haven’t followed every post and comment).
I know that many people are going to be worse off under this plan (discussed above and previously by ew) and many people will be better off (those newly eligible for Medicaid and some who receive subsidies), but I haven’t seen any estimates on how many people will fall into each group. I’m not even sure where to start on estimating these figures. Because I believe that the systemic effects of the HCR legislation (in the Senate form) will be likely be fairly minimal and somewhat negative, the ratio of people likely to be helped to people likely to be hurt is pretty critical to deciding whether or not to support it.
Also, what are the provisions (other than the stupid ‘Cadillac plan’ tax) that will have an impact on employer-based coverage?
I think about 15 million more would be covered under Medicaid, which is where you can argue this is an absolute good. A fair number of the remaining 15 million will be significantly better off, because of subsidies. So I’d say that probably 20 million or so would be better off.
As to the other measures affecting employer-based health care, one of the things that I think will hurt is that it is very difficult to opt-out of employer based health care. So you’re stuck with whatever shit your employer gives you, unless 1) you have other coverage (such as with a spouse), 2) that insurance costs more than 8% (in which case you could get a voucher to use your employer’s contribution in the exchange, which is a good thing added in the managers amendment), 3) you qualify for Medicaid (in which case your employer would have a big incentive to make sure you continue to qualify for Medicaid–meaning they’d have an incentive to continue to pay you shit wages), 4) that insurance costs more than 9% or so–forget the amount–in which case you can opt out. Problem with all that is that there are fewer controls on what your employer can offer you, particularly if it is already grandfathered in.
People live by a monthly budget. Break down the annual numbers and health care comes in at a $437 bill every month; almost as much as food.
The Democrats think voters won’t notice a new monthly bill this size they have to pay?
Very few things Congress does with legislation it passes are directly noticeable by voters as “pocketbook” issues. That cannot be said for this. People will notice in a big way, and I hope the Democrats have a better argument than that they “gave” Americans healthcare.
This is a loser; the Republicans are stupid if they don’t use this as a campaign issue.
This is a loser; the Republicans are stupid if they don’t use this as a campaign issue.
This has been my thought all along. Apart from the poor, there are no winners in this bill. Even those with good group insurance will see the quality of their plan go down over time in the form of higher deductibles/out of pocket expenses. The GOP will hammer at this – and if they do, it will be one of the first campaign attacks against Dems that I will agree with. (God, I hope this doesn’t mean I’m being assimilated into the GOP-Borg.)
And remember, the kind of folks on Medicaid and likely to benefit from the Medicaid expansion may well be mostly voters the Democrats already had; so maybe no big gain there to offset the losses in the higher brackets that stand to reason. You are hitting the nail right on the head.
Digby just put up a great post on how affordable the plan will be. Age is one factor that makes a difference.
http://digbysblog.blogspot.com/2009/12/individual-calculator-by-digby-for.html
About making healthcare affordable after other expenses, some of those other things should be made more affordable as well. One family I know had to spend several times that estimate on childcare, but that was in NYC.
Damn, that’s another factor which hasn’t been added frequently into the mix.
I paid between $5K and $6K a year per kid for childcare*, and that was a while ago, about 2003. When I first started paying for childcare for one child, I could manage it. For two kids? I had to change jobs to bump up my pay or I’d have been in the hole every month.
We didn’t have a third kid. My overall household income could have supported it, but it would have meant after paying for insurance and vehicle and all the other expenses related to work that it might not have made any sense to work.
I can see us losing many women in the workplace if insurance makes it difficult for them to juggle health care and childcare.
* that’s here in midwestern fly-over country; it’s surely much, much more for childcare in more urban areas and along the coasts.
Heh. If we decide to stop fighting wars and also to relieve families of the financial burdens of child care and health care, we’ll be like Sweden. *Oh noes!*
Remember this one “It will be a great day when our schools have all the money they need, and our air force has to have a bake-sale to buy a bomber.”
