Health-Care Reform: A Common Sense Approach Part I

The Astroturf lobbyists, posing as grass-root concerned citizens, and health insurance lobbyists have hijacked the health care fora for public debate. The Town Hall meetings are suppose to be the fora for civil discourse, for honest and meaningful information and facts. Instead they are shouting matches of vitriol and intimidation that promote disinformation and fear.

It is part of human nature to fear the unknown, as the old saw goes better the devil you know than the devil you don't. The purpose of this article is to dispel that notion. To dispel the notion that the status quo of health care in the U.S. is better than the unknown that change will surely bring.

There is another adage; the empty wagon makes the most noise. It took me two whole days to find enough facts and information to write this article. The din of the empty wagons has smother the information and facts citizens need to participate in civil discourse. To avoid being another vitriolic voice in the crowd, this common sense approach to the health care debate should muffle the din of the empty wagons.

What is the public option? The public option is an alternative to private health insurance. The public option will provide health insurance for individuals, less than 65 years of age, who cannot afford private health insurance or who want to change their current health insurance plan. The public option will be administered by the government and according to The Commonwealth Fund, premiums are expected to be 20% to 30% lower than private health insurance premiums.

How will the public option be funded? Individuals who sign-up for the plan will pay premiums just like private insurance plans. There will be a government subsidy for individuals too poor to pay premiums. How will the government subsidy be funded? This is not carved in stone because the legislation is still being written. The three sources under consideration are tax deductions for incomes over $25,000, surtax on large businesses, and a tax on employer-paid health care benefits. These tax considerations will be examined in Part 2 of this article.

Let's take a closer look at the people deemed too poor to pay premiums. The people deemed to too poor to pay premiums are those who fall 300% or 400% (there isn't a health care reform bill yet, the details are still under negotiations) of the federal poverty level. The federal poverty level is defined by the Department of Health and Human Services (HHS) based on a number of factors such as household income and how many persons per household.

An example would be a family of four living in one of the contiguous 48 states or the District of Columbia has a household income of $25,000 per year. According to HHS, the federal poverty level for a family of four for 2009 is $22,050 per year in the lower 48 and D.C. Does this family meet the criterion of 300% of the federal poverty level? If so, this family will receive a government subsidy for health insurance premiums. Let's do the math. Multiply 3 by $22,050 and we get $66,150.

Yes, this family qualifies for subsidized health insurance premium. As a matter of fact, all families of four in the lower 48 and D.C. with household incomes up to $66,150 per year will be eligible for government subsidized health insurance premiums.

The federal poverty level for a one-person household living in Hawaii is $12,460 per year as stated in the 2009 Poverty Guidelines. If a one-person household living in Hawaii earns $40,000 per year, will this person qualify for subsidized health insurance premium? No, because 300% of $12,460 is $37,380. For 2009 in the Aloha State, a one-person household earning up to $37,380 per year is eligible for government subsidized health insurance premiums.

This criterion is subject to change for two reasons, firstly, the federal poverty level is indexed to the rate of inflation; it reflects the increase in the cost of living. Secondly, the health care reform bill is still under negotiations and there is debate that the 300% should be lowered to 200% of the federal poverty level. These are only examples of who and how eligibility for subsidized health insurance premiums will be determined.

List of Sources

The Diana Rehm Show. 19 August 2009, National Public Radio, http://wamu.org/programs/dr/09/08/19.php

The Department of Health and Human Services, http://aspe.hhs.gov/poverty/09poverty.shtml

Klein, Ezra. Health Care Reform for Beginners: The Many Flavors of the Public Plan. The Washington Posthttp://voices.washingtonpost.com/ezra-klein/2009/06/health_care_reform_for_beginne_3.html

On Point with Tom Ashbrook. 18 August 2009, National Public Radio, http://www.onpointradio.org/2009/08/the-public-option-debate