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 July 24, 2009

Where’s the $2,500 Savings Obama Promised?

Throughout his campaign, then-Candidate Obama repeatedly made two promises about health care reform: that if you like your current health plan, you could keep it—and that it would cost about $2,500 per year less. Obama made this pledge on his campaign web site, in the second presidential debate, and in the third debate, :

“If you have health insurance, then you don’t have to do anything. If you’ve got health insurance through your employer, you can keep your health insurance, keep your choice of doctor, keep your plan. … And we estimate we can cut the average family’s premium by about $2,500 per year.”

One continuing theme in the current health care debate has been over whether you will actually be able to keep your plan if any of the current bills in the House or Senate pass.

But what about the $2,500 in savings?

There is nothing in any of the current health care reform proposals that would produce anything like that savings, or even any savings at all.In fact it does just the opposite.

A study by John Shiels and Randy Haught of The Lewin Group estimates that the average private insurance premium—the cost of the health insurance you have right now—will actually go up, not down, costing the average working family $460 a year more. That figure accounts only for cost-shifting that they assume will occur because the new “public plan” will pay doctors and hospitals less than they receive now from private insurers, and in some cases less than the cost of providing health care service. In reality, the cost increase might be much higher, because a new “Health Choices Commissioner” will have the authority to mandate coverage of more services than your current plan – in which case you will not be able to keep your plan, and the plan with that extra coverage will necessarily come with a higher premium.

The closest the House bill (H.R. 3200) comes is to provide some income-based subsidies to purchase health insurance. These would apply only to those who both don’t have employer-sponsored insurance and who have incomes below four times the federal poverty level. They are designed to limit the percentage of income that an eligible family would spend on the “basic” government health insurance package in the new “public plan,” to 1.5 percent to 11 percent of income, depending on how close the family is to the federal poverty level. But this is not for the insurance you have now, it’s for government-run insurance “standard” insurance package (similar to Medicare only with much higher premiums). And the subsidy is not “savings for the average family,” it is just shifting part of the cost of insurance from some families to other families—the ones who pay the taxes necessary to fund the subsidies.

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Comments Author: Robert Book
  • Ron Pellerin
    I personally think They just want to get something, anything, through. Have x amount of people on a socialist path and depending on the government, and eventually conquer the other, as theymight say, " tea baggers", Divide and conquer. If it looks like fish and smells like fish, It's fishy.
  • blacknblue2
    Last fall I would post on Dkoz but became very dispondent over it. I started to relize that there is a big, big army of socialist thinking people. It was almost like and army of people that couldn't think on their own, they all thought as if they were on big amoeba.

    I also posted on HuffPo and sometimes still do. At least HuffPo has some dissenters.

    There is a silent war going on in America. You are correct about divide and conquer. The Socialists have created havoc, they have over whelmed systems and are now prepared for the take over. Obama is 1000 percent worse then I ever dreamed. Acorn is just the tip of his underground support and I think a greater, more open Socialist group will be created by his administration.
  • There is no argument about the need to address the costs of medical coverage in America. I speak only for myself as a small businessman. The current costs are so high we cannnot afford to provide medical coverage as a benefit for our employees and because of that, we are less competitive than others when it comes to hiring talented people.
    That being said, I do not believe that H.R. 3200 is anything other than a boondoggle. An attempt to address bleeding finger with a bodybandage. Democrats and Republican alike are at the root of the problem -Big Government.
    If I were asked to address this problem, I would begin with laser cut to the blood source feeding the growth of the cancer of ever-rising costs-Tort Reform. Tort reform that limits and even eliminates frivolous lawsuits. No cost to the tax-payer and at least a 5-10percent impact on medical costs.
    The second thing I would do, would be to eliminate the elaborate healthcare plans available to elected officials and government employees and force them to be a part of the system the Taxpayer is offered.
  • blacknblue2
    Hm? I am 57 and have a 15 year old kid. For several years I've had an HSA account and a high deductible $3,800 insurance policy. The cost today is a bit under $300 a month and covers both of us. I have $8 million of coverage and my policy is comprehensive (no need for riders such as chemo, etc). BTW, I would never buy a policy that needs a bunch of riders attached to have comprehensive coverage.

    Now to me, someone that has been in the financial planning world for 30 years, a comprehensive plan isn't one that means I have a $20 copay at the doctor. I pay the $78 office visit. I pay everything until I satisfy the $3,800 deductible. What I have is a $3,800 family deductible and the plan pays 100% after the deductible. Me or my son's medical care go toward satisfying the deductible.

    If someone can not pay $300 a month to cover their son and them self, they have greater problems than medical insurance. I see it all the time in my office. People with the big screen TV's, the new cars, the this and that toy or gadget but they have no money. We have seen the housing / mortgage meltdown in America and it was due to several factors. But one big factor was people bought houses that they could not afford.

    Statistics show that people are not buying life insurance. My parent are in their very late 80's and when they were young, it would foolish to not have some form of life insurance. But today's American places greater value on things than family responsibility. We are seeing bodies of people in California that can't be buried because nobody can afford the funeral. Why? I would guess it is due to the deceased choosing to not get life insurance.