Well we are beyond that point. Our schools do not have all the money they need. In fact teachers paying out of pocket for supplies for kids and people holding bake sales to send American soldiers body armor to wear in wars based on lies.
Bake sales for body armor
http://www.dailykos.com/story/2008/4/4/489915/-The-cupcakes-challenge:-Andrew-Rice-calls-on-Inhofe-to-help-troops-%5BOK-Sen%5D
“The utilities costs are based on my own costs for a 1000 square foot, very well-insulated home, with the winter thermostat set at 64 degrees, and with no air conditioning use.”
Those utility cost have to be much lower than what an average family of four pay in Michigan. Those two kids obviously do not get to participate in any extra curricular activities.
Nextstopchicago is a total nutter. Not only are his figures for mortgages off, as was illustrated above, but his ideas about rental are laughable too.
I pay 1200 a month for an apartment with a leaky roof, bad appliances, basically no maintenance, terrible insulation and a lengthy list of other problems. I’ve had to go weeks without a washer or a dryer (I wonder if anyone’s calculated the average yearly cost of doing your clothes) because they refuse to buy a decent one; the current model eats my clothing, tearing it to shreds at random intervals. I’ve lost entire fridge-fulls of food because they let the old fridge break down constantly for months before replacing it. I finally got some attention on that one by hauling bags of rotten food out of my fridge to the rental office, but it was an ordeal.
I live in one of the hippiest, most liberal cities in America, Madison Wisconsin. There is NO useable mass transit here outside of downtown, and what few bus lines operate cost a fortune. There is no alternative for our family but lots and lots of driving, no matter what chicago-boy says.
This estimate by Marcy (fantastic work by the way) does leave out a few things I’d like to see figures for, though who knows if they’re out there.
–Cost of clean clothes per year (lots of jobs have dress codes, as do schools; this is not an optional expense. soap, water, power, dry cleaning for many jobs)
–Cost of maintenance on house or apartment (I’ve spent a ton just on my own trying to make this place liveable, from putting insulating plastic over the windows to all the food I had to throw away to laundromat costs when our washer/dryer is broken, which is often.)
–Average cost of vision/dental. Glasses aren’t a frivolous entertainment expense; nor is dental work. Bad teeth can kill you, just like they did the Pharoahs in Egypt.
–Average cost of minimal work/school clothes/uniforms. Every job I’ve ever had required minimal standards of dress. You can’t always shop at Goodwill if you want to keep your job (for many people at least)
–Average computer costs. For many jobs these days, and certainly for many schools, you’re required to have a computer. My wife has to be on-call to do work from home and to have a laptop for business travel. I have to have a laptop for exams. These are not optional expenses for us or for many other people. Ditto for the internet for that matter; we have to have broadband for my wife’s work. She HAS to be able to telecommute, and you can’t do that via dialup.
–Average school supplies. This was mentioned above, but many schools require a large amount of money for supplies for kids. It’s not just universities. Paper, pencils, pens, art supplies, glue sticks, backpacks, etc.
Etc, etc, etc. It goes on and on and on, and now you’re supposed to be liable for up to 20% of your income on crappy health insurance. Go Team Obama?
Not just crappy health insurance, but crappy health insurance you may not even be able to afford to use.
Yeah, I know. I want to vomit everytime I see someone talk about a 70% actuarial plan as ‘health insurance’. When we both know what that means is steep copays on everything so you can never afford to see the doctor.
That is exactly the point. If you have to be subsidized to buy the insurance, how you will ever be able to afford the deductible and the co-pay to ever use the insurance? You will be forced to buy something that you won’t be able use. Remember, so many of the people that have gone to these free health clinics around the country have insurance, but can’t afford the deductibles. It’s a win-win for the insurance companies. They collect all these premiums, but never have to deal with any claims.
In case anybody needs convincing on the good of a Health Care Universal Insurance. I did my 2009 accounting for all health services.
