Median US household income - $50K, average family health premium >12K. Do the math!

[Phoebe Loosinhouse]

It's really even worse than I thought. No wonder we're all going down the tubes due to the cost of health insurance! But, if we're really, really lucky, our ace negotiators in Congress (the same people who wouldn't negotiate the drug costs for Medicare Part D) might get us a reduction from the ever munificent insurance companies. Or maybe they'll allow us to sell our spare organs to each other in order to survive.

This is truly unsupportable madness.

http://www.census.gov/Press-Release/www/releases/archives/income_wealth/012528.html

http://www.americanprogressaction.org/issues/2009/03/cost_shift.html
(thank you antigop for providing this table in another thread)

[stray cat]

1. For a family benefits are usually 30% of salary paid for by the employer

if you are lucky enough to have an employer subsidize insurance. I wonder if single payer or any program would mean 20% taxes toward health care?

[Phoebe Loosinhouse]

4. I think that's all over the place. Some employers pay a portion

and others don't. Employers have been shifting more and more of the cost over to the employee and now we can see why. If you are completely covered by your employer, you have a tendency to not look so much at what the actual expense is. If you have to go private because you are employed by a small business or you are on a COBRA, you pay a lot of attention.

[tularetom]

2. Another regressive policy screws the average American family

Let's see if I make $1 million per year and spend $12,000 on health insurance, that's 1.2% of my earnings. Not bad.

But if I only make the median $50,000, I'm spending 24% of my earnings on health insurance.

If I make $30k or less I guess I can pretty much kiss health insurance good bye.

Yup, that sucks.

[Golden Raisin]

3. Meanwhile I'm quite sure

our Congresspeople have gold-plated, comprehensive, super-duper, top-of-the-line insurance coverage for themselves and their families, paid for by our tax dollars.

[snappyturtle]

6. Oh yeah they do. See my response below, #5. nt

[snappyturtle]

5. I agree with what you have said but I do not understand why

we can't have what the government's employees have. This is the fourth time I have posted this link today to healthcare posts! LOOK at the premiums!!!

http://www.southparkstudios.com/episodes/220760

Then browse around the site to see the options and extent of service. Take a look at "What is New in 2009". It hit home for me. My mother has this insurance. She also had breast cancer in '85....still with us at age 92. Had wonderful service. My insurance company BCBS wouldn't pay for mammograms for me! But now, new in 2009, Mom's insurance I see is paying for annual mammograms...used to be every two years....which would have been fine with me. Why can't we all be in this same insurance pool?

[Phoebe Loosinhouse]

7. That was John Kerry's solution, I think.

So, the government acts like a supernegoiator on their own behalf but just lets the rest of us spend ourselves to uncovered and bankruptcy? Nice.

[snappyturtle]

19. I CAN'T BELIEVE I USED THE

wrong link.....found the above link on another thread and e-mailed and forgot to go copy the SAMBA link again....HERE'S what I wanted you to see.....http://www.sambaplans.com/HealthPlan2009.shtml

Sorry.

[Phoebe Loosinhouse]

20. I kind of figured that the tables weren't in the southpark link

:D

but you were obviously impresse-d with the premiums in a good way, so I figured they must be lower than average. John Kerry apparently believed that most Americans would be able to afford the premiums in the government's plan. The rest of just pay what the traffic will bear at what terms are dictated to us and pray we won't be refused for coverage.

[truedelphi]

33. Thanks fo rthe correction. I have to admit, I had a pretty good time

Watching the excerpts from the So Park shows. especially liked it when the "Economic reporter" took a dastardly fall immediately after opening his fat mouth.

[snappyturtle]

36. You're too kind!! I'm in extreme ditz mode today! nt

[prolesunited]

8. We're on COBRA and I'm unemployed

We can't go without coverage because of pre-existing conditions. Our monthly tab for COBRA is $1,100 a month and that's BEFORE we buy any meds or see a doctor. Our mortgage (with escrow) is less than $900 per month.

