What do health care reformers mean whey they talk about affordable premiums?

Affordable premiums do not mean the same thing
to different families, insured or uninsured

A key question in the health care reform movement  is how to get health insurance for uninsured Americans at an affordable rate.  

A secondary but no less important questions is how to define affordable, not just for the currently uninsured but also for those who have health insurance and have seen double digit premium increases for years.

One person’s affordable may be another person’s expensive

Many of the bills speak in terms of percent of the poverty level as the measure of affordability. It is easier to put in prospective in we speak in terms of income.

Under the Finance Committee bill sponsored by Sen. Baucus, a family of 4 whose income is between $66,000 and $88,000 per year would not be eligible for government assistance with premiums unless their premium exceeded 13% of their income.

So for families whose income is $66,000 they would be responsible for up to $8580 in premium per year or $715 per month.

A family whose income is $88,000 would be responsible for $11,440 per year or $953 per month.

Premiums do not include out-of-pocket expenses such as deductibles, co-insurance and co-pays. The Baucus bill would cap these costs at $5,950 for individuals and $11,900 for families.  A number of health expenses, especially out-of-network services, might not count toward this out-of-pocket maximum.

The better way few talk about

Under the Baucus plan, a couple with two children earning just over $88,000 could be on the hook for up to $23,366 in premiums and out-of-pocket expenses, and perhaps more.

If that same couple opted for a high deductible health plan and opened a health savings account, they would pay less in premium, pay for out-of-pocket expenses with pre-tax dollars and their cap for the family would be $5900 in 2010.

Example:  A couple in their 40’s  with 2 children and living in New Haven County, Connecticut  would pay around $906 per moth for a high deductible health plan with 100% coverage after the deductible.  Their family deductible would be $5850 which would be their max out of pocket.

They could contribute up to $500 a month into a health savings account and that money would pay for all their medical expenses with pre-tax dollars. Any money not spent would roll over year after year.

Even in a year with a lot a medical expenses, the maximum this family would pay is $16,672 of which $5800 would be tax deductible.

Read everything you need to know about Health Savings Accounts

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