Gruber Doesn't Reveal that 21% of MA Residents Can't Afford Health Care

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Picture 178I was intrigued to see Gruber link–in his response to Ben Smith–to his May 2009 analysis of how to measure affordability for a national healthcare reform plan. After all, I’ve been debating with people who love to cite Gruber on affordability for months, and I’ve never seen them cite it. Now there are several reasons they might not want to rely on this paper. It might be that he starts out by arguing that you can still call something “affordable” even if it isn’t affordable for everyone.

In considering affordability for a group, we need to establish a sensible benchmark whereby insurance is considered affordable if “most of” a group can afford it. We can disagree about what “most of” means, but it would be wrong to define “most of” only as “very close to 100%.”

This, of course, accepts as a baseline some continued medical debt (at least) or even bankruptcies in your definition of “affordable.”

Or maybe it’s the fact that Gruber insists that health insurance (not care) be considered as the same kind of necessity as food and shelter.

Second, it implicitly assumes that health care is less important than these other categories; that is, that if individuals have to spend their resources on these other categories, then they should not have to spend resources on health care. It is unclear why health insurance should take a lower position on the priority scale than other necessities.

But the thing I’m most troubled by in this paper is something Gruber neglects to mention: real data from MA on the number of people who forgo necessary medical care because it is not affordable.

In March 2009–two months before Gruber wrote this paper–MA released the first results [PPT] of how that state’s health care reform had improved access. It showed that 21% of the total population–and even 12% of children–forgo necessary medical care because they cannot afford it. Of the 21% forgoing care, most (something like 18 or 19%) have health insurance–but it is health insurance they can’t afford to use. In a paper contemplating what constitutes affordability for a national plan that resembles the MA plan in many ways, Gruber uses national Kaiser/HRET data, rather than the MA data that is much more directly on point.

Now, I might excuse other analysts for ignoring the MA results, except for two things. First, Gruber boasts of his involvement in the MA program as part of his explanation for his qualifications for the HHS contracts.

Throughout this year I have provided technical assistance to the administration and to Congress with my micro-simulation model, as well as based on my experience as a member of the Massachusetts health connector board.

Also, when the facts from MA suit his argument, he uses them, as he did in a November analysis of how much the Senate plan would reduce premiums.

So rather than looking at a real world study showing what happens when a program very similar to the Senate plan goes into effect–which shows that a significant number of people can’t afford to use their health insurance–here’s what Gruber says about how out-of-pocket expenses affect affordability.

A very conservative response would be to say that a plan is only affordable if the premiums plus the maximum out of pocket exposure does not exceed available resources. This is very conservative because while premium payments are certain, out of pocket payments are not, and a sizeable majority of enrollees will not reach the out of pocket limit.

Moreover, there is a strong argument that out of pocket costs should not be incorporated into a discussion of affordability of insurance. After all, individuals face more out of pocket risk without insurance than they do with coverage. Thus, if an individual is very ill and faces large out of pocket costs under an insurance plan, they would have faced at least those same out of pocket costs, and likely more, had they remained uninsured. So it would be wrong to say that those out of pocket costs were responsible for making insurance unaffordable. That is, it is nonsensical to argue that very sick individuals cannot afford insurance because they will have large out of pocket costs under the insurance plan; indeed, the problem is that these individuals cannot afford not to have insurance.

This is analysis that Jonathan Cohn, with data from Gruber, expands upon here.

But it all comes back to that underlying premise. So long as you define “affordable” in such a way that accepts ongoing medical debt for at least some of your sample in your definition of affordable, then this approach–looking at total risk, rather than whether insurance equates to care, makes sense. It transforms the question of whether health care (not health insurance) is affordable into one that measures degrees of indebtedness for using health care.

But then again, that’s what a lot of bill apologists do: consistently oversell what this kind of reform does, by conflating health insurance with health care.

Update: Fixed percentages forgoing care for clarity.