For:
. one hip operation and what goes with it (doctor’s visit, X-Rays, pre-op
tests, hospital stay and medication)
. annual visit to family doctor with blood tests and X-Rays
. a colonoscopy and a gastroscopy
. one visit to an optometrist and two visits to the ophtalmologist
. the medication that we need all year round for our little miseries
. the annual government premium.
The total of it all for 2009: 600.00$
Just reading here what are the costs for an average american, I just panick.
I am going to stay here in my little corner of the world and enjoy the beautiful bluejay that just came to visit a moment ago, snow falling on its wings.
Hi to Marcy and I want to express my admiration for the quality of your blog and the very important work that all you guys are doing for a sane and better way to live.
Anne.
So does this family with two cars, two kids, and a their own house currently have no health insurance at all right now? How common is that?
When I was making $17k a year and could only get part-time work I was paying $200+ a month for an awful disaster insurance policy. Using that Kaiser calculator even the less generous senate bill would cost just $73 a month. That would have saved me $1,500 a year.
The Democratic Party wants you to move to a crappier place and buy a crappier car! And Use your vacation money for shitty insurance! We want to help!
Vote Palin/Pawlenty 2012!
Sure, this is going to work out just fine. And people who think this is a bad idea are being unrealistic?
Isn’t the problem, that we will have winners and losers and nobody knows how it will ultimately play out…
It’s too bad the bill didn’t have a test period…
This debate is tearing the country apart.
THe Medical code is turing into the IRS code…
This post should be permanently affixed at the top of this blog right through the midterm elections next November. It makes it instantly clear how badly this bill will hurt, not help, the middle class. And it’s easy for all of us in that category to see how much Obama is going to force us to pay so that health insurance companies can gain windfall profits.
I really like it when you put together a breakdown like this EW. It takes so much more time to do this, with back up for your deductions (than to, for example, just toss around some out of context numbers and talk about cutting back on vactions) but it is so much more helpful. Great post.
Can I just express my extreme gratitude for your article explaining in the simplest terms what us working, struggling, voiceless people face if this thing gets rammed through. I’m so ashamed for thinking the Democrats were better than the Republicans.
Can you imagine the kind of national economy we’ll have if everyone buys used cars, doesn’t eat in restaurants, take vacations, or spend anything that isn’t forced out of their clenched fingers?
If I were a CEO reading this blog, I’d start making calls, because this is _not_ the kind of picture that is going to be good for business. (Discount/import chains, maybe. Only maybe.)
And all because of health care?! (And those other things, like wars.) Enough to make a CEO turn socialist.
This bill allows health care costs to continue to grow at 5% a year.
In ten years we’re not going to have a national economy, period. They’ll be offshoring all our jobs to Europe.
The kind of national economy you get when you don’t manufacture anything physical any more and all the desperate ploys like innovative financial engineering finally and inevitably fail? It’s bad, but the reasons why there is no there there are structural and there is no longer any quick nor easy fix.
I think I’ll go read about Rome and the UK after empire.
If you are looking for good (and mostly understandable) information synopsizing the HCR bills currently under consideration, the Kaiser Foundation is the best source I’ve found.
Dugg. Excellent article EW.
This comment is directed at folks who believe there is value in trying to improve on the Senate Bill (if you are committed to ‘slash and burn’, ‘take no prisoners’ all-out opposition to the bill, I understand and I won’t try to talk you out of it).
The best strategy to improve the current Senate bill is take aim at the especially stupid provisions that won’t have much of an effect on the CBO score and none of the the ‘Health Care Hostage Takers’ (i.e. Lieberman, Nelson, et. al.) have made part of their ridiculous demands.
Here’s the first one:
I believe ew has hit this one before. This sets up perverse incentives for employers to discriminate against certain people (eg it becomes cheaper to hire a kid under 27 who can stay on their parents insurance than a 30 year old single mom).
