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"Shared Responsibility?" Doesn't Seem Like it From New California Labor Federation Report on Schwarzenegger Health Care Plan That Analyzes the Numbers
Governor’s Plan Likely to Cost the Average Middle Class Family Between $8,100 and $13,000 a Year
By Frank D. Russo
The California Labor Federation released a report yesterday that finding that Governor Schwarzenegger’s proposed health care plan looks like it will cost the average middle class family between $8,100 and $13,000 a year, forcing many Californians to choose between their financial security or breaking the law.
The report, is titled “Unfair, Unaffordable, and Unacceptable: An Analysis of the Schwarzenegger Health Reform Proposal’s Impact on Low and Middle Income Families,” and can be read online and printed out.
The Labor Fed has been criticized by groups such as the Bay Area Council which is supporting the Schwarzenegger plan as "swinging their hammer against Governor Schwarzenegger’s healthcare reform efforts, possibly shattering the last great hope for healthcare reform in California and perhaps nationwide." And the Schwarzenegger Administration has issued statements that the report is based on "fuzzy math" and is based on the proposal they made in June.
But what are the real numbers? Where is the real refutation of the report issued yesterday? Seems to me that the fuzziness has come about all along from the lack of the Governor's proposal being in bill form, in print and being a concept paper for so long because he couldn't (and still can't) find an author. There is just recently a more definitive version available, but it has its own obscurity. Gone is the $5,000 cap on annual deductibles long proposed by Schwarzenegger, for instance, but in its place is a provision for the administration to set the level by an administrative determination. Seems to me that the best assumption is that that is the most probable level that will be adopted by this administration. Otherwise, analysis is impossible and we get a pig in the poke and will find out later.
Note the name at the end of the report on page 5 of Emily Clayton. She came to the Labor Federation from the California Public Interest Research Group (CalPIRG), a consumer group known for its dedication to the public interest and straight shooting approach to public policy. White hat people.
In six pages, footnoting most sources from the Governor's office itself, it comes to the following conclusions:
• Any Californian earning over $36,000 a year (just over 350% of the poverty level) will receive no help paying for insurance. Similarly, an uninsured single mother with two children, earning $61,000 a year, would be left to pay all her household expenses and the full cost of health care for her family.
• A family of four earning $62,000 (300% of the poverty level) would be required to spend $3,100 (5% of their family income) on premiums. The state would give them a tax credit for the rest of the premium cost. After that premium credit, there is no other state help available to the family. This arrangement leaves the family to pay every other health care bill on their own. If a member of this family gets in a car accident or breaks a leg, the family will have to pay the $5,000 deductible, on top of the $3,100 in premiums, before the insurance company starts to pay for any care.
• Under the Governor’s proposal, this family of four, with its assistance from the state, would still be required to spend a minimum of $8,100, or 13% of its income, before getting access to health care. If a member of the family has a chronic condition like asthma, requiring frequent trips to the hospital or doctor, this family could easily reach its maximum out-of-pocket limit, subjecting it to a total of $13,100 of health care costs, effectively mandating the family to spend 21% of their income on insurance.
• Families with incomes above 350% of the poverty level would face the same realities, but would also have the additional burden of paying their entire premium costs without assistance.
• Recent research has shown that the expected levels of family contributions in Governor Schwarzenegger’s health proposal are high enough to wipe out the life savings of 60% of California families.
• Forty percent of families have savings (including cars, 401k plans, and savings accounts) worth less than $6,400, meaning that a $5,000 deductible plan, with premiums, would require two out of five California families to sell their car, liquidate their retirement savings, and drain their college fund in order to pay for health insurance. Another 20% of families would be faced with the same reality if they went beyond the deductible and reached their out-of-pocket limit of $10,000.
• Much of the Governor’s argument for forcing all Californians to buy at least a minimum insurance policy is that they will be sheltered against catastrophic losses in the event of a serious illness. The numbers, however, show that the Governor’s plan would fail to shield 60% of the state from those very losses and would still require 1.9 million currently uninsured Californians to go out and purchase insurance with those costs.
There are other public policy issues to be debated about the Governor's approach and others and room for folks to disagree based on their own values and philosophy. But it seems to me that we ought to agree on the facts and know what they are about an issue as important as this.
That has to happen before the October 31 Assembly Special Session hearing on the health bills if one of them or a version of one of them is to move forward. Don't blame the messenger here if the facts are as they have been presented.
Comments
I guess I just don't understand this. My medical insurance for just me costs $2544 per year. I have a PPO through Blue Cross. Deductable $3500 year, out of pocket $3500 per year. The Governors plan seems more expensive than my PPO. Am I wrong somehow? It doesn't cover every little thing, but it covers the big stuff that we all worry about.
