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The three health insurance reform plans approved by congressional committees are unlikely to make insurance affordable for low- and moderate-income families. Under plans in the bills, subsidies would be available through a “gateway” or “health exchange” to those not covered by an employer, Medicare, or Medicaid. The plans vary considerably in amount of subsidy and their impact on families. In nearly all instances, premiums would be more costly to families than under the Massachusetts plan, which covers about 169,000 people (while an equal number remain uninsured).

Under the most generous plan – from the Senate HELP Committee – a single parent with one child earning $22,000 (151% of the federal poverty level) would pay $60 a month in health insurance premiums plus co-pays and deductibles equal to 7% of the family’s health costs (perhaps $400-900 per year). A single adult with $32,000 in income would pay about $210 monthly plus 16% in cost sharing, and a couple with one child and a $75,000 income would receive no subsidy.

HR 3200 has been approved by three House committees. Under the House bill, the same single-parent family would have to pay $40 more for premiums monthly. The single adult would pay $55 more monthly plus 6% more in cost sharing. A couple with three children earning $50,000 (194% of poverty level) would pay $230 per month and 7% in cost sharing.

The bill originally released by Senate Finance Committee Chairman Baucus would have been the most prohibitive for families and children. Six days later Baucus raised his proposed premium subsidies but retains the lowest cost sharing subsidies. The single parent earning $22,000 would be expected to pay $85 per month plus co-pays and deductibles of 10% of costs. Under Baucus’s plan, an unmarried couple earning $48,000 would pay $480 per month in premiums and 30% of incurred health expenses. The two Senate bills must be combined in order for health reform to advance.

In 2008, the average premium for a family plan purchased via an employer was $12,680, and the total cost of health services will reach over $8,000 per person in 2009. Health insurance costs rise much faster than other costs, and, thus, premiums plus cost sharing are expected to eat up a bigger share of a family’s disposable income in the future, health reform or not. Advocates for the “public option” – i.e., government-run insurance – claim that lower administrative costs would provide competition for private insurers and keep plans affordable in the future. In contrast, advocates for a single-payer solution say that HR 676 could cover the whole population with no premiums, co-pays, or deductibles because of administrative savings on the insurance side and the reduced need for health providers to employ billing staff.

All three bills provide for fines for individuals or families who fail to purchase health insurance. HR 3200 carries a penalty of 2.5% of income, the HELP bill up to $750 per person, and the Baucus bill either $750 per person or, for those with incomes greater that 300% FPL, $950 per person (up to $1,900 per family).

Low- and moderate-income families – already under stress – will be challenged to pay the premiums and cost-sharing charges under these bills. Their lives are not so regular as spreadsheets full of averages make it appear. When unexpected expenses arise, they often cannot make ends meet. Some would be able to pay the costs and will receive coverage, but others would have to choose between housing, utilities, transportation, food, dental and vision care (largely uncovered by the bills), and health care costs. They might pay for a while and then default, thus losing the insurance and the money. Or they might choose to pay the penalty and not have coverage. This aspect of the reforms could prove quite unpopular.

To receive a version with footnotes and tables, contact charlie.coop@verizon.net.