Ken’s Take: Simple arithmetic – if you can’t lay off 2/3s of your insurance bill to an employer (or anybody else), it appears that you’re paying 3 times as much — even though the underlying cost of the insurance didn’t change.
Are these guys grossly disingenuous or just plain dumb re: basic economics?
* * * * *
Excerpted from WSJ, Obama and the cost of individual insurance, SEPTEMBER 16, 2009
President Obama likes to take a swipe at “the marketplace” by asserting that “buying insurance on your own costs you three times as much as the coverage you get from your employer.”
This is simply false. The CBO expects premiums for employer-sponsored coverage to cost about $5,000 for singles and $13,000 for families this year on average.
According to the CBO: “Premiums for policies purchased in the individual market are much lower — about one-third lower for single coverage and half that level for family policies.”
One reason that individual policies are cheaper is that they generally require more cost-sharing by consumers.
The reason that employment-based plans seem cheaper is that on average workers only pay 17% of the premiums directly if they’re single (about $850), and 27% for family policies (about $3,500). Businesses pick up the rest by paying lower wages, thus hiding the real costs.
Meanwhile, in the individual market, consumers pay with after-tax dollars.
This tax differential is the core of “our inefficient and inequitable system of tax-advantaged, employer-based health insurance.”
“While the federal tax code promotes overspending by making the majority unaware of the true cost of their insurance and care … the code is grossly unfair to the self-employed, small businesses, workers who stick with a bad job because they need the coverage, and workers who lose their jobs after getting sick. . . . How this developed and persisted despite its unfairness and maladaptive consequences is a powerful illustration of the law of unintended consequences and the fact that government can take six decades or more to fix its obvious mistakes.”
Full article:
http://online.wsj.com/article/SB10001424052970203917304574412813119441566.html?mod=djemEditorialPage
* * * * *
The Homa Files 