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Gruber's Response: "Consistent" but Not "Disclosed"

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Ben Smith got a fairly long response from Jonathan Gruber on why he hasn’t disclosed the $392,600 contracts he has had with HHS during the period when he was the chief spokesperson for the Administration’s health care plan. He lays out his qualifications and points to some studies addressing the questions I have asked (I’ll return to them shortly). The bulk of his response is spent insisting that everything he has said was completely consistent with his beliefs (which, if I remember correctly, is just what Armstrong Williams had to say).

Moreover, at no time have I publicly advocated a position that I did not firmly believe – indeed, I have been completely consistent with my academic track record. On the two issues this article raises:

But that, of course, wasn’t the point. I don’t doubt he believes all this stuff. But why didn’t he disclose it? Here’s what he says about that.

Gruber told POLITICO that he has told reporters of the contract “whenever they asked” and noted that he formally disclosed that “I am a paid consultant to the Obama Administration” in a form attached to his most recent, December 24 article in the New England Journal of Medicine, though it wasn’t widely known by reporters on the beat.

So, nine months after he first gets a contract with HHS, he starts disclosing the relationship, and only to the organization that can totally discredit him professionally, not to those that will more directly affect the health care debate? Gruber was first put under contract in March of last year–$95,000 to promote “the President’s” plan–and the received another $297,600 in June. Why no disclosure then? And why–after he decided he ought to start disclosing this stuff–did he not disclose it in a December 28 op-ed in the WaPo?

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Jonathan Gruber Failed to Disclose His $392,600 Contracts with HHS (Updated)

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MIT health economist Jonathan Gruber has been the go-to source that all the health care bill apologists point to to defend otherwise dubious arguments.  But he has consistently failed to disclose that he has had a sole-source contract with the Department of Health and Human Services since June 19, 2009 to consult on the “President’s health reform proposal.”

He is one source for the claim that the excise tax will result in raises for workers (though his underlying study is in-apt to the excise tax question). He is the basis for the argument that the Senate bill reduces families’ risk–even if it remains totally unaffordable. Even Politico stenographer Mike Allen points to Gruber’s research.

But none of the references to Gruber I’ve seen have revealed that Gruber has a $297,600 contract with HHS to produce,

a technical memorandum on the estimated changes in health insurance coverage and associated costs and impacts to the government under alternative specifications of health system reform. The requirement includes developing estimates of various health reform proposals on health insurance coverage and cost. The alternative specifications to be considered will be derived from the President’s health reform proposal. [my emphasis]

(h/t Mote Dai)

The President’s health reform proposal? But I thought this was the Senate’s health reform proposal?!?!? (wink!)

Now, HHS says they had to put Dr. Gruber in charge of evaluating health care reform proposals because he’s got,

a proven micro-simulation model with the flexibility to ascertain the distribution of changes in health care spending and public and private sector health care costs due to a large variety of changes in health insurance benefit design, public program eligibility criteria, and tax policy.

Even assuming that Gruber is the only one in the world who can run these simulations, don’t you think it’s rather, um, dubious that the guy evaluating the heath care reform–for $300,000–is also the package’s single biggest champion?

And no one has been transparent about this contract?

Update: Actually, Gruber failed to disclose his $392,600 contracts with HSS. The reference to ongoing work in the bigger, second one refers to a $95,000 contract he had from March 25, 2009 to July 25, 2009.

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BREAKING: C Street Member Says Health Care Bill Will Fail

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In an article lacking some pretty important follow-up questions, Jodi Kantor tucks in this judgment, from C Street member Bart Stupak.

He is trying to pass the health care overhaul, he insists, not sabotage it, and predicts that the legislation will ultimately collapse for reasons apart from abortion. But he will be blamed anyway, he is sure.

“I get the distinct impression that I’m the last guy the president wants to see,” he said. [my emphasis]

Now, at one level, I think Stupak is right on. The women in both the House and Senate have proven themselves willing to allow Stupak and Ben Nelson to use health care as a means to restrict access to reproductive care in this country; there’s no reason to believe that that will change.

