The Hill has “details” on the latest “plan”-like scribblings of the Republican policy “wonks” on healthcare. There is one thing I want to look at before I start my morning coffee:
The core of the plan is a $2,500 tax credit that any citizen would be eligible for and use to purchase health insurance. The lawmakers say this gives flexibility to people, whether they get employer-based insurance or not, to more directly control their healthcare spending, for example by using a health savings account.
I’m looking at one of the sponsor’s web pages and I get very few more “details”
every American citizen is eligible to claim a $2,500 tax benefit as well as a $1,500 tax benefit per dependent minor. This benefit can be assigned to an employer, transferred to a Roth Health Savings Account, or advanced for annual distribution. With this benefit, individuals and families now have the freedom to use pretax dollars to plan and save for their health care futures.
Let’s look at the distributional consequences of this type of policy.
For people who make under 200% of FPL, pre-tax dollars aren’t too valuable as most of their dollars are minimally taxed. For people making six figures and only have a kid or two at most, pre-tax dollars are fairly valuable as they are facing a much higher explicit marginal rate. Worrying about pre-tax dollars is overwhelmingly an upper middle class to affluent problem.
More importantly it is the flat subsidy.
$208 a month is a decent subsidy. In some regions that will buy the equivalent of a Silver plan with absolutely no out of pocket monthly premium. That is fine for a healthy and young individual (as underwriting is back with a vengeance). There are Silver plans for 40 year old non-smokers that cost under $200. However, that same $200 a month Silver plan with a $3,500 deductible will cost a 63 year old $450 a month. And odds are that 63 year old will need to use their policy a lot more than the 40 year old.
Furthermore, a flat subsidy is great for people who don’t need help. I get my insurance through my employer and the visible premium payment is roughly two hours of pay per month for a Platinum like coverage for my family. I don’t need help. My family does not need help. We already have access to good, high actuarial value, affordable coverage.
Families and individuals that are not mid-career professionals and are making under median income will see a far higher percentage of their income go to post-subsidy premiums. The poorer you are, the higher the premium percentage is for a given level of individual risk. And that is a major problem as the people who should bear the least risk are the one’s with the fewest available resources to mobilize in an oh-shit scenario.
TLDR: Comfort the comfortable