Why Progressives Are Batsh*t Crazy to Oppose the Senate Bill

Op-ed by Nate Silver of FiveThirtyEight.com

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Pick your sub-headline:

a) It’s time to stop being polite and start getting real.
b) Here’s hoping a picture is worth 1,000 words.



Any questions?

OK, I imagine that there will be a few. Here’s how I came up with these numbers.

Senate Bill. These estimates are straightforward — they’re taken directly from the CBO’s report on premiums for people at different income levels. A family of four earning an income of $54,000 would pay $4,000 in premiums, and could expect to incur another $5,000 in out-of-pocket costs. The $4,000 premium represents a substantial discount, because the government is covering 72 percent of the premium — meaning that the gross cost of the premium is $14,286, some $10,286 of which the government pays.

One caution: this reflects the situation before the public option was removed from the bill. But, provided that the subsidy schedule isn’t changed as well, that shouldn’t change these numbers much.

Status Quo. In 2009, the average premium for a family in the individual market was $6,328, according to the insurance lobbying group AHIP. However, this figure paints an optimistic picture for two reasons. Firstly, the average family size in the AHIP dataset is 3.03 people; for a family of four, that number would scale upward to $7,925, by my calculations. Secondly, the CBO’s estimates are based on 2016 figures, not 2009, so to make an apples-to-apples comparison, we have to account for inflation. According to Kaiser, the average cost of health coverage has increased by about 8.7 percent annually over the past decade, and by 8.8 percent for family coverage. Let’s scale that down slightly, assuming 7.5 annual inflation in premiums from 2009 through 2016 inclusive. That would bring the cost of the family’s premium up by a nominal 66 percent, to $13,149. And remember: these are based on estimates of premiums provided by the insurance lobby. I have no particular reason to think that they’re biased, but if they are, it’s probably on the low side.

Not only, however, would this family paying a lot more under the status quo, but they’d be doing so for inferior insurance. According to the CBO, the amount of coverage in the individual market would improve by between 27 and 30 percent under the Senate’s bill. Taking the midpoint of those numbers (28.5 percent), we can infer that there would be about $1,427 in additional cost sharing to this family in the status quo as compared with the Senate bill; this would bring their cost sharing to $6,427 total.

Add the $6,247 to the $13,149 and you get an annual cost of $19,576 — for a family earning $54,000! Obviously, very few such families are going to be able to afford that unless they have a lot of money in the bank. So, some of these families will go without insurance, or they’ll by really crappy insurance, or they’ll pay the premiums but skimp on out-of-pocket costs, which will negatively impact their fiscal and physical health. But if this family were to want to obtain equivalent coverage to that which would be available to them for $9,000 in the Senate bill, it would cost them between $19,000 and $20,000, according to my estimates.

Status Quo with SCHIP. Fortunately, some families in this predicament do receive some relief via the SCHIP program. SCHIP eligibility varies from state to state; a family earning income at 225 percent of the poverty line, as this family does, is eligible for SCHIP in about half of the country.

Premiums are fairly cheap under SCHIP — for a family at 225 percent of poverty, generally on the order of about $60 per month to cover two children. We’ll assume that this will inflate slightly to $75 per month, or $900 per year, by 2016.

The two adults in the household will still have to buy insurance in the individual market, which will cost $7,684 by 2016. That makes the family’s total premium $8,584.

For the adults, we assume that the cost sharing component runs proportional to premiums, and totals $3,756. For the children, this calculation is a little bit more ambiguous. Out-of-pocket costs under SCHIP are capped at 5 percent of family income, which would be $2,700 for this family. But that’s a cap and not an average — we’ll assume that the average is half of the cap, or $1,350. Total cost-sharing, therefore, is $5,106 between the adults and the children.

This means that premiums plus out of pocket costs will equal $13,690 for this family. I estimate the subsidy by subtracting this figure from the cost of unsubsidized insurance in the individual market; the difference is $5,885.

Caveat/Disclaimer. There are, obviously, some simplifying assumptions here, especially with regard to SCHIP. The only thing I can promise you is that I’m “showing my work“. I would actively encourage people to pick apart these numbers and come up with their own, more robust estimates. One thing that should probably be accounted for is that the families in both the status quo and the status quo + SCHIP cases will frequently be able to deduct their health care expenses from their taxable income, especially if they’ve incurred substantial out-of-pocket costs. That means that the difference in net costs is slightly exaggerated by my figures.

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Read the rest @

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The closing…

Nate SilverI understand that most of the liberal skepticism over the Senate bill is well intentioned. But it has become way, way off the mark. Where do you think the $800 billion goes? It goes to low-income families just like these. Where do you think it comes from? We won’t know for sure until the Senate and House produce their conference bill, but it comes substantially from corporations and high-income earners, plus some efficiency gains.

Because this is primarily a political analysis blog, I think people tend to assume that I’m lost in the political forest and not seeing the policy trees. In fact, the opposite is true. For any “progressive” who is concerned about the inequality of wealth, income and opportunity in America, this bill would be an absolutely monumental achievement. The more compelling critique, rather, is that the bill would fail to significantly “bend the cost curve“. I don’t dismiss that criticism at all, and certainly the insertion of a public option would have helped at the margins. But fundamentally, that is a critique that would traditionally be associated with the conservative side of the debate, as it ultimately goes to mounting deficits in the wake of expanded government entitlements.

And please do pick apart my numbers: I’m sure that you will find some questionable assumptions and possibly some outright errors. But if you found a persuasive, progressive policy rationale against the bill, I’d be stunned.~~Nate Silver

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4 Comments

Filed under (Senate Majority Leader) Harry Reid, Government, Health, Health Care Reform, Media and Entertainment, Medicine, Nate Silver, Obama Administration, Politics, Pres. Barack Obama, Public Option, Senate, Uncategorized, United States

4 responses to “Why Progressives Are Batsh*t Crazy to Oppose the Senate Bill

  1. audiegrl

    Health Care Reform and the Ravening Masses

    To follow up on my earlier post, I should make it emphatically clear that I’m not saying people should sit on their hands or keep their mouths shut and settle for what the sixty senate solons can manage on Health Care Reform. Activism and volume on the outside are hugely important. But reading reader emails at a highly interactive news and opinion site like TPM does give you a front row seat on the political junkie and progressive activist id in real time.

    In recent weeks I’ve read quite a few emails which say something like this: Okay, that’s it. I’m done with Obama. He’s just like Bush. He’s governing from the right. He’s disappointed me on this and that and the other. So I’m not voting or I’m voting third party. And let’s go ahead and ditch the health care bill because it’s not going to have a public option.

    It’s times like these when the difference between political activism and self-expression and primal scream therapy become really apparent. Politics isn’t easy. Political change isn’t easy. It includes tons of reverses and inevitably involves not getting a lot of what you wanted, at least not at first. This doesn’t mean everyone needs to agree on policy or priorities. People don’t agree on things. That’s life. But that’s different from cashing out of the process if you don’t get just what you want.

    For most people it’s just talk at moments of maximal frustration. But there’s always this ‘take my marbles home’ tendency, or emotional escape hatch, that many people have. This isn’t what I was dreaming of so I’m just going to stop voting or find a third party or generally just devote myself to whining full time. The illusion here is that there’s an escape hatch. By pulling up stakes I absolve myself of all the messiness. And I’ll tend my purity over here in a protected zone of utter irrelevance.

    In real politics, there are no opt-outs, only cop-outs. And tough reverses bring out a lot of cop outs.
    ~~Josh Marshall

  2. thelcster

    preach on it audiegrl!

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