But I am curious why, then, Stupak believes health care will fail.

There are, IMO, two possible reasons. The most obvious would be if the House refused to accept the Senate’s Hocus Pocus Excise tax. A couple of the corporatist Democrats in the Senate, having refused other, more effective cost control measures (like drug reimportation and a public option) insist on the Hocus Pocus Excise tax, claiming they need to do something to control cost. So if the House were to refuse to accept that as is, it might well scotch the bill.

But there’s another possibility: that those same corporatist Democrats refuse to accept ways (probably subsidies) to make the bill remotely affordable to the middle class. That would be news. Because it would mean that Stupak, who is not himself a Blue Dog but who may know their mood on this, may have reason to believe we’ll actually lose conservatives in the House (or those same obstructionists in the Senate) if this bill becomes anything but a plan to turn the American middle class into serfs handing over chunks of their income away to the health care industry.

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White House Still Pushing the Excise Tax Hocus Pocus

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As Brian Beutler reports, Nancy Pelosi’s snippy comment about Obama’s campaign promises was a reference to the White House’s demand that the House accept the Senate excise tax.

[Pelosi] aides say she’s particularly steamed that the White House wants her to largely adopt the Senate bill in its entirety. And she’s particularly unhappy that the White House has thrown its weight behind the Senate bill’s chief funding mechanism: an excise tax on so-called “Cadillac” insurance policies, which she and many in her caucus have long believed violates President Obama’s pledge not to raise taxes on the middle class. According to one aide, that–not the public option–was likely the reason she ribbed Obama at her press conference yesterday, quipping, “there were a number of things he was for on the campaign trail.”

The House proposes paying for its bill by imposing a surtax on high-income Americans. And though there’s been speculation for months that the final reform package will include a combination of both sources of revenue, Pelosi, who’s already had to accept the demise of the public option, wants the excise tax gone.

Yet, the White House has not revisited any of the assumptions it has made about the excise tax that seem to be increasingly dubious–such as that it will end up giving workers a raise.

Interestingly, the EPI has just released a paper debunking the claim.

There is logic to [the argument that cutting health care costs leads to wage growth], but it is only skin-deep and deeper examination will show it to be simply not true. The logic can be seen looking at trends in health care premiums and wages—wage growth fared better in the late 1990s when health care premiums grew more slowly than in the early 1990s and wages performed poorly in the 2000s, a period when health premiums grew strongly again.

However, digging just a bit beneath the surface reveals the following:

  1. Health care costs are not large enough to substantially move wages as these proponents claim;
  2. Examination of actual wage and benefit trends confirms that changes in the trajectory of health care costs did not materially affect wage trends over the last 20 years; and
  3. The wage behavior described—accelerating in the late 1990s and more slowly thereafter—actually best characterizes wage growth for low-wage workers who have minimal access to employer-based health care. Conversely, this pattern of wage-growth over time is least pronounced for higher paid workers with the most health coverage.

Clearly, this “health care theory of wage determination” is wrong, Read more →

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Byron Dorgan Will Not Run for Re-Election

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DorganJust before the holiday, Democratic leaders forced Senator Byron Dorgan to forgo a key policy initiative–drug reimportation–so as to push through a stinker of a health care reform bill. And while he says his decision “does not relate to any dissatisfaction that I have about serving in the Senate,” over the holiday he decided not to run for re-election.

Although I still have a passion for public service and enjoy my work in the Senate, I have other interests and I have other things I would like to pursue outside of public life. I have written two books and have an invitation from a publisher to write two more books. I would like to do some teaching and would also like to work on energy policy in the private sector.

So, over this holiday season, I have come to the conclusion, with the support of my family, that I will not be seeking another term in the U.S. Senate in 2010. It is a hard decision to make after thirty years in the Congress, but I believe it is the right time for me to pursue these other interests.

Let me be clear that this decision does not relate to any dissatisfaction that I have about serving in the Senate. Yes, I wish there was less rancor and more bipartisanship in the U.S. Senate these days. But still, it is a great privilege to serve and I have the utmost respect for all of the men and women with whom I serve.

