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Health Reform Better for Poor than Middle Class. How Did We Get Here?
Matt Yglesias notes the Wall Street Journal is reporting that in his big speech to Congress tonight, President Obama will reaffirm his commitment to a public option -- a dinky public option. This awesome chart from Nick Beaudrot shows exactly how dinky it is; the pink boxes represent the public option. But it also demonstrates something else about health reform that you won't hear any Democrat say: It does more to help the destitute poor than the working or middle class.
Even Max Baucus' compromise plan, which contains no new public insurance option, expands Medicaid to all Americans below 133 percent of poverty. Currently, Medicaid is open only to pregnant women, children, single mothers, and the disabled. After reform, healthy, single adults will be eligible. That's a major progressive victory, and it's possible because insurance companies aren't interested in this segment of the population, which can't afford to enter the private market. Government can choose to expand here without undue corporate pressure.
But what's going on in this plan for the working and middle classes? At 300 percent of poverty -- $66,150 for a family of four -- Baucus requires a family to spend 13 percent of its income on health care before government subsidies kick in. That's a burdensome $8,600. For sure, this is better than said family going completely bankrupt under the current system, should they get into a catastrophic car accident with insurance that caps hospital expenditures. But middle-class Americans -- voters! -- may not see exactly what is in this plan for them. Politically, this is a very hot potato. There's still time to strengthen protections for the middle class in negotiations between the White House and Congress. But such efforts won't work if the administration is willing to neglect the issue of subsidies in favor of defending the public option.
--Dana Goldstein
COMMENTS (6)
Note that this is 13% of gross wages. For a family of four earning $66,150 in my home state - Maryland - take-home pay is about $1000/week after federal and state income taxes and FICA and Medicare withholding. The percentage to be paid for the new health insurance would be 16.5% of take-home pay.
Put another way, the family would see its monthly income fall from $4350 to $3634. If they're living from paycheck to paycheck now, how are they going to pay the rent?
Posted by: Bloix | September 9, 2009 12:04 PM
i dont understand why this chart has to be so complicated. right now the govt(state and federal) pays about 45% of all medical expenses. private insurance pays about 35%. individuals and other payors like charities pay the rest. just create a public option for all those non elderly without employer provided insurance-including those on medicaid. charge everyone premiums based on incomes with subsidies to make up for lower premiums for lower income people. the state contribution to medicaid would no longer be necessary
Posted by: sr | September 9, 2009 12:18 PM
Another hit piece on the public option from the TAPPED crew?
I guess I shouldn't be surprised.
Posted by: Jinchi | September 9, 2009 12:45 PM
Good point about the benefits of the proposal for the poor. But it's a bit misleading to suggest that the President will be proposing a "dinky" public option if that suggests that other proposals under consideration have a more vigorous public option. All the committee bills have modest public options that would be available only for those on the purchasing insurance individual market. That's why the President is being truthful when he has said that the public option is only one component of the health care reform debate - and not the most critical one.
Posted by: David | September 9, 2009 1:39 PM
Dana, you realize you've just written a post meant to pit the middle class against those in poverty? Surely, that's not what you intended. If this isn't an either/or choice... then say that. But you make it sound as if "the poor win and you lose and that's bad." Let's at least consider the possibility that the best thing this plan could do - and indeed if it was the only thing that would be good - would be to make sure people in poverty have access to insurance and care.
http://uspoverty.change.org/blog/view/the_repair_work_at_the_bottom_of_the_net
Posted by: weboy | September 9, 2009 1:42 PM
I think Dana's point is that "programs for the poor are poor programs", and also that if the bill is seen as not doing much for the middle class, than it won't have political support. That's somewhat distinct from the policy questions.
Posted by: Nicholas Beaudrot | September 9, 2009 3:04 PM