CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press NYT Goes for the Gold in the Find Bad Things to Say About Obamacare Game

NYT Goes for the Gold in the Find Bad Things to Say About Obamacare Game

Print
Saturday, 21 December 2013 11:24

Yes folks, the NYT is trying to dislodge Fox News. What they may lack in outrageousness they make up in credibility. Here they are with a front page story telling us about the tragic situation of the Chapmans, a New Hampshire couple making $100,000 a year who will have to spend $1,000 a month for insurance with Obamacare. This would come to 12 percent of their income. The piece tells readers:

"Experts consider health insurance unaffordable once it exceeds 10 percent of annual income."

That's interesting. If we go to the Kaiser Family Foundation website we find that the average employee contribution for an employer provided family plan is $4,240. The average employer contribution is $11,240. That gives us a total of $15,470. Most economists would say that we should treat the employers payment as a cost to the worker since in general employers are no more happy to pay money to health insurance companies than to their workers. If they didn't pay this money as health insurance then they would be paying it to their workers in wages.

If we say that this family has a $70,000 annual income (roughly the median for two earner couples), then the cost of the health care policy would be close to 20 percent of their income, even adding in the $11,240 employer contribution to their income. This would mean the experts consulted by the NYT would think that most of the families with insurance have unaffordable insurance.

In this respect, the $1,000 a month that the Chapmans are paying under Obamacare looks pretty damn good. It is more than 20 percent less expensive than the average policy in the Kaiser survey. Of course a lot depends on what is covered and the extent of the deductibles, but based on the information given in the NYT article there is no reason that anyone should be shedding tears for the Chapmans.

Comments (22)Add Comment
...
written by PeonInChief, December 21, 2013 11:45
First, the Obamacare cliff is very steep, particularly for older people who are just above the cut-off. I computed it as though we had to purchase on the exchange and discovered that we would pay a quarter of our income in premiums for a silver plan, and a great deal more if we actually used the insurance, you know, to get treatment and the like.

Second, the insurance that employers offer varies a lot, but many offer insurance that is a lot better than that on the exchanges. The premium cost may be equivalent, but co-pays and deductibles are much lower. What Obama gave the insurance companies was the ability to charge individual-insurance prices for what are essentially group plans.

We can only hope that Obamacare will survive so that we can start moving to single-payer. If it becomes such a burden that it's repealed, the country will be bankrupted by medical care costs by the time anyone is willing to try fixing our health care system again.
A Cool 50 Million
written by Ellis, December 21, 2013 11:59
50 million people don't have health insurance at any one time. Compare that to the paltry number of those who will be covered under Obamacare this coming year. And their insurance won't allow them to access health care anyway, because of how health insurance works.

Obamacare is a testament to how inhumane a profit-driven health care system is.
Also note that
written by Lord, December 21, 2013 1:35
Also note that if they are unable to find a policy for under 8% of their MAGI they are exempt from buying one so they don't even face a penalty. More than likely they just want an ample policy. Experts should agree though, health insurance in this country is indeed unaffordable, it is just that we afford what we can.
...
written by watermelonpunch, December 21, 2013 4:01
This would mean the experts consulted by the NYT would think that most of the families with insurance have unaffordable insurance.


Because everyone in the U.S. has unaffordable health insurance. They did before, and they still will.

Just that it will be masked by tax credits for those of lower incomes.

I saw one of the key good things about Obamacare as the part where health care costs become transparent. I was hoping this would include transparency of how much insurance costs.

Bravo Obamacare for outing the U.S. private health care insurance model as yes, too expensive.

Shame on the New York Times for not explicitly addressing that key fact, and instead zeroing in on some well-off couple whining about expensive insurance, when for years, many people of very modest incomes have been priced out of it entirely.
...
written by Kat, December 21, 2013 4:03
Well, means tested programs aren't very popular so what do you expect?
healthcare costs 18% of GDP, and 10% of the 85% of GDP is 8.5 GDP.
written by Because everyone in the U.S. has unaffordable health insurance. They did before, and they still will., December 21, 2013 4:39
Experts consider health insurance unaffordable once it exceeds 10 percent of annual income.