I did not have a moment to post here earlier, but I am with EW’s analysis. I was paying $5000 or so each year for one person to have an annual exam. That was the extent of my insurance “usage.” I am self-employed and have always had to pay into my own “pool” of one. Of course on top of the monthly payment, I had my co-pays at the doctor and for any tests. The billed amount for the last annual exam was about $350, but who knows how much it actually “cost.” I will say that the amount of the co-pays on top of what I was paying for insurance was so infuriating I did not go every year for the “annual exam.”
So you can see why I am furious that when I applied to get into a larger pool/lower payment with the same company; they kicked me out/sent me a “denial of coverage” letter for “minor seasonal allergies.”
I drive an old car. I am on my fifth car since 2000 because other drivers have crashed into my cars and destroyed them, so why buy a new car? My current car (which I have not owned yet a year since my last accident on 12/23/08) is a 1996 Volvo SW (they are heavy and I have not yet been seriously injured while being crashed into). The insurance is $1000 a year. And there is maintenance of course. On top of the out of pocket to “replace” my old prior car (a 1994 Volvo SW which was in fantastic condition I got after a “total” crash in 1/06 also in a Volvo SW that I also took good care of), I have put several thousands into this one, fixing things to bring it up to “par” with the last car. And there is also regular maintenance of course. It is a gas hog, but I figure my life is worth something, and I don’t want to have to deal with the hospitals and the care after an accident. (My neighbor was just crashed into and has a broken pelvis (3 places), broken wrist and collarbone. And her car is gone of course. Her bills are incredible, she has insurance as a “public” employee.)
I think your estimates for “living expenses” are reasonable, and I don’t know how people are expected to pay for insurance, especially if it is crap.
I currently have insurance through a pool that was created for people who are “denied coverage” and which is open to residents of NM. It is subsidized, and I guess this is the best thing that happened to me. I am paying less than ever (sliding scale based on income) for $500 deductible. I have not used it, so I can’t say the coverage is good or bad.
The “cap” may be the out of pocket, which is a killer, whether it is $2500, $4000, or more. I too have been wondering what the “adjustment” for “pre-existing condition” coverage will be, but I am sure the amount favors the insurance companies, like everything else.
Oh, agreed, but that sure isn’t particularly clear yet – at least to me anyway.
The House and Senate bills both:
The House bill explicitly includes spouses and dependents. The House bill is better (shocker, I know). Here’s the description (all of this is from kff.org):
The Senate bill:
Thanks much for digging that out, WO. The Senate version looks quite literally like an invitation to disaster insofar as in order to qualify, a person with a pre-existing condition has to first go uninsured for 6 months.
Nixon’s plan would have capped insurance AND out-of-pocket costs at $1,500 a year per individual. What would that be in today’s dollars?
It’s pretty sad that “yes, we can Obama’s” plan is less generous–and imposes less of a regulatory burden on the insurers–than that which Tricky Dick constructed.
“I’ve been seeing a bunch of single, relatively young men with comfortable incomes argue that the health care reform is ‘affordable.'”
It seems to me that a major part of the helath-insurance problem is that, despite our soaring health costs, we are a relatively healthy country. At any given time, most people have little or no idea of what a serious accident or illness will cost. I was talking to a belligerent, tea-bagging version of such a young man who proudly told me that his catastrophic policy and “healthcare saving account” were protecting him. I asked him how much was in the latter, and he proudly told me that it contained almost $10K. I asked if he was consistently putting in $10K a year, which baffled him–he’d saved up the $10K over a couple of years and considered himself done saving. I told him the rough costs of two procedures that people I know have had of late–an infection following outpatient knee surgery and breast cancer treatment. His $10K wasn’t going to cover a week, much less a cure, and he’d be bankrupt long before his high-deductible, high-coinsurance catastrophic “coverage” paid for anything.
This ignorance is possible because we allow private insurers to skim off “low” premiums from young healthy people in return for “coverage” on which they will never collect. Later, when they same folks are ill or old, they will have to start over again paying much steeper premiums for different insurance with a much a different risk pool, one with no healthy contributors to cover the costs.
