A Question Concerning Group Health Plans [closed at OP's request]

Great Debates
1

This question is posed mainly for conservatives on the anti-UHC/anti-Obamacare side of the argument.

When I started working in the US, I signed up for the group health plan offered by my company. At the time the premiums represented 0.013% of my gross income. As my income grew, the cost of premiums stayed the same, but now represent 0.01% of my income.

And just for clarity, it’s a high deductible plan, so my max out of pocket would be 0.13% and 0.1% respectively.

Because the cost of the premium is the same for all employees, those making less than me at the bottom of the company might be paying 0.04%, and those above me might be paying 0.001% of their income.

So the question posed is: would you ever agree to a system where the costs for your premiums and max out of pocket are based on your salary, in a percentage sort of way? Not directly a percentage because it would grow and shrink too fast. But tied to your income, so that as your salary went up, your premium would go up. And vis versa, goes salary down, premium goes down.

The result being that the janitor at the company would end up with a lower premium than you, but you would both be paying a similar percentage.

One reason I ask is that when my salary jumped, I saw that as an opportunity to up my health insurance coverage. I was okay paying the 0.01% at my initial salary, why not pay 0.01% at my new salary.

The other reason I ask is that I see the group health plan as a mini version of UHC. Everyone in the company has access to a policy, that is deducted from their income. Overall, as long as you’re employed, the concept is great. The only thing I don’t like about it, as a rabid socialist, is that it is a flat tax. The person at the bottom pays the same amount as the person at the top, but it hurts the person at the bottom more.

For me, I’m okay paying slightly more as my income goes up. I’ve been at the bottom before, I know it’s hard. Having a very slight wealth distribution, when done right, hurts the people at the top very little, but benefits the people at the bottom a great deal. I know a $100 is $100. But for someone making $20,000 that $100 is huge compared to someone making $2million.

Obviously if the increase was so high that I don’t benefit from a pay raise, than I lose all incentive to work harder. That is bad, it is obviously bad, that is the far out extreme, that’s not what we’re talking about here. I am not advocating having my entire salary increase go towards someone else’s insurance premium.

But I was okay paying 0.013% at my initial salary, why wouldn’t I be at my new salary? The 0.003% is very small relative to all the other things. It is also large when you work out the numbers, and I don’t want to pay that much to get nothing. That’s why a direct percentage is stupid.

In previous threads, someone would usually try to say, “why health care, why not houses and ipods.” The answer is that I think we already do. A low income person will live in low cost housing. If their salary doubled they’d move to better housing. If it doubled again they’d move again. The person at the top is paying roughly the same percentage of his salary as the person at the bottom. Ipods come in a variety of sizes and prices. A person at the bottom can buy the cheapest, the person at the top can by the most expensive. In the end they both pay the same percentage of their salary. We have that ability to adjust expenses. But not with health care, this premium is the lowest. The person at the bottom can’t get a plan that says, “we’ll cover the right side of your body but not the left.”

The one and truly obvious counter to this is that unlike the ipod, the person at the top will not be getting better coverage when his premium goes up. Everyone at the premium level gets the same. Rich guy would be paying more for the same thing.

The reason I would advocate this is so that the person at the bottom can maintain access to coverage. It hurts him more to have that large flat rate premium. As premiums go up faster than his salary increases he will eventually get priced out.

2

Well, you asked for conservatives, but I’ll answer anyway (since I’m someone who doesn’t like the UHC plans on the table…)

I wouldn’t have much of a problem with the system you describe. But making it a reality would be a bear… health benefits are used to lure valuable workers to a company, they help descriminate the employers in the eyes of the talent. So to implement, you’d have to make this a Government (and probably Federal Government) commandment.

And I do have a problem with the Government telling companies what they can and cannot pay their workers (and yes, I believe Health insurance, like all benefits, is part of the comp plan).

3

Some companies do have different levels of coverage for different types of employees, or offer a variety of plans at a variety of prices.

4

Yes, I am aware, the numbers I quoted were for the cheapest (high deductible) option.

5

If the coverage is the same across the board, I would have considerable issues with paying more solely because my income was higher. I also thing that would be prohibited by HR regulations.

6

Do janitors offer their services cheaper (say 10 cents per hