What Health Care Reform Will Mean For Most Americans: the Underinsured

Below a snapshot of how health care reform would help one underinsured household.

A single profile is hardly a definitive assessment of how reform will affect the many  families that are now paying far too much for far too little insurance.

But so much commentary on health care reform focuses on the uninsured or the well-insured. Most middle-class American families fall somewhere in the middle. This ProPublica assessment throws a spotlight on how reform would change their lives. (The analysis is based on results of a questionnaire that ProPublica did with American Public Media’s Public Insight Network.)

At the end of the Kroner’s story, I comment on what it highlights about reform legislation.


Mary and Mack Kroner

Age: 53, 57 Location: Austin, Texas Work Status: Employed Health Care Status: Underinsured with a high deductible Income: Combined $50,000 per year

 Underinsured

 Mary and Mack Kroner, of Austin, Texas, are both self-employed.

Mack is a self-employed cab driver and Mary is a self-employed writer; they both pay for their own health insurance. Though together they pay about $600 a month in premiums, they have what Mary Kroner calls “junk insurance.”

Rapidly rising premiums have forced them to increase their deductible every year, and now they have a policy with a $5,000 deductible per illness per year. That means that they’ve been paying essentially all their health care costs out of pocket. Mary pays $100 for her annual mammogram—a must because her sister had breast cancer—but she skips recommended pelvic exams. A recent colonoscopy recommended for Mack after he showed signs of bowel cancer cost them $1,376, roughly half their monthly income.

“We just bite the bullet and don’t attend to things because we can’t afford it,” Mary said.

What Health Care Reform Means for Them:

The Kroners would qualify to purchase insurance through a health care exchange because they are not part of a government program and do not have insurance through their employers. They could choose one from of an array of private plans, and one public plan, that conform to set levels of coverage.

The House plan would create a national exchange, the Senate plan state-based exchanges—and states would be able to opt out of the public option.

The plans in the exchange are likely to cost less for individuals like the Kroners because they pool risk, much the way that employer policies do. Setting levels of coverage also encourages plans to compete based on price.

Both the Senate and House plans would help the underinsured by requiring generous coverage for preventive care, like Mack’s colonoscopy and Mary’s mammograms. They would also cap out-of-pocket costs.

The Kroners would also qualify for government help in paying their premiums, but would fare slightly better with the Senate plan. Both plans offer subsidies on a sliding scale, which would ensure that people making less than 400 percent of the Federal Poverty Line would spend only a certain percentage of their salary on premiums. Mary and Mack make about 300 to 350 percent of the poverty line, which in 2009 is $14,570 for a family of two. Under the Senate plan, the Kroners’ premium would be capped at 9.8 percent ($4,900). That’s $2,300 less than they pay now. Under the House plan, their premium would be capped at 10 to 11 percent of their income ($5,000 to $5,500), which would save the Kroners between $2,200 and $1,700 from their current premium.
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What the Story Highlights about Reform Legislation

Although the legislation’s critics argue that middle-class Americans cannot afford to pay up to 9.8% of their income (under the Senate plan) or 10 to 11% of income (under the House plan) for health insurance, the fact is that many Americans like the Kroners, who don’t have an employer helping them pay for insurance,  already shell out more than 10% of their salaries for coverage.

And like the Kroners, in many cases, all they have to show for their hard-earned dollars is “junk insurance” that doesn’t cover many of the essentials they sorely need.

In other developed countries, the idea of budgeting 10% of a  middle-class family’s income for national health care is not unusual. This is the price many pay to live in a country where everyone has access to high quality care.

 In Switzerland, for example citizens don’t receive government help until they’re paying 10% of their salary for health care. In Sweden, the country’s chief health care economist told me that the taxes that go to fund the country’s health care program equal about 10% of the average family’s income.

The difference between Switzerland, Sweden and the U.S is that in Switzerland and Sweden, 10%  of your income buys  excellent care—and the security of knowing that you will always have access to that care. Under reform, Americans who have employer-sponsored insurance would keep it, and typically, they will spend far less than 10% of their income on insurance. (Many won’t realize that the cost of insurance means that their employers will have to forgo pay hikes.)