It has been a special privilege to serve with Senator Conrad and Congressman Pomeroy, who do an outstanding job for our state. And although he inherited an economy in serious trouble, I remain confident that President Obama is making the right decisions to put our country back on track. Further, my decision has no relationship to the prospect of a difficult election contest this year. Frankly, I think if I had decided to run for another term in the Senate I would be reelected.

But I feel that after serving 30 years, I want to make time for some other priorities. And making a commitment to serve in the Senate for the next seven years does not seem like the right decision for me.

This is a huge loss for Democrats–first and foremost because Dorgan is one of the good guys, largely uncorrupted by the nastiness of DC. In addition, it is almost sure to be a loss for Democrats, as Republican Governor John Hoeven would win this election in a landslide, if he chooses to enter it.

Senator Dorgan, thank you for your service. But you will be missed.

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Subsidies

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There’s a lot I object to in Hendrik Hertzberg’s judgment of those opposed to the Senate health bill as “pathetic.” His entire piece revolves around the claim that bill critics are committing a pathetic fallacy: attributing to an inanimate object–Congress–animate actions–passing the bill.

The pathetic fallacy is a category mistake. It’s the false attribution of human feelings, thoughts, or intentions to inanimate objects, or to living entities that cannot possibly have such feelings, thoughts, or intentions—cruel seas, dancing leaves, hot air that “wants” to rise.

Yet most critics have been very specific about the people (Harry Reid for his inability to enforce party discipline, Rahm and others for prioritizing deals with the industry over cost containment, Joe Lieberman for being Joe Lieberman) who have made this bill what it is. It is Hertzberg’s fallacy, not critics’, to suggest that this bill got so bad because of an inanimate object called “the system.” Indeed, suggesting the end result of the actions of a small group of fully deliberate beings is not the product of human will serves as a neat excuse for those who want to obscure the process and decisions that resulted in this bill.

Hertzberg also curiously invokes the defeat of Kennedy’s Medicare efforts in the Senate (after which, two years later, the bill passed) to argue we are faced with a choice between the status quo or this bill. The history of prior reforms can and has been used as a double edged sword in this debate, so I’m not arguing that the lesson offers us any real insight into the fate of health care if we do or don’t pass this bill. But used as he is doing, doesn’t it suggest the possibility that, if this bill were to fail, it might not be several generations until we tried again, it might be passed in the near future? (Not that I necessarily believe this would get easier in two years, I just think it is a very inapt use of the example.)

But reading the piece finally got me to read another piece that bill champions have repeatedly pointed to to celebrate the bill: a post by University of Chicago Health Policy Professor Harold Pollack, comparing the subsidies included in this program with the subsidies offered in just about all other support for the poor.

By 2019 when the reforms are fully implemented, the Senate bill would provide about $196 billion per year down the income scale in subsidies to low-income and working Americans.

Even policy wonks have trouble getting their heads around such a big number. With due allowance for the back-of-the-envelope nature of this calculation, $196 billion exceeds the combined total of federal spending on Food Stamps and other nutrition assistance programs, the Earned Income Tax Credit, Head Start, TANF cash payments to single mothers and their children, all the National Institutes of Health, and the Department of Housing and Urban Development. (I admit to some uncertainty about that last one. We may have to leave HUD behind…)

(Pollack has a worthwhile, thoughtful expansion of his stance on the bill here.)

Now, I don’t contest Pollack’s numbers. Nor do I underestimate the magnitude of this amount of subsidies.

But there’s a flip side to that magnitude, one which, IMO, is not worth celebrating.

First, a significant number of the recipients of these very generous subsidies aren’t going to see them in tangible form. Read more →

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Bill Supporters Still Can’t Say “Affordable”

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This post from Nate is just weird.

As you recall, in my last post on affordability issues, I basically accepted Nate’s selected source for family expenses–BLS data–and showed that even still this plan was unaffordable for a middle class family with child care costs.