Posted by: Morris1 at October 18, 2007 10:28 AM
The governor's health plan looks like a continuation of the Republican war against the middle class. I don't see why anyone making less than $100,000 a year would support this. Consider--if you are making a middle class income and don't have health insurance and get really sick, you get wiped out. That's probably a 2-5% risk. On the other hand, with this proposal, you'd get placed in penury to pay for health "insurance" (sounds more like protection) with 100% risk.
Health costs have to come down, pure and simple. It's hammering our economy, our standard of living, our physical health and security. Let's just hire a bunch of German administrators and give them carte blanche to set up a system like they have in Germany.
Posted by: publius at October 18, 2007 11:05 AM
Not sure how this a Republican war no the middle class, since just about every every Republican opposes Arnoldcare. Funny thing about Arnold he is now getting tagged from both the left and right, he turned his back on the Republican Party and now they have turned on him. If he thought the Democrats would love him for it he sure was misled.
Posted by: sean at October 18, 2007 11:33 AM
To Sean: Surely you are aware that the distribution of wealth in this country is now at a level not seen since the Gilded Age? Tax policy has been changed to the determinant of the middle class for the last quarter-century--not only the continuing tax cuts on capital gains (or synonymously, wealth) but the regressive social security "fix" of 1982 which made the combined social security/medicare tax 15.65%. This social security raise was sold as "saving" social security but in reality it was paying for the retirement of those currently retired in the 1980's. So working Americans had to pay for those already retired--if this money had been set aside (say invested in the stock market) for the future retirement of the boomers, then there would be no social security shortfall. I could go on and on but the reality is that the rate of inflation on health care, housing and college has been nearly 50-100% over the last decade and these are all middle class costs. The standard of living is going down for the middle class and
Schwartzenegger's proposal is one more effort to use governement to screw the middle class over.
Posted by: publius at October 18, 2007 12:05 PM
The accumulation of wealth is essential to the American dream. If you can't get rich why work hard or create new ideas, products or processes?
I live well within the middleclass and experience its pressures everyday. I also realize government programs are a joke and only cost me money. There are not enough rich people to tax, and even if you were able to tax them, who do you think owns the means of production and distribution? If you raise their taxes and this effects their bottom line they will raise prices they charge you more for products and services they sell. Rich people don't pay taxes, never have never will. So the burden for all your big government spending falls to the middleclass. The poor have no money to give and the rich pass the cost on.
I would love to opt out of social security and place that money in a private account but that will never be allowed because why should we grant our citizens financial freedom?
As someone with a true libertarian bent it would be nice if one party would give me both social and financial freedom to determine as I see fit. The way I see it I'm too rich to be a Democrat and not religious enough to be a Republican.
But my main point is Arnold is not representative of the Republican Party and to cast him as such is wrong, his status is that of the leading RINO, Republican In Name Only.
Posted by: sean at October 18, 2007 12:28 PM
Sean states:
I would love to opt out of social security and place that money in a private account but that will never be allowed because why should we grant our citizens financial freedom?
But of course the "private" account needs to be FDIC insured, right? I wonder what you would say if your money was in a bank which wasn't federally insured and it went belly up? Or if someone mugged you and there were no police?
The problem with libertarianism is that libertarians don't like the consequences of no government and so want "some" government (like national defense) but then when their criteria for some government is applied to other programs they object. I think most Democrats would prefer smaller government also but have a greater desire to solve social problems, which, unfortunately, requires government.
As for your claims about the rich never paying taxes, the share of national income throughout the 40's through the 70's for the richest 10% was about 25% of the nation's wealth. Now it is close to 50%. This is a result of tax policies on the part of our government, not the results of "globalization" or other processes (if it were globalization, then other Western industrialized countires would have seen a similar increase in inequality, which they have not).
Posted by: publius at October 18, 2007 01:29 PM
Frank,
Fact check: The Bay Area Council's statement was a strong request that the Labor Federation quickly call off the full-scale war campaign on the reform efforts and return to the negotiating table, not an attack on their reasoning. We fear a 2005 annus horribilis redux, which will cause voters to just say no to everything. You well know that there are many others with plenty of resources that can respond to this brinkmanship. As soon as we enter that spiral no one wins but the campaign consultants and the TV advertising executives, and those folks have gotten enough dough in the past few years. Perhaps it's Pollyannaish, but the Bay Area Council members genuinely want reform, and hold out hope that we can get it the right way (through negotiation and not TV ads and union publicity stunts).
Posted by: John Grubb at October 19, 2007 08:28 AM
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