Something is truly crazy when you run those numbers. By the end of the year, our biggest expense will be health care -- more than housing, more than food, more than transportation. It will easily eat up more than one-half of our income. And even more incredible, we don't even have any horrible diseases like cancer or MS.

We're hanging on by a thread, but I'm not sure how much longer.

I guess I could give up my asthma and allergy meds. I hear breathing is overrated.

[Phoebe Loosinhouse]

9. Healthcare costs become deductable once they pass a certain percentage of income

I think I vaguely remember that, but I can't remember the percentage. It's worth looking into or maybe you already do.

[sinkingfeeling]

16. 7.5% of AGI. Right?

[Phoebe Loosinhouse]

18. Yes, thanks for posting figure. Also see post #12 below. nt.

[Bluenorthwest]

45. If costs excede 7.5% of AGI

then you are allowed a deduction on the amount that is above that percentage, not on the whole enchilada.

[SoCalDem]

32. If you actually spend enough for it to BE a deduction, you are probably too broke to care

all that much.. One year we diligently saved ALL the medical expenses, and after doing all that work, it came out to a resounding ZERO deduction, because it did not meet the "math-test"..

If you have the actual money to put out in the first place, you are also likely to have "Cadillac" insurance, so it's not even necessary..

You have to have actually paid it..not just "owe" it.

and if you are middle -to- poor, and did pay it, you have probablky gone bankrupt & lost your home, so without the home mortgage money, you probably no longer even file a long form..

Catch-22s abound..

[Phoebe Loosinhouse]

12. Here is the IRS publication about allowable deductable medical expenses.

http://www.irs.gov/publications/p502/ar02.html#en_US_publink100014757

[prolesunited]

40. We'll be able to do it this year

but you still have to come up with the money. Plus, it's not a credit. Based on our current income, we won't owe that much in taxes anyway, although we'll still have to pay SS and Medicare taxes.

But, thanks. I am aware and keeping all the receipts set aside.

[truedelphi]

27. Been there, done that and I truly sympathize.

Though our premiums were a scant $ 957 a month! (You will no doubt be flooded by younger DU'ers telling you your math is wrong -after all, if they pay $ 350 a month for COBRA, so must you.)

We had to keep up our premiums as M. had lost his sight, and only by keeping up with the premiums could we guarantee that his vision would be restored through needed operations.

Since we have been off COBRA, there have been months we do without needed meds. Life-threatening situation without them, but what can you do? Rob the pharmacy? (Irony is -- every convict serving time is guaranteed their insulin and asthma meds.)

[rucky]

10. Yeah, but it's tax deductible

so higher is okay.

My employer told me this with a straight face, when I asked why the buy-in was so high.

[Phoebe Loosinhouse]

14. That may be, but it doesn't alter the fact that average family insurance cost regardless of who pays

it and whether or not it is deductable is close to a quarter of the median income. Now imagine if you make less what a percentage it makes up.

Also deductability just means you get to deduct your tax rate from your cost. So, you may save 15, 25, 28, 33 or 35 %, but you will still be bearing the bulk of the expense.

[rucky]

44. You'd have to see my paycheck to fully appreciate the humor of my last comment. n/t

[fumsm]

11. Congress is owned by the insurance companies.

This is why it keeps getting worse.
Can't wait to see what they have in store for the pres's new plans. Congress will fold, and he will fail, again. It's a bigger ponzi racket and bonus scheme than any bank or investment firm could ever imagine. Their chump change to these people.

[TreasonousBastard]

13. OK, so what is the actual cost of care that the...

insurance is paying for? They don't put ALL that money in the shareholder's pockets-- they do pay some medical bills here and there.

Say them nasty ol' insurance companies have a profit and overhead of 30% (which is a bit high) that's still $9,000 a year in actual hospital, doctor, drug, etc, cost that the thieving bastards pay on top of your copay, deductible, and uncovered expense.

So, even if we throw all that insurance money into a mutual pool, or a tax, it's still going to cost over 10 grand a year to treat the "average" family and that money has to come from somewhere.

Where?