Even in our perverse America, where private health insurance is coddled and subsidized, we should at least be directing the young and healthy to pay into the same pool that they will draw out of later, when they are old and ill. Anything else is simple fraud. Insurance companies should not be allowed to set premiums by age when coverage is mandated for all Americans. The mandated premiums of the young should have to go towards the costs of their care later in life. If their premiums do not buy such protection, then the young shouldn’t have to buy insurance at all. If the mandate gives the young nothing but the opportunity to contribute to corporate profits, let them opt out and count on their youth and health alone.
Unfortunately, there seems to be no limit to the corruption and cynicism of our corporatist Democrats.
Some people may have read this column by Nicholas Kristof in the NYT this summer.
I think of that column and of Kristof’s friend M. often. In a way I know where she is and where her beloved husband is right now — in a medical and human sense I know, and those are hard places, for both together and each separately. But I never had to do what she has had to do. I could not believe she would be forced to such a cruel choice to avoid bankruptcy, right at a point when she must have been devastated in so many other ways, and exhausted on top of all that.
robspierre @ 253 (and EW, and so many others here) is right when he says that those healthy youngsters earning comfortable incomes have no idea what a medical catastrophe is or costs. They are totally misconceiving the notion of insurance if they are thinking of it only in terms of their own lives, their own health, this year. Does anyone conceive of insurance on her house that way? If your house didn’t burn down this year, do you demand your premiums back?
The insurance companies know how it works, or how it should work if it worked fairly — ie, was socialized over numbers and time — but they’ve got a lot of people scammed into believing that their insurance is their own private little fund. That way lies disaster for everyone but the very wealthy.
I think of Kristof’s friend M. often, as I say, and of her husband (to me, he still is) too. My heart goes out to her and her children, and I hope that at least she was able to retain PoA, because she may need it.
ot: “A White House intervention for bickering leaders of U.S. intelligence”
(via latimes)
edit: thought the article had new information, but re-reading ew’s 11/24/09 post, doesn’t appear to. sorry, pls. ignore.
The Senate version is not health care reform but a bandade on a wound that needs stiches. Especially when you realize that older citizens and anyone with pre-existing issues will pay far more than that for coverage. Keep in mind that nothing will change until we reign in our elected officials with term limitations and financial reform of the election process which will never happen because the fox will never be a good guard of the hen house.
Is there any chance of prosecuting people in the Obama administration under 18 U.S.C. § 201 “Bribery of public officials and witnesses” for the deals that they cut with PhRMA and AHIP?
I don’t think so as there was no “personal” stake per se, so much as purportedly/allegedly arms length action on behalf of the government, for the benefit of the government and its people; as opposed to individual gain. The dividing lines get pretty freaking blended and ambiguous in a government as large and complex, and with corporate interests as powerful as exist in today;s society, but no chance in the world of the Obama DOJ taking this theory up. None.
Since the hourglass on the TT thread is out of sand …
Wonder what this is about?
Leach suspended after player complaint
BTW UGA Bulldogs lead Mike Sherman’s Texas A&M Aggies 14-7 in the Independence Bowl
And some team with some guy named Favruh(?) is playing tonight on MNF
I will be along in a few minutes with a new Trash post for tonight’s game and the next few bowl games before we get into the big time bowls and last week of the NFL schedule. Give me about half an hour.
Some good zingers in here.
David Simon On Health Care Bill: “Only One Thing Can Make People This Stupid, And That’s Money”
Link.
Interesting. WH update on making a good bill better. Interesting also the orgs that are supportive–and the silence from many others.
They think this is a good bill? What would they consider bad?
It is a wonderment, isn’t it?