This is just handwaving propaganda.

Because everyone in the U.S. has unaffordable health insurance. They did before, and they still will.


Indeed the USA spend 18% of GDP on healthcare.

How would it be possible then for all Usians to have health insurance costing 10% of their income, also considering that families income in 85% of GDP? It just does not compute.

If Usians can only afford to pay 8.5% of GDP for healthcare, who would be left paying the remaining 9.5% of GDP?
Arithmetic!
written by NB, December 21, 2013 5:36
Also, we are we going to use Dean's favorite tool: arithmetic. Healthcare currently consumes 18% of GDP in the US. If we are spending 18% of national income on health care, it stands to reason that some households will spend more than 10% of income on health care (since 18 = 1.8 * 10, and therefore 18 > 10). Getting healthcare spending down to 10% of GDP or below might be nice, of course!
Zero info about what the old plan covered
written by JFB, December 21, 2013 5:37
One thing is certain: the article says zero about what kind of plan they were on previously, which cost $665 a month by the way, it says at the end of the article. If their new $1000 plan costs them $335 a month less in co pays and etc than the new one, which is entirely possible, then it costs them the same. It might save them more than that. The point is, we know nothing about this from this article.
...
written by AlanInAZ, December 21, 2013 6:34
The employer contribution for the Chapman's cancelled plan should have been returned to the Chapman's as a pay increase. Had this been done then I doubt there would be a complaint. It seems the employer got a windfall.
...
written by watermelonpunch, December 21, 2013 6:49
Zero info about what the old plan covered
written by JFB, December 21, 2013 6:37


Yeah, without talking about a number of things that were left out for context, it's really rather uninformative for people in various places across the U.S.
You have to take in what they paid before, cost of living in their area, their state's insurance laws, etc.

No doubt there will always be people feeling they're getting a raw deal, no matter what. In some cases most people would consider their gripes justified. In other cases not so much.

That couple's income is $100,000 per year. For a household of 3? That's well above the 400% of poverty level.
It's not like they were over the threshold by $800.
FPL for 2013 for a family of 3 is $78,120 per year.
$100k per year - - That's not a "few thousand dollars" over the threshold to qualify for subsidies!
That's almost $22,000 a year MORE than qualifying for subsidies.
Would they seriously be better off making $22,000 less per year, just to qualify for subsidies??

When you look at it that way, basically, what they're complaining about is NOT how much THEY have to pay for insurance... but they're complaining about someone else in a worse spot actually getting some help.

Yes, means tested stuff is never popular because people tend to be very selfish & self-centered with their sense of "fairness".
...
written by watermelonpunch, December 21, 2013 7:00

I looked at the article again & the FPL chart, and maybe the couple is supposed to have a family of 4... ??

Well, then we're back to - why did they go & have 2 kids?
Maybe they should've thought before having multiple babies they can't afford apparently, and be able to pay for their health insurance & support themselves.

If they say but they're middle class & CAN afford 2 kids. Then we're back to - well what are you complaining about & crying poverty for? Why do you want handouts (tax credits) if you're self-sufficient & self-supporting?


Bottom line, I may have some sympathy for people who fall into that Family Glitch problem... And I think they could really be hard done by. And that definitely needs to be fixed.
If the people were in that situation, I'd feel bad for them, and be right with them there in an uproar.

But these families - who have chosen to support children - and have incomes well above poverty, and getting paid living wages, and having the ability to pay off student loans and the luxury of having kids without wondering how to feed them... I'm fresh out of sympathy by the time I get that high up the income strata.