But what’s remarkable is that, even assuming Nate’s numbers are correct and mine are high, those numbers still show that this plan is unaffordable for a family of three paying some child care.

Nate’s post completely ignored that part of my post, completely ignored that I had used BLS data for housing, completely ignored that I had eliminated all income taxes for this family, completely ignored that I specifically backed out BLS data for health care and replaced it with an unrealistic 7.9% charge (indeed, that was one of the big mistakes he had made in adopting the BLS data in the first place, as I pointed out in my post) and still shown the program to be unaffordable.

Either Nate has now decided that the BLS data is no longer valid, or he doesn’t want to engage with that part of my post.

But on his other costs, here are some points.

Taxes

Nate argues that my original estimate for taxes was too high (which, of course, I accepted in the second post). But then he has calculated those taxes making them less than the FICA taxes (7.65%) for this family. And he does that even while hypothesizing that one of these family members might be self-employed, which means the family would face FICA taxes of 15.3%. Note also, Nate assumes that this family owns their house and calculates mortgage deductions accordingly, which is probably an unsafe assumption for all middle class families in this day and age; 27% in the BLS data, for example, are renters. So while I’m happy to use the BLS numbers (which, after I got rid of all income taxes became basically just FICA), let it be said that Nate ignores two possibilities that would make those taxes go much higher.

Housing

Here’s what Nate says about housing:

Housing: This is still the most significant difference — I had figured housing costs at about $10,000 based on BLS data, versus Marcy’s estimate of $19,275. Marcy points out that the a higher propotion of people in the BLS dataset I used will have paid off their mortgage, but that’s still just one-fifth of the BLS’s sample, so it’s not going to make a huge difference. But let’s bump up my estimate to $12,000 — or an even $1,000 per month — to account for this, as well as for the fact that a family with two children might want some extra square footage.

Now, if you just figured out what the BLS numbers gave you without the people in the sample who owned their own home outright, it would show that the remaining 80% would pay $12,577, already higher than Nate’s estimates. And that’s assuming the 4-person families are living in the same size housing that all the singles in the BLS sample are living in, so on that basis, the number is still likely higher.

But let’s do this another way. I live in a house that was–when I bought it in 2002–almost exactly the average price of a house in this country. After losing value over the last several years, it is now worth somewhere between the average national price and average price for a midwestern house. I have not refinanced since I bought it, but when I bought it I put 20% down and had near perfect credit–almost certainly far better off than the middle class families we’re talking about. Admittedly, Ann Arbor’s property taxes are crazy, which adds a lot to monthly payments. So assume my better-than-average mortgage cancels out Ann Arbor’s exorbitant tax rates. And yet I still pay a few thousand more than the $12,577 you’d get off of the BLS numbers. And my house is average or below average in other ways, too–it’s 50 years old, in average condition, just 1,000 square feet, has just one bathroom, and the third bedroom makes a much better office than a bedroom. All three families who lived in this house before I did were just like the middle class families I’m talking about (though one was a single mother). In other words, this almost perfectly average house, with higher property taxes but lower credit costs, costs several thousand more than Nate has calculated.

Child Care

Here’s what Nate says about child care:

Child Care: Marcy’s data says that pre-school care costs $6,216 per year, and infant and toddler care costs $7,936 per year. Assume that each child needs three years of infant care and three years of pre-school care out of an 18-year childhood. If that’s the case, the family will spend $2,358.50 per year per child on average, or $4,717 on average for two children. Also, while Marcy asserts that her estimates are high, not all families will have to pay for day care. Even if both parents are working, some families may be fortunate enough to have a free or discounted child care program available to them via a church, employer, or municipality, or may have older relatives living nearby to take care of the children during the daytime. Or, if one or more of the parents works from home — which will be the case fairly often for someone in the individual market — they may be able to take care of the toddlers themselves and still earn a paycheck.