I can’t figure the change in the medical itemized deduction exclusion from 7.5% of AGI to 10%. Is this to go along with the tax on cadillac plans? (both in the Senate bill)
If folks are shoved to cheaper plans, when they get sick they’ll have higher co-pays and deductibles. Thus, these folks are less likely to be able to get a tax deduction for these higher medical outlays.
Is it tin-foil hat time or is this just a way to raise more money to pay for this plan?
btw, in ref to one of my earlier posts: yeah, the Medical Loss Ratio (85/80) is still in the bill, just minor changes in the language. But it looks like the percentage method to determine the mandate penalty has been dropped.
How your income compares to others. Very interesting. What a deal.
I pay far less than the hypotheticals for housing and transportation. We never have more than one car payment at a time, for one. Also the mortgage is for a house that needed a lot of sweat equity (which we have put in). And, while the kids needed childcare when they were younger, they don’t now.
So I think the assumptions here are flawed.
And one thing left out is that the family is far better off paying for insurance than having none and having a catastropic illness or accident. One friend had a child who came down with leukemia and had a (thank goodness) successful bone marrow transplant. This would have broken them if they had no insurance.
We are not all so fortunate; simply because you are certainly does not make the assumptions flawed, and it is somewhat absurd to project that it does.
I hear you, but I think my experience shows that it is absolutely possible to keep down those housing and transportation costs.
I live in a safe neighborhood and the family has plenty of room, but housing costs are under control. We bought a place we could afford from the beginning, unlike a lot of folks who stretched too far. And we invested in remodeling, which we did on our own, only when we had funds to do so.
My family had little money for a long time but we were conservative in how we spent it. Obviously others made very different choices on housing and that’s why so many ran into trouble with odd mortgages.
Other people live in places where prices are much different, and not all have the skills to remodel on their own or on the cheap. Again, it is good you have been able to do that, but it does not translate to everyone; and I challenge you to say where the hypothetical family in the post have been spendthrifts or living over their heads. You are pitching generalities and trite conclusory barbs in the face of defined facts and figures that neither apply nor support what you are saying.
“Other people live in places where prices are much different, and not all have the skills to remodel on their own or on the cheap.”
People choose where to live.
They choose what place to live in.
And they choose whether to develop certain skills, whether to further their income or improve their homes.
When we bought our house, our family income was $40,000 a year with one kid in childcare. We research vehicles and buy ones that are highly reliable with relatively good mileage. At times, big expenses like car repairs have given us credit card balances, but we are frugal on clothes, have an old tv and few electronics (no wii or other game systems), and almost always prepare food at home.
Honestly, not everybody wants to live like Ed Begley. If you do, great. I don’t, and I darn sure do not need people telling me how I should live. That is just in general, and to telling people that they have to live like hunter gatherers in order to buy crappy insurance they cannot afford to use once they have got it is plain silly.
All the traits and frugality you describe are honorable, worthy and very commendable. It would be a good thing if more people adopted some or all of them. An average family doing everything you describe still, in many cases, as the post above demonstrates, may not be able to afford to use the insurance that Barack Obama, Ben Nelson and Harry Reid are cramming down their throats. That is a the point and, quite frankly, your comment pretty much reinforces that.
A couple of other points. You live in Maine; it is nothing like the west or urban areas; nothing. Secondly, again, most people do not necessarily choose where they live and it is presumptuous to claim they do. Many people live where their roots are and jobs are, and it is not necessarily by choice.
The solution to the rising costs of health care is one that, until recently, has been very confusing to me. However recently I set out to become more educated on America’s current health care system and what other possible solutions there might be. In my studies I stumbled across a great book titled “Bend the Health Care Trend,” by Mark S. Gaunya and Jennifer A. Borislow. The book was a huge eye opener to me, and taught me that when consumers are engaged and empowered to make informed, responsible, and cost-conscious decisions about their lifestyle and healthcare spending, they are healthier and happier which in turn help drive down the rapid rise in health care spending- makes a lot of sense :). There are a lot of great tips in this book that really make a lot of sense, and in my opinion might actually be the answer to America’s health care woes. Maybe our current government should take a look at this book- it is written by two people who have a lot of experience of this topic.