They want some solidarity from me?
Support universal health care that will help us both, sister & brother!
Where does the money go?
written by Chris G, December 21, 2013 8:56
We live in MA. According to the Kaiser survey our policy premiums were a bit less than state average. (For more on what we paid in 2013 and how we picked our 2014 plan see http://www.robustanalysis.net/...ance-plan/). I have no idea what my employer's contribution was but, that aside, I see that $17k total is the statewide average. How on Earth do the numbers work out to $17k?! Where does the money go? Who's running up the bills? It can't be a uniform distribution of $17k per family of four. It's got to be a skewed distribution with most of the cost accumulating in the low probability tail, i.e., maybe costs are along lines of $5k/year for 90% of families and then $125k/year for 10% of them. Anyone have a histogram?

Still trying to wrap my head around the numbers though, even $5k/year seems excessive for relatively healthy family. Then again, I look at the claim summaries we get from our insurance company post-services and you can see how the costs could get out of control even for a 'normal' family. Take, for example, the claim summary we received after my wife's PT appt last month. Routine PT, nothing exotic, and the price was was $300 for a 45 minute session. (That's the negotiated rate between the insurer and the provider. We were only responsible for about $75 of the bill.) I'm pretty sure the physical therapist wasn't getting paid anywhere near $400/hr. There was no doctor or other personnel involved, no fancy equipment, what else could the $$$ be going towards? The hospital is a non-profit so its not going too shareholders... What else? Rent? Maybe PT income is subsidizing some other aspect of the hospital's operation? Those are about the only things I can imagine. Other thoughts?
If only most workers actually KNEW that the $15,470 came out of wages
written by Rachel, December 21, 2013 9:28

If only they knew that they are the ones that pay for the overpriced doctors and (in some areas) nurses, the excessive use of overpriced technology, and the oh-so-overpriced drugs.

Unfortunately the unions and the Democrats have failed badly here. I've heard too many people completely dismiss the issue of health care costs. "Oh, the company pays that."

The high deductables of the ACA may make a dent in that indifference. But the ACA also takes away many options, while retaining most of the market barriers. So the high costs and high deductables are likely to cause a lot of pain for many middle income people without leading to any significant increase in efficiency.
...
written by watermelonpunch, December 22, 2013 12:08
written by Chris G, December 21, 2013 9:56
I have no idea what my employer's contribution was but

I appreciate this isn't your point, but doesn't anybody think this could be part of the problem?

Aside from the fact that it's my continual pet peeve that nobody seems to recognize health insurance benefits as PART OF PAY. Human resource personnel talk about it like it's a gift they're giving away to workers. Workers fail to recognize that they're getting wages that aren't taxed with health benefits.
It's a total mess of ignorance, as far as I can see.

I'm pretty sure the physical therapist wasn't getting paid anywhere near $400/hr. There was no doctor or other personnel involved, no fancy equipment, what else could the $$$ be going towards? The hospital is a non-profit so its not going too shareholders... What else? Rent? Maybe PT income is subsidizing some other aspect of the hospital's operation? Those are about the only things I can imagine. Other thoughts?

Could be subsidizing some other part of the operation.
Or could be that they just are able to charge that much because nobody who cares has any position to bargain it or even a firm grasp on what it really costs, what it's worth, and what the price really is?

As far as I know these medical facilities and the health insurance companies, don't have to disclose their reasoning or make public anything about their decisions, right? So who knows.

And I'd hardly pick out PT as the most costly form, nor the priciest, of medical treatment anyway. If it was, so many people wouldn't be shoved into dubious surgeries & prescribed so many pills.

There was an interview on Science Friday very recently, the guy writing some investigative stuff about medical prices... he was talking about the phenomenon of the $75 roll of gauze & whatnot. That was interesting.

And no, while physical therapists are probably not lining up at the soup kitchen, they're certainly not paid $400/hr.
What's more is that it's not usually a job that's paid hourly (like hospital nurses, for example). It's usually a salary position & I've heard that some employers require physical therapists on salary, to work mandatory overtime on a regular basis (that's overtime with no additional pay).