For families like the Kroners, who don’t have employer-based insurance, the U.S. would become more like Switzerland and Sweden.

Private insurers would not be allowed to sell insurance that didn’t meet high standards, covering preventive care, as well as doctor’s visits and hospitalizations. (Both the bill passed by the House  earlier this month, and the legislation approved by the Senate Finance Committee call for the establishment of a federal benefits "floor," an essential set of medical services that all policies would have to cover.)

Moreover, under reform, insurers would not be allowed to charge co-pays for preventive care. This means that, down the line, Americans who receive timely preventive care will be able to avoid more aggressive and expensive treatments for chronic diseases.

This is how health care reform will fulfill its promise: lifting the quality of care while lowering costs.

13 thoughts on “What Health Care Reform Will Mean For Most Americans: the Underinsured

  1. The CBO has estimated that millions of Americans in the individual market who are not subsidized will pay higher premiums under a reformed system, and this estimate is already being used as ammunition to attack the reform legislation. What the opponents fail to mention is that the higher costs will reflect a requirement that all insurance plans meet basic requirements for essential services. In essence, the new plans will substitute for what Maggie refers to as “junk insurance”. Costs will rise, and value will rise even more.
    Individuals and groups insured by plans that offer good benefits are likely to see a cost reduction.

  2. Maggie, Will insurance companies be required to cover alternative medical care such as chiropractic and acupuncture under the House and Senate bills, and without deductibles and co-pays?

  3. Thanks for this. A real-life scenario helps. I’ve been asking for just such envisioning. Let’s have a few more “cases” discussed. Perhaps a pharma case as well.
    Meanwhile Don McCanne (pnhp.org)reports that Aetna is raising premiums. The insurer expects to lose thousands of customers–I wonder of those customers will return when they have a pocketful of subsidies (sort of like financial aid) to help them purchase a policy.

  4. Well Fred, I hope you are right.
    It’s frustrating to be among those who buy individual insurance, know that we’re going to be taxed six ways to Sunday to subsidize others who aren’t finding the room in their budgets, and that our premiums will go up as well. It’s like being bled from both ends.
    Plus the downturn has meant that business hasn’t been so great and those premiums that are high but swing able with a successful business are biting more. The health industry seems to have forgotten we’re in a recession.
    I thought health reform was suppose to improve the situation in the individual markets. It’s not sounding that way right now.

  5. Implementing American Universal National Health Care is the ONLY thing big enough to fuel our economic recovery.
    Britain grew its bombed out, bankrupt economy out of the ruins of World War 2 by starting its Universal National Health Care system when it had NO money.
    Britain began its Universal National Health Care System immediately after World War II when most of its buildings lay in bombed out ruins and Britain was incredibly bankrupt.
    The Universal National health Care system catalyzed the nation causing economic growth with the training of huge numbers of new doctors and medical personnel and the huge growth of the medical economy.
    Universal National Health Care helped lift Britain out of economic collapse. There was no “option”.
    For this reason the time for American Universal National Health Care is NOW exactly BECAUSE we are in an economic crisis. American Universal National Health Care will cause the high wage jobs and taxable business growth economic recovery in America that we so desperately need RIGHT NOW.
    Read more about it here.
    http://www.vivzizi.com/vivziziAmericanUniversalNationalHealthCareforeconomicrecovery.html
    And if you are extremely frustrated as most Democrats and Independents are by a president and congress who aren’t giving you the healthcare you thought you were going to get (like Medicare and what congress gets) then there is now something CONCRETE and EFFECTIVE you can do. People can show their support for True Universal Health Insurance Every Wednesday with a Driving Slowdown until passage of an American, Free to patient, Universal, Single Payer, Tax Base Funded, non employer or employment based, Health insurance or healthcare system. You can read more about it here http://www.massivemedicalmobilization.org

  6. I worry that this legislation will not do anything for me. I get my insurance from a Taft-Hartley multi-employer plan. The coverage is so poor I had to buy up to an HMO. I am paying considerably more than 10% of my income, yet I don’t think I would be eligible for subsidies, or to participate in the exchange. Am I right?

