Universal Health Coverage -- A Rant

Election year politics have again brought the idea of universal health care to the forefront. Plans offered by the candidates contain some specifics, and also leave a many things to be determined, most notably -- final cost. To see some "no nonsense" discussions, view this page at factcheck.org for a brief comparison of the Clinton and Obama plans and this page at factcheck.org for a discussion of John McCain's plan.

Responding to the information I found, I started by evaluating the cost of medical coverage to those I know personally:

Me: Single coverage for a plan that reaches about $5,000 a year out-of-pocket is just over $4,500 (a well-rated plan is just over $5,500). There is minimal drug coverage (generic only -- $1,000 per year max at a $5 copay). These numbers are derived from qualified quotes -- not advertised (read: "teaser") rates. Colorado is not one of the low-priced states, but the lower-priced plans don't meet standard UCRs (and have many other exclusions) so the "uncovered" costs can grow exponentially.

Family their 40's with 3 kids: Over $14,000 per year ... just the premiums ... for $7,500 annual out-of-pocket and no drug plan (that's pretty good coverage). HMO plans would be less expensive, but there is also the lesser choice, which this family did not feel was appropriate with kids active in sports.

Retiree Medicare Supplement with RX through former employer for individual and spouse: $9,200 annual premium in addition to the Medicare B premium of $1,156.80 (or more if the income is above $82,000 per year) per person = $11,513.60. The annual out-of-pocket is $5,000 plus drug co-pays ($8 generic, $20 non-generic).

The Clinton and Obama plans talk about tax breaks to "buy" coverage, but I didn't find a reference to the taxable status of employer contribution (if someone knows this, please provide a link).

Under the McCain plan, insurance premiums paid by an employer would become taxable income. This means an employer would lose tax deductibility for the premium and the resulting income would be subject to social security/medicare tax. Disability and life insurance plan premiums, because of the increased "income" would rise meaning higher employer and employee costs (tax and premium). It would be interesting to see if the White House and Congress would move to change the minimum wage to recognize this or how the tax code would recognize a mix of hourly/benefits coverage for non-exempt employees. In addition, it would seem to me that this would encourage any employers still offering retiree coverage to drop them quickly, especially if there is no other pension obligation necessitating 1099's.

Why do I mention retiree medical?

1. Fewer and fewer employers are offering this coverage, though the Medicare D plan was to give incentive for employers to continue such plans. The rising cost of these plans is given as one reason (together with pension liabilities) for corporate bankruptcies in recent years.
2. The "donut hole" in Medicare D coverage is a difficult cost for people to predict (see this site for more information and a full size copy of the chart shown in the graphic).
3. Consistent coverage for longer term care is not even mentioned in these plans ... and planning for this frequently inevitable expense IS part of health/medical cost. Where long term care is avoided, the use of physical and occupational therapies has been used to achieve this goal and time requirements frequently exceed current covered periods/number of visits.
4. "Baby boomers" are now retiring.

Funding and cost are important to me, personally, because I had one instance of illness during an uninsured period (one week before coverage was to kick in, a dozen years ago). The $11,000 bill, which I was expected to pay in full, would have been $3,650 if paid by all major insurers in this area and myself because of their "discounts". While the medical system blames costs on the uninsured, I paid that bill ... and they made far more than if I was insured. What would standardizing of costs do to the cost of care? While the candidates talk about technology efficiencies and tort reform as areas for cost saving, isn't this another area that warrants attention? If everyone had coverage, wouldn't providers have the need for unfunded patient reserves removed? Shouldn't this also decrease cost?

As we think about healthcare costs and funding in this election year, it will be interesting to see if universal health coverage gains stature as a social imperative for the US or remains as is. Other industrialized nations seem to have adopted universal coverage as a "right", a stance vehemently opposed by some in the US. Whether you are for or against universal health care, how do you see the cost of health care as an issue in the US economy?

footnote:

Specific to the concept of funding, Frontline did an interesting program entitled Sick Around the World exploring health, cost of health care, and the cost of funding coverage in five nations. I commend it to you as an information springboard for the dialogue.