[Ed. note – this looks like an advertisement and that is not sanctioned here. The link has been removed; readers should decide for themselves what value to place on this comment]
Maybe our current government should look at Marcy’s numbers to get a clue!! I doubt that, that would get Obama off the golf course though.
Here’s my problem with what you are saying. Bottom line is that it varies. It’s not consistent across the board. Some folks will manage and some will not. That’s the idea of taking a cross section like this and looking at it. Why do people feel the need to be so black and white. Your situation is yours…but guess what?? There are other folks out there with different situations, the bottom line being that for many this bill is NOT affordable. That’s all…that’s the point. Not it’s affordable for some…or how “special” you are because you survived a hard time. Geesh.
One last word about luekemia. My beloved neighbor died two years ago from luekemia. She was the mother of 3 boys and married to a blue collar contractor. She had health insurance from “selling steaks at Omaha Steaks”. When she died the family was left hundreds of thousands in debt trying to save her life. She had 2 bone marrow transplants. They lost her, her income, her insurance…and today are still paying on the debt. WE have to change the health insurance industry..and this bill does nothing to solve this problem. You can take all your money and buy insurance, but that insurance does not “insure” you from financial ruin. It’s a catch 22, the way it stands today. If I know that I have less than 3% of my income left over…I can save it all up in a savings account but it won’t cover my costs if one of my kids breaks a bone and needs surgery to repair it. (while they participate in sports so they don’t become obese or end up drug addicts). I won’t have enough left over to pay off the 20% or more in hospital bills. And…If I have to pay co pays to get routine testing done..I am not going, at all, because I know I can’t afford it.
That last response was in reply to Mainer at 268.
277: Who is Ed Begley? I could google it, I suppose, but what does he have to do with, well, anything?
278: Yes, I live in Maine. But I wasn’t born here and I’ve lived in a number of states. Part of the reason why I’m here is that you can have a great lifestyle without the high costs. So I guess others haven’t made my choices. But they can make choices that will give them good lifestyles without being too squeezed. I am lifelong progressive/leftie but I also believe in people being empowered/responsible when it comes to life choices.
274: What happened to your neighbor and her family will not happen under the hcr bill, as there are lifetime and annual caps. That is one of the best things about it, indeed maybe the best, although I am also thrilled with the provision about keeping kids’ on parents insurance into their 20s and, for others, the new federal requirements about covering people under Medicaid. The latter replaces some extremely low state income thresholds for Medicaid. As Waldman writes in the American Prospect, “the biggest winners from the expansion will be poor people represented by Republicans.” From: http://prospect.org/cs/articles?article=ten_things_to_watch_in_the_health_care_reform_conference
By the way, I think the bill is far from perfect. I think we should have single-payer, if not that, a strong public option and, if not that, better subsidies and more people in Medicare and Medicaid.
But I also think this is a big step forward that can be built upon. In the next election, work for candidates who want to increase the subsidies not to drop them altogether. And keep working for broader reforms. This is not the end point, but it’s a big, big step in American politics and policy.
You are living in some kind of dreamland. Politically, I am on your side, ideologically too; and my first reaction to your mandated austerity for the sake of buying into this baloney is to tell you to go straight to where the sun doesn’t shine much. And, again, I am generally on your side of the political calculation and, under different circumstances, we would probably be friends. I like and appreciate your attitude and ethos, but it has little, if any, applicability to where and how I live. I would not mandate my lifestyle on you, and I sure as hell do not want either you or Obama to impose yours on me. That is the endemic problem with this catastrophe of a HC bill; it will not only destroy the Democratic party from without, but from within as well. It is already well on its way, and there are a lot of us that will not go quietly into the night to support Obama’s shitty folly.
By the way, if these numbers are accurate, I figure the mandates will stomp any economic recovery flat in 2014.