    Becasue of what I have seen over the past thirty years, I have become very calloused. The cries of woe is me I can't afford health insurance falls on dead ears. I would make a bet, a bet that I would have the Vegas house advantage, that if I looked at all the many, many whining people I could point out why they can't afford health insurance.

    Do you want to take personal responsibility for care of yourself and your family first? Or do you want the big vacation, the big TV and new car?

    I drive a very nice car, one of those luxury sports models but it is 19 years old. I consider a 5 year payment on a depreciating asset to be just damn foolish. I pay my bills, I pay my health insurance, I pay my life insurance, I pay the things that a responsible person should pay First. I choose not to have that $80 a month robust cell phone plan, I don't have the $110 a month robust cable plan, etc, etc., etc.

    Far too many Americans want to drink the champagne on a beer budget. I doubt if my idea of prudent health insurance planing using my HSA arrangement will be a Qualified Plan under the Obama plan. So I will be forced to take a plan that costs more money.

    Sometimes I think government doesn't want people to learn the principals of financial planning, of running their house on a budget of not buying something what you don't need if you can't afford it.

    Oh wait? The elected officials don't don't it in their own house so I guess they think printing money is a prudent plan.

    People are taught to hate insurance companies and Obama loves to point it out to the American public. Why has such hatred appeared? Generations before didn't think in such a manner. Maybe it is because deep inside they know that they are shirking personal responsibility and don't like the idea of an industry around that reminds them of it. Just a thought.

    My friend of 45 years asked me to stop buy and see if his companies 401K is good. While talking he mentioned that he once offered health insurance to his 18 employees. It was going to be an HSA and he was going to put money into each employee's account. He was also going to bonus each person enough to pay 75% of the insurance premium. He could only get 4 employees to go along with the idea. The remaining employees didn't want to pay a dime toward their own health plan. I told the guy that I can not even count the amount of times I have heard the same story.

    Yep...I am jaded.

    We are doomed.
  • blacknblue2
    His lies are so deep and devious. Take for instance how we are to trust him about a government health plan acting a a competitor. What nonsense because:

    A Federal insurance business would not:

    Pay income tax
    Pay State tax
    Pay local tax
    Pay liability insurance (due to Federal immunity protection of suits)
    Pay the State Premium tax
    Pay property taxes
    Set aside reserve/surplus money as required under State insurance laws
    Federal government doesn't need to raise capital, they just raise taxes
    Not sure but I think the Federal government doesn't normally pay for postage
    The treasury department will be the plans own little accounts receivable department (paid for by taxpayers)

    The above are just a few reasons that a Federal Plan is not a competitor but uses the benefit of Federal monopoly of writing rules that benefit the Federal plan. There is no doubt that the $billions and $billions of costs to do business -- that are required by private companies -- costs that the Federal plan opts out of -- will put the private companies out of business.

    Currently with private companies all of the credits for taxes and fees go to benefit State and local governments, the local people. If the insurance companies go under the State and local governments will need to raise taxes to make up the losses. Then the taxes / fees that were once collected, that were credits on the State ledger will become a debit on the State ledger.

    There is nothing in the plan to prevent moral hazard but inf fact invite moral hazard. Having no preexisting condition clauses means people can game the system. The drug dealer, the illegal alien or any other people that pay no taxes will not be fined the 8%. These people will have 100% free health care and when they get the dreaded cancer diagnosis, they can walk into the public or private plan, lay down the one month premium and start receiving their cancer treatments. Treatments that could cost into the six digit dollar amount and for people that never paid a dime before the one premium.

    If too many people game the private companies, they will not have enough capital to pay claims and will go out of business. In the Federal Plan, they will just have the treasury collect more taxes or print more money.

    These elected officials are either stupid or arrogant. Most if not all the Nationl Health Plans in Europe have deep deficits. In 2004 the French Health Plan was €12.9 billion in debt.

    http://www.thisfrenchlife.com/thisfrenchlife/20...
    "The government plan to reform the heavily indebted health service is ever so slowly progressing through the French National Assembly. Despite union opposition they have been involved in a great deal of consultation and it is clear that something will have to be done to tackle the service’s €12.9 billion debt."

    http://news.bbc.co.uk/2/hi/europe/3423159.stm
    "France must make big changes to its health system in order to cut waste and increase efficiency, a government-commissioned report is warning. "

    The Democrats are crazy to put forth this plan and it will not end well.

    Obama is very smart, devious and knows the final outcome of a public plan.

    http://blacknblue2.wordpress.com/2009/06/09/hea...
  • janetgreenhow
    This Socialized Medical plan will have government bureaucrats deciding on your medical care rather than you and your doctor. If you are a senior and need surgery, you will either have to wait a year for a decision or do without. Since you are old, you are not worthy of expensive medical procedures so we can give that care to illegals who have no insurance.
    IS THIS THE CHANGE YOU WANTED?
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