In part one, I introduced the term “subsidizer”, the people who overpay in order to help provide free services to those who don’t pay. You mean can’t pay, right? No, I mean don’t pay. If someone can afford cable tv or a car payment beyond their means, or cigarettes or drugs, but not health insurance, that’s not a “can’t” issue, it’s a spending priority issue. While I am not saying that everyone could afford health insurance, there are many people who can afford it but choose to spend money on other things. An example is the Earned Income Tax Credit, or EITC. People who earn money from work but meet income limits can not only get a refund of all taxes they paid, but get an EITC worth many times their tax refunds, as an additional tax giveaway. It’s not really a refund, since they didn’t pay the tax to begin with, nor is it a tax credit, despite the name, because a credit assumes a tax liability. Let’s take an example: a couple filing jointly with three children can make up to $53,390 annually and qualify for the EITC. The amount they get, in this example, is up to $6,318. That’s $526/month that they haven’t earned and get in a single lump sum. In most states, that would pay for decent health insurance for the whole family. I worked at H and R Block for three years doing tax returns and saw a lot of these gimmes go to people who paid no tax. I didn’t have to ask what they intended to do with the money, they were only too glad to share with me. Everyone was going to buy health insurance, right? Yeah, if it came in 60″ diagonal HD with chromecast built in, or started with i followed by either pad or phone. No one said “health insurance”. In Washington, they didn’t need to.
A Tale of Two States
My middle daughter, who lived and worked in Idaho for three years while going to college, now lives and works in Washington. When the Affordable Care Act–ACA or “Obamacare”–passed, states had the option to run their own health insurance exchanges or expand Medicaid. Idaho did the exchange, Washington expanded Medicaid. In Idaho, my daughter was making around $19,000/year, and was able to buy a good Blue Cross plan for about $190/month, and ended paying $91/month after a tax subsidy of $99/month. Not bad, but when she moved back to Washington, she qualified for Apple Health, the name for our state Medicaid plan. She paid no premium at all, paid nothing for meds, or any medical services and even got free dental. It’s a REALLY good deal….too good. Someone has to pay. Kinda like the families who scored the EITC. If they qualified for Apple Health, they get everything paid for, if they don’t, that’s another story!
My daughter will make too much money to qualify for Apple Health this coming year. To buy health insurance in Washington, the cheapest plan for an individual is $290/month, and it pays nothing until the deductible of $7,900 is satisfied. That’s $100/month more than a plan in Idaho that covers almost everything! Need a visit to urgent care? In Idaho, that’s $25 after insurance. In Washington, it’s whatever the clinic fully charges–typically about $150–until you’ve paid out $7,900! Hospital overnight stay? Idaho, under the Blue Cross plan, $150. Washington, $7,900. Can you guess the main reason why she will pay so much more here than in Idaho? She is now a subsidizer. I was self employed most of my life, and was a subsidizer for 40 years!!
Do I have the right to resent EITC recipients? Medicaid recipients? How about those who get both AND a big screen 4K tv? I really hated doing tax returns AFTER my full time occupation hours, especially when I had to smile at a $6,000 EITC. So why did I do it? I had to pay enough for my health insurance so others could get theirs for free, that’s one reason. What do excessive premiums or out of pocket costs have to do with financing the rich benefits of Apple Health? A.H. coverage is provided by a limited number of managed care/insurance companies, who bill and are paid by the state and federal governments. Because the payment rates are so low, professional providers have to charge higher rates to “private pay” and privately insured patients. Insurance premiums and coverage gaps reflect this. Even with soaking the subsidizers, the government still has to soak the taxpayers to offer such largesse to those who pay nothing.
My daughters benefited from the ACA, for a few years. Now they are in their 20’s and have no employer paid insurance. They might be subsidizers for many years. This is not justice. If you demand universal coverage and are already covered by your employer, shut up. If you have no health insurance under ACA at this point, that’s practically prima facie evidence that you are making enough to afford it, because otherwise, you would be under Medicaid or getting government-subsidies for buying insurance. But if you are a subsidizer–paying exorbitant rates–you are the heroes, and have earned the right to complain.
To summarize and simplify, justice in the healthcare financing realm has to do with: 1-who pays, 2-who benefits, 3-quality of care delivered and 4-sustainability. The next post in this series will consider different alternatives for answering the first two questions.