  7. Folks:
    When insurance premiums need to be subsidized up to 400% of poverty, which is the upper part of middle class, one has to wonder if health care itself, is way overpriced?
    If the insurance itself is pricey, what does that say about the products and services it insures?
    Don Levit

  8. Fred, Walter, Harriette, Ginger, Roger,
    Fred –you’re absolutely right. Insurers will no longer be allowed to sell “swiss cheese” insurance (filled with holes). Some people in the individual market will be paying higher premiums–but they would be getting something that deserves to be called “insurance”
    Moreover, because of the subsidies, most people in the individual market will find that their premiums are lower.
    Secondly–most news reports neglected to mention that today, the majority of families purchasing in the individual market are buying policies with very high deductibles and pretty high co-pays. (That’s all they can afford.)
    Under reform, there will be a cap on out-of-pocket payments and no copays for preventive care.
    In addition, with subsidies, many more people will be able to afford plans with low deductibles.
    Cost-saving reforms also should bring premiums down.
    I’m writing a post about this.
    Walter–
    The bills that Congress passes will not get that specific about what will and won’t be covered.
    And this is a good thing.
    We don’t want politiicans fine-tuning what is covered. They are not doctors and not in a position to know what will provide health benefits to patients.
    It’s one thing to say that insurers cannot charge co-pays for primary care. It’s something else to try to define exactly what is included in “primary preventive” care.
    (Meanwhile, I can imagine some politiician wrapping himself in the flag and ranting against a provision to cover “acupuncture — a CHINESE form of medicine.)
    But medical reserach does show that both acupuncture and chiropracty can be very effective in certain cases.
    Many private insurers cover acupuncture, some cover chiropractors.
    The goal of the public plan is to provide evidence-based medicine. My guess it that, at least, it will cover acupuncture.
    I would guess that their would be co-pays. If there were no co-pays, I would go for acupuncture once a week–purely for the relaxation.
    But I really don’t think other taxpayers should pay for that; it would be like paying for a weekly massage. Arguably, weekly acupuncture And a weekly massage would be good for me, but not quite “medically necessary.”
    Finally I would guess that private insurers who now cover acupuncture and chiropracty will continue to do so. It’s good for market share.
    But we want to leave these details to panels of physicians and health care reseracherse who have No financial intererest in the decisions they make.
    Harriette–
    Good to hear from you.
    Keep in mind that the vast majority of Americans have employer-based insurance. Since they are paying for only 30% to 0% of the premiums,they won’t be getting subsidies.
    The decision as to whether to stick with Aetna, to find a new insurer–or to drop insurance benefits altogether, will be made by their employers.
    If insurers begin jacking up premiums over the next 3 years, more employers will get out of the health benefits business–or raise the share of premiums that employees must pay.
    Ginger–
    First, you won’t be taxed to help fund healthcare reform (unless you earn more than $1 million as a household, or $500,000 as an individual—and that provision in the House bill makes it into the final bill.
    If you have “Cadillac Insurance” –very, very expensive insurance, you also could be taxed. But if you have Cadillac insurance your employer will, no doubt, offer you other alternatives to avoid the tax.
    Secondly, your premiums will NOT go up under health care reform.
    I’m writing a post about this now. (More misinformation. Most people didn’t read the whole CBO report. I did and can explain why, according to the report, your family’s total spending on health care would be less under reform.
    The post should be up tomorrow morning.
    Finally, don’t worry to much about helping to
    “subsidize others.”
    First, under reform, everyone will be required to buy insurance, or pay penalties.
    If the penalties aren’t stiff enough, they will be raised. We will have to raise them. We can’t afford universal coverage unless everyone (including the young and healthy) is “in the pool.”
    Secondly, under the current system, you could easily become one of those “other people” who need more generous insurance than we have today.
    For instance, under the current system, if one of your children developed cancer and needed 10 years of treatment, chances are that the cost would outstrip the “lifetime cap” on how much your insurer will pay for your family.
    This means that: first, you go bankrupt trying to pay yourself, out of pocket. And then, when you run out of money, your child still doesn’t get the care she needs.
    (Many specialists won’t take Medicaid, so even if you’re poor enough to qualify, she is likely to get subpar care.)
    You also could easily go bankrupty if your entire family was in a car accident, and everyone survived–but needed extensive medical care and long hospitalizations.
    Under health care reform, that couldn’t happen.
    Roger–
    We have two decades of reaserach showing that 1/3 of our health care dollars are squandered on unncessarsy, often redundant tests, ineffective procedures and benfits and over-priced drugs and devices that are no better than the less expensive products that they are trying to replace.
    This is not just a waste of money. Every time a patient is exposed to unncessary care he/she is exposed to risk without benefit.
    We DO not want to expand the healthcare industry. As a nation, we cannot afford to spend more than 17% of GDPon healthcare.
    One-third of the spending is not helping people. And it means that we are spending money that we need in other areas to: provide better public education; to launch a war on poverty; to protect the environnment; to provide better, affordable day-care and pre-school for the nation’s children . . . I could go on.
    We don’t want to grow the health care industry.