(It's not just insurance companies walking the plank-- we have to think the whole healthcare thing through)

[Phoebe Loosinhouse]

17. Sorry to be tedious

but I will have to insert here my obligatory observation that United Health paid their former CEO over 1 Billion dollars in salary and stock options. That's just one company and one person. That tells me that there are a LOT of extra dollars floating around in our current "for profit" system. How many procedures and treatments would that have covered?

[TreasonousBastard]

26. Dunno where that billion came from, although...

the UHC ceo always got paid a lot more than he's probably worth. And including stock options is a little tricky when complaining about pay-- if he does a really good job, it doesn't cost the company that much to pay him in cheap stock.

But, in the grand scheme of things, even throwing ceo pay into the claims pool doesn't explain why it costs 6 months pay or so to have a baby or a years pay to set a fracture-- medical costs are completely out of whack for a number of reasons, and anyone who has seen an inscrutable, but huge, hospital bill should know that. Spend a couple of hours in the emergency room and see billing even more creative than the phone company.

All insurance, yes even health insurance or government programs, is simply a pool out of which claims are paid. The higher the claims, the higher the premiums. In casualty insurance, even though the complaining was loudest when rates were going up, we had periods wehen claims went down while capacity was rising, and premiums were going so low we wondered if we could pay even the few claims we had. So it goes for competition, which occurs even in the insurance industry no matter what people think.

So, the point is not so much ceo pay, or greedy companies, or anything else good for the torch&pitchfork business, but what are the essential health delivery costs, and what can be done about them.

(This I write as many people are looking at Medicare costs skyrocketing over the next five years and wondering how that will be paid for.)

[truedelphi]

28. As far as the percentage of pure profit to the insurers --

Ihave seen studies saying 24% and I have seen studies that say 30% so there is wiggle room shy of 30%.

Frima Harrup, the columnist, wrote an OP about how ONE SINGLE CEO of an HMO collected a salary equivalent to the entire payroll of a Rhode Island hospital that had 3300 employees. So it will be easy to pare back costs of our health care system if we can get the golden spooned parasites at the top out of the equation.

[TreasonousBastard]

29. Well, Califiornia requires no more than 15% be...

spent on admin costs, but profit is usually on top of that. Our underwriting profits in property/casualty insurance rarely went over 5%, but health insurers may figure things differently. Expense ratios were all over the board, partly because some companies weren't very careful and partly becasue some companies were cooking the books a bit for tax or required reserve reasons. Realistically, expenses should have been under 20%.

Although those studies you have seen may have mentioned 24-30% (and I seriously doubt that's all profit) that still leaves the other 70% of claims that have been paid, and the astronomically high medical expenses.

So, once again, how much actual medicine are we buying in this country, and how does anyone plan to pay for it without major changes in medical billing?

[truedelphi]

30. I firmly stand by the 24 t0o 30% in terms of proftits. And one DU'er who

Lives in Belgium had a post about the per capita cost of the Belgium, Universal Single Payer Health Insurance system being a firm 9% per capita figure.

Once we get rid of the greedy, we will see costs contained. It does not look like it is going to happen inside an Obama/Rahm administration, though.

[TreasonousBastard]

34. You can stand as firm as you want, but I don't believe it...

since that means California health insurance companies can have a total P&E overhead of 45% and that makes no sense at all. Most other state regulators wouldn't stand for that either.

And what is "9% per capita"? That's meaningless-- 9% of what? Of income, of GDP, of bodyweight, of the price of their cars...?

France, btw, which WHO claims has a better system than Belgium, does not have single payer, not does Spain, Italy, of Germany. And they all spend less than we do on healthcare and their people are healthier.

[truedelphi]

35. OF GDP. Sorry about that.

I'll take any sort of insurance that other countries have, since in those countries people on the bottom are not gouged, and you are not excluded for the "pre-exisiting" conditions.

What is P/E?.

[TreasonousBastard]

37. profit&expense-- it's an insurance term, and

9% of GDP is pretty good, but I still gotta emphasize that our medical costs here are a lot higher and have to be pared-- we can cut profit and ceo pay down to nothing and we're still screwed.