Now aside from the fact that Nate strains to average this out–ignoring that if both these kids are in child care in a year the costs will be at least $12,432, meaning this family would have to find a way to pay for much higher rates in several years of that average, there are several other bizarre assumptions Nate makes to bring child care costs down. He assumes that a family that doesn’t get health care through an employer might get child care through that same employer. He assumes that several discounted child care options aren’t included in the child care averages I used. Most curiously, he assumes that children don’t need after school care between the time they go into kindergarten and the time they turn 13, when most states consider them capable of watching themselves (after school care for two in Ann Arbor’s school system would cost at least $100 a week, or about $3,900 for the school year, and that doesn’t account for summers). Read more →

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The New Robber Barons

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image002Previously, Marcy Wheeler noted the unsavory blending of the private interests of health insurance companies with the power and hand of the US government:

It’s one thing to require a citizen to pay taxes–to pay into the commons. It’s another thing to require taxpayers to pay a private corporation, and to have up to 25% of that go to paying for luxuries like private jets and gyms for the company CEOs.

It’s the same kind of deal peasants made under feudalism: some proportion of their labor in exchange for protection (in this case, from bankruptcy from health problems, though the bill doesn’t actually require the private corporations to deliver that much protection).In this case, the federal government becomes an appendage to do collections for the corporations.
…
The reason this matters, though, is the power it gives the health care corporations. We can’t ditch Halliburton or Blackwater because they have become the sole primary contractor providing precisely the services they do. And so, like it or not, we’re dependent on them. And if we were to try to exercise oversight over them, we’d ultimately face the reality that we have no leverage over them, so we’d have to accept whatever they chose to provide. This bill gives the health care industry the leverage we’ve already given Halliburton and Blackwater.

Marcy termed this being “On The Road To Neo-feudalism” and then followed up with a subsequent post noting how much the concept was applicable to so much of the American life and economy, especially through the security/military/industial complex so intertwined with the US government.

Marcy Wheeler is not the only one recently noting the striking rise in power of corporate interests via the forceful hand of US governmental decree (usually at the direct behest of the corporate interests). Glenn Greenwald, expanding on previous work by Ed Kilgore, penned a dynamic description of the dirty little secret (only it is not little by any means) afoot in modern American socio-political existence:

But the most significant underlying division identified by Kilgore is the divergent views over the rapidly growing corporatism that defines our political system.

Kilgore doesn’t call it “corporatism” — the virtually complete dominance of government by large corporations, even a merger between the two — but that’s what he’s talking about. He puts it in slightly more palatable terms:

To put it simply, and perhaps over-simply, on a variety of fronts (most notably financial restructuring and health care reform, but arguably on climate change as well), the Obama administration has chosen the strategy of deploying regulated and subsidized private sector entities to achieve progressive policy results. This approach was a hallmark of the so-called Clintonian, “New Democrat” movement, and the broader international movement sometimes referred to as “the Third Way,” which often defended the use of private means for public ends.

As I’ve written for quite some time, I’ve honestly never understood how anyone could think that Obama was going to bring about some sort of “new” political approach or governing method when, as Kilgore notes, what he practices — politically and substantively — is the Third Way, DLC, triangulating corporatism of the Clinton era, just re-packaged with some sleeker and more Read more →

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Why Can’t Bill Supporters Say “Affordable”?

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Like Nate, I appreciate having a discussion based in facts and details. And Nate says several of the cost estimates I used to show why the health care bill is unaffordable for middle class families “are on the high side.” I appreciate him checking my numbers–as I have said on several versions of the post I have done on affordability, I’d like to have a real discussion about these costs.

Nate’s numbers are too low

Nate uses a different method than me; rather than building costs up from individual estimates as I did (indeed, Nate never shows what my hypothetical family’s budget would look like), he looks at BLS data, and argues that either, “this is significantly more than most two-child families will be spending on these services — probably by a margin of $10,000 or so,” and/or my hypothetical family, “does not have a reasonable and responsible gameplan to begin with.”

