During today’s mark-up session of the HELP Committee’s health care proposal, Republicans introduced at least seven amendments designed to lower the subsidies available to Americans who purchase coverage through the Exchange. Sens. Mike Enzi (R-WY) and Judd Gregg (R-NH) both argued that Americans above 250 percent of the Federal Poverty Level (FPL) — or $45,775 for a family of 3 — could easily afford health care coverage:
- Enzi 200: To eliminate subsidies for those above 250 percent of poverty
- Enzi 201: To eliminate subsidies for those above 250 percent of poverty
- Enzi 202: To provide for reductions in subsidies
- Enzi 211: To limit subsidies to those below 250 percent of poverty.
- Enzi 251: To limit subsidies to those below 250 percent of poverty
- Gregg 223: To limit subsidies to those below 200 percent of poverty.
- Roberts 203: Limiting Premium and Cost-Sharing credits to people below 200% of FPL
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In reality, millions of Americans at about 250% FPL are struggling to afford skyrocketing health care costs. A recent study concluded that medical debt contributed to 62 percent of U.S. personal bankruptcies in 2007 — and 78 percent of bankruptcy filers had health insurance but “still were overwhelmed by their medical debt.“ One in five Americans had trouble paying their health care bills in 2007 and even moderate levels of out-of-pocket spending — spending that is as low as 5 or 10 percent of family income —created medical bill problems.
Health care reform must end medical debt and medical bankruptcy, but Republican affordability measures are simply insufficient. The question of affordability is two-fold: which income levels do we subsidize and how much subsidies should the eligible families receive. While the cost of living varies widely across the country, on average, a family of three would need at least $37,919 – or about 200% FPL – to afford their basic necessities not including health care costs. So families up to 200% need to be subsidized, but who else?
Well, researchers suggest that families that spend more than 5-9% of their gross income on health care begin confronting affordability problems. As Karen Pollitz points out, “depending on what premiums are charged for qualified health benefit plans” subsidies capped above a certain level “may prove to be insufficient to ensure affordable health care for all Americans.” Congress “might consider instead a rule that no individual or family will have to pay more than 10 percent of income on health insurance premiums….cutting subsidies off entirely at an arbitrary income level can leave families vulnerable,” she says. Families at approximately 500% FPL ($110,250 for a family of four), however, can typically afford the cost of coverage.
Of course, the entire goal of reform is to slow the growth of health care costs and lower premiums for families. In this sense, subsidizing coverage — that is, making sure that every family can afford to access needed services — is a way of saving money in the long haul. After all, the billions we’re spending on subsidies is a small fraction of the $40 trillion we’re projected to spend on health care in the next ten years if we fail to slow the growth of spending.
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