[truedelphi]

39. But one reasont hat medical expenses are so unreasonable is that

people whohave no insurance cannot afford doctors - and doctors will simply not see them.

So they end up at the emergency room.

My husband and I started doing it ourselves. We did everything we could to be self susteaining for DECADES, and then suffered a medical bankruptcy.

My attitude now is F&*K them! Now I just go to the emergency room.

Rather than payout of pocket for a mediocre doctor who will not even do the basic things that I need, I go to the ER. I just no longer give a damn about this system of health care in America. And I get better treament at the ER than I would with the mediocre doctors that are still accepting patients. The last "poor people's clinic I went to, the nurse there would nto ev en take notes. So every time I went in, she was "So who are you and why are you here?"

How can that be helpful!

[sinkingfeeling]

15. And then add the $3000 to $10000 out-of-pocket, deductibles, and co-pays that go with the insurance.

[intheflow]

21. Those are 2007 numbers.

I'll bet the median family income has plummeted since then.

[cascadiance]

22. And I presume that $50k is before taxes not take home pay...

If we look at the median US take home pay, then the math looks that much more crazy!

[Jim__]

23. A question on your numbers.

In the US, because of the distortion in income distribution, median income is below average income (my guess is well-below average). Do you know if the employer paid part of insurance is included in the median income number? My guess is that the average family premium is above (maybe well-above) the median family premium. Your comparison may give you a somewhat distorted view.

I absolutely agree that we pay too much for health insurance and that wages in the US are almost criminally distorted.

[Phoebe Loosinhouse]

24. I always thought that most people look to medians as being a better guide than averages

since averages are subject to distortion due to anomalies in both lower and upper ranges. Median is the true center where 1/2 are lower and 1/2 are higher. I think median is the more commonly looked at figure, but of course, I could be wrong. That figure came from the census report which I linked to. They refer to "real median income" and I have no idea what that means. There are 2 links at the bottom of the report that will take someone to an explanation of their methodology, if you would like to look there.

On the other hand, the second link, where I got the premium figure IS for the average family premium according to the way they notated the table.

My point was that as a percentage of individual income, we pay too f!@#ing much for health insurance, no matter how you slice it and who pays it. As someone else pointed out, it's just one more thing that is oppressively regressive to the poor and middle class but a wealthy household could not care less about since it's a far smaller fraction of the family budget.

[TreasonousBastard]

31. The median is the proper way to look at income, but...

there is also something called the modal point, which is where on a curve income points tend to cluster. So, while the median is 50 grand, you might find the the mode is about 32,000-- the income point where the largest number of people fall. It's also possible to have several modes, say with 18,000, 32,000, and 76,000-- each having, say, 8 million families making that much. This gets real handy when looking for "typical" households.

The mean, which is what most people think of as "average" is simply diving the total by the number in the group. If I'm hanging out with friends, and Bill Gates walks into the room, the median and mode don't change much, but the mean income in that room goes up by a couple of million.

Now, the problem with your example could be an apples and oranges thing-- you're looking at the median income, but not a necessarily a median or modal insurance premium. It could be skewed upwards by a fairly small number of very high priced policies.

But, we don't know that for sure, and the argument stands anyway-- healthcare costs too damned much.

[eridani]

42. Agreed. The mode is the ONLY proper measure of the central tendency of a skewed distribution n/t

[specimenfred1984]

25. Forget math, I'm just so super happy!

I've got coverage and everything looks so beautiful!

Spewwwwwwwww...

[area51]

38. Kick on this life-and-death issue. (n/t)

[The Gunslinger]

41. Don't forget the $$ the family pays

if they have to use it. I got to spend $500 before it even kicks in, and then whatever amount the insurance does not pay on top of that..............and don't forget dental..

[Deja Q]

43. Fixing health care would nix most of the economy problems...

[Bluenorthwest]

46. Well clearly

if we lower costs by 2,500 a family, all will be dandy and we can all afford it, right?