Now, Nate hasn’t actually shown that. Instead, his primary source of numbers shows what the average family in this income bracket ($50,000 to 69,999) would spend. And that family is older (average adult age of 47) and smaller (2.7 people, with just .7 kids) than the family I was discussing. That’s significant in ways that make his costs too low on several counts. For example, over a fifth of the people in the BLS estimate own their home outright. A significant portion are single or couples. Adding older home-owners and singles needing smaller homes into his consideration almost certainly means Nate’s housing costs are too low for a family of four or even three. Similarly, Nate’s figures for food expenses are low by $1,324 (and his average family eats out, which USDA assumes my average family of 4 does not for its calculations).

Plus, Nate doesn’t point to the places where my estimates (based on real expenditures) are quite low, according to the numbers Nate uses. I said this family spent $1,500 a year on heat, electricity, and water; his numbers say the average 2.7 member family would spend $2,823. I said this family would spend $1,200 for all telecom services; Nate’s data says this 2.7 member family would spend $1,253 on telephone services alone, with cable, at least, presumably included in the $1,141 of audio and visual equipment and service. So, accepting Nate’s numbers for these services would mean both my costs and probably his, too, for utilities and telecom are still too low for a 4-person family.

And the BLS data Nate uses appears to not account for child care at all (please correct me if I’m wrong here). Nate points out rightly that, “not all families will have a pre-school aged child. The typical child spends 3-4 years in pre-school, but then 12-13 years in the public school system,” but doesn’t account for the fact that I used costs for just one kid in child care, and not the more expensive infant or toddler rates. Also, if these kids were school aged, it would mean the family would spend $1,353 more on food because of the growing kids’ higher calorie requirements. Also, note these costs don’t necessarily have to include child care. Unmanageable college loan debt, unplanned major house repairs, existing medical debt, or credit card debt could all get my middle class family into the same plight without any child care costs and without, necessarily, making this family at all unusual or frivolous.

And then there’s the most ironic place where Nate’s calculations–finding my estimates $10,000 too high–are themselves too low: health care. The BLS data Nate uses shows this family of 2.7 spends $3,229 yearly on health care. Yet, the majority of this pool would get health care through work, a significant number are single, and some (though not many) are on Medicare.

Even Nate’s numbers show this plan is unaffordable for a middle class family

But what’s remarkable is that, even assuming Nate’s numbers are correct and mine are high, those numbers still show that this plan is unaffordable for a family of three paying some child care.

Nate’s numbers show the average income in this bracket is $59,319, with $58,610 left after taxes (note, a family of 3 at 301% of poverty would make $55,131, so this hypothetical 2.7-member family would still fall into the same income bracket I used in my original post). This average family would spend $50,465 a year. So to show what happens when this average family has to pay child care and spend 7.9% of its income on mandated insurance, I’m going to take out the BLS health care costs and add in the 7.9% this family would have to spend under the mandate. And because I argued earlier that these families aren’t spending all that much on entertainment (and therefore couldn’t save money by cutting entertainment expenses), I’m going to back out entertainment costs too. And because Nate said my estimates for taxes were too high, I’m going to take out those, too (though not FICA, which this family would have to pay).

$50,465 (total expenditures)

-$3,229 (less health care expenses)

-$2,936 (less all entertainment costs)

-$709 (less income taxes)

$43,591 (Nate’s numbers less health care, entertainment, income taxes)

+$4,686 (7.9% of $59,319 in income–or the amount paid before opt-out became possible)

+$6,216 (child care for just one four year old in MI)

$54,493

$4,826 (total income less total expenses)

In other words, this family would have just $4,826 left to spend on entertainment (what Nate originally said this family could cut back on) and out-of-pocket health care expenses.

That says a family expected to pay 30% of out-of-pocket health care expenses would blow their entire discretionary budget after $16,086 in medical costs. More than what my other hypothetical family might spend, but still not a catastrophic medical event. And this hypothetical family would have to go $3,147 in debt before government subsidies would pick up the rest of their out-of-pocket expenses. Read more →

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