Anyway, lots of us wonder where all that money goes! Or at least we wonder what the point of it going where it does is accomplishing. Seems to me we could be doing so much more as a civilization if we didn't keep pouring money into a pure pit. (Economic rents or what have you.)
Fans of arithmetic want to know:
written by JimV, December 22, 2013 9:07
Mr.(Dr./Prof.) Baker, if in your example you count the employer portion of a health-insurance premium as effectively part of an employee's salary (which is fine with me), shouldn't you also add this same amount to the median salary of $70K that you cite? (Unless it already includes it, which I doubt.)
yes, employer contribution counts as part of pay
written by Dean, December 22, 2013 10:40
JimV,

yes, you should add the employer's contribution to both the numerator and denominator. You still get most people contributing more than 20 percent of their pay for health insurance.
...
written by watermelonpunch, December 22, 2013 1:41

Thank you Dean Baker, for clarifying that, and thanks for bringing that up, JimV.

I would VERY MUCH like it if people now would get into the habit of expressing wages inclusive of health insurance benefits, AND find a way to point out, on a regular basis, how much in tax free wages people are receiving via employer health insurance.

This is of personal interest to me, of course.
I am in the position of being on the verge of acquiring tax credit subsidized "obamacare" marketplace insurance.

I know that many people will call my tax credits "welfare" or something like it.

It's not that I find "being on welfare" offensive, as I think social programs are the mark of a civilized society, and if someone needs to partake of them because of misfortune or general circumstance caused by the policies effecting the economy in such a way that people are adversely effected, I feel there is NO shame whatsoever in this.

That said, I should still dearly like it if people with employer provided health insurance benefits were made aware & brought out of their ignorance, that they too are benefiting from tax preferential treatment, ie: "handouts" in the form of tax relief.

Might I be so bold as to petition CEPR, or anyone else, to construct a calculator where people can figure out just how much taxes they would've paid if they got their health benefits as wages, & maybe even a way for them to see what tax credits they'd be eligible for (or not) if they got their pay that way and had to then shop the Marketplace exchange for insurance.

Perhaps I'm dreamin' that this kind of calculator is possible due to the extremely convoluted tax code the U.S. has, but I think this could be potentially helpful if it were possible at all.
...
written by skeptonomist, December 22, 2013 2:47
Anybody who was able to afford health care on their own before (not provided by employer) will probably not be better off under Obamacare. Its purpose is to provide health care for those who didn't have it before. Assuming that there's no such thing as a free lunch, somebody has to pay for this - meaning the better-off who probably had health care before. Obamacare does little to contain costs in comparison to the expense of covering all the additional people.

The real criterion for the success of Obamacare will be whether or not it really does cover everybody. For a number of reasons, it will take several years to find out how far coverage has been extended.
...
written by liberal, December 22, 2013 4:28
By the same token, though, the employer's half of SS taxes is also really a tax on wages. I.e., the employee really pays the whole thing, even if she nominally only remits half.
The Complaints Will Only Go Up
written by jerseycityjoan, December 22, 2013 4:58
Nobody else pays as much as we do for healthcare. It is killing us, as individuals and as a country. It takes away trillions of dollars that could be better spent out of our pockets.

It must stop. So far, as a country we have been unwilling to even accept the problem.

I believe that the due to the screaming, the amount of the subsidies will go up. People are just not willing to pay 9% of their income on insurance to cover healthcare. I suspect there will be a lot of upset over copays and deductibles too, and demands that they be reduced.

As people get used to the benefits of Obamacare but the costs become truly unbearable and unsustainable, then, finally, Americans will open their ears and listen to the true story of how we have been overpaying for healthcare for decades, how nobody else does this but us, and how our overpaying has hurt us, not helped us.

Without the pain, we won't have the openness to change.

Employer Contribution is on your W-2
written by EMichael, December 23, 2013 7:41
The ACA requires employers to report their payments for an employee's health insurance. Box 12, Code DD.

viewer class
written by viewer, December 23, 2013 12:01
The employer would not most likely pay the amount they pay for health care to the employee if they did not pay for healthcare - In fact I'm pretty sure they would not. I declined health insurance by my employer because my wife's gets it with hers. I do not recover the ammount the employer would have paid.

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.

busy
 

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

Archives