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View Diary: The political vulnerability of subsidies (226 comments)

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  •  I've been saying this for months (0+ / 0-)

    What are we subsidizing? Health care?  No. Not at all.

    We are subsidizing insurance, whether that person or family gets sick or not.

    Why don't we simply subsidize the costs incurred if and when they get sick?

    Well, that's single payer, you might say.  Yes, that's correct, but there are other, more politically palatable ways to accomplish it.

    I've diaried about universal catastrophic coverage before and maybe it's time to take another look.

    A quick example:

    A family of four needs $9,000 worth of insurance in today's market to be well covered. If they are only making $40k per year, we will subsidize about $7,000 according to both the house and senate bills (estimated here). (Personally, I don't believe $9k buys much insurance.. it will likely be more.)

    But, if this is a young healthy family, chances are they won't use anywhere near  $9,000 in actual health care in a year.  This year with regular doctor visits they used less than $3000, let's say.  We (the government and taxpayers) have "wasted" $4000 dollars by sending that to an insurance company who makes quite a tidy profit.

    However, if we were to have a pool for catastrophic medical bills, we can spread around the risk to every American. A 1-1.5% payroll tax (with employer matching) could cover all medical bills over (let's say) $10,000 in a single year for all Americans.

    Now, insurers are only risking a maximum outlay of $10k per person.  They know if that person gets ill, the government fund will kick in after $10k.

    Now, it costs about half to insure a family of four for the gap coverage ($0 to $10k) that the insurer would be liable for. (Maybe a lot less if the family is willing to take a higher deductible)

    Now the family can pay their original $2000 portion and we can subsidize only $2500.  We have provided the same or better coverage for $4500 less!

    And not only that, we have reduced health insurance rates for every American, not just a small percent who need subsidies!

    Think about it..

    "Those are my principles, and if you don't like them... well, I have others." - G. Marx

    by Skeptical Bastard on Wed Dec 16, 2009 at 02:05:10 PM PST

    •  i like this idea but (0+ / 0-)

      I think 10,000 is way to high.  It should be some modest percentage of yearly income or it does not really protect people.

      Also, the average family of four pays way more than that.   The average american (a single alone) pays 13,000 a year insurance, I read, and I don't know if that stat was including the cost the gov pays for medicare...

    •  oh wait, i get it (0+ / 0-)

      sorry i just realized that the companies will INSURE the family for the 10k.

      interesting.

      This seems like a great way to socialize medicine, starting with the highest medical bills.

      •  yes! (0+ / 0-)

        and let me inject a "right wing talking  point" into the discussion, if I may...

        If this gap insurance was nationalized and people were able to buy it across state lines, just like you can buy Geiko and Progressive auto insurance online, the competition would be tremendous, cutting profit margins to a minimum for the private insurers.

        "Those are my principles, and if you don't like them... well, I have others." - G. Marx

        by Skeptical Bastard on Wed Dec 16, 2009 at 03:45:02 PM PST

        [ Parent ]

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