  9. Thank you Maggie for your reply to my last question. Another question that popped up in my mind is this: I have a friend who works a seasonal job where they take a large deduction from her paycheck for the insurance. During the months that she’s on layoff, she has to pay much more. She actually had to drop the insurance because 3 years ago, because the insurance refused to pay for treatment of an ailment because they said it was “pre-existing,” and also because she couldn’t afford to pay for the insurance when she was on layoff. I know that under health reform insurance corporations will no longer be allowed to refuse to pay because of “pre-existing” conditions. My question is, due to the large amount that my friend has to pay for her employer’s insurance, will she be able to get a subsidy to help her pay for the insurance and if so, will she have to wait until 2013, or will that apply immediately? For a lot of poor people, waiting until 2013 is still a long time to get relief. I must mention that her employer has an ESOP which my friend has over $2,000 invested. In California one cannot get Medi-Cal if he or she has over $2,000 in savings. This is even though she has no access to those funds as long as she’s employed there. If you can answer this question, I’ll appreciate it.

  10. Hello, I have been reading about the new health care reform, and I have soo many unanswered questions. I currently have insurance with my employer and I pay on average 26.00 a week. I have been newly diagnosed type1 diabetes, I cant afford my insurance to go up and then again I cant afford to lose it either. How is this new plan going to effect a person like myself. With insurance they cover all of my perscriptions/ meds, and without it would cost me a little over 1200 a month just to maintain life. So any input on this very touchy matter will be very helpful. Thanks.

  11. Maggie,
    While I agree with you on the description of acupuncture and alternative care, I have to point out something. When you say “Physicians and healthcare professionals” that will panel to make decisions, please bear in mind that they DO have a great deal of financial interest in those decisions. Some (emphasis on SOME) of those professionals have more interest in keeping their market share dominant and keeping out acupuncture and chiropractic care than they do the larger picture of what kind of net program would offer the best results and healing. The problem lies in the reimbursement system that values QUANTITY of patients treated rather than RESULTS from the treatments. Its a numbers game, not a healing game right now, and until that changes the professions with the most “chips” to guard (ie patients) will have the most financial stake in the future inclusions into the healthcare bill and debate. Money and ability to secure a flow of it > ability to offer quality care and heal patients.

  12. Just want to ask, why is the health care program of the US is so pricey? What can the government do about this? I’ve been hearing a lot about the problem in the US health care, and I just couldn’t believe that other countries like Canada have a better health policies and the citizens are better protected. This is a bit crazy considering the US is the riches country and can’t provide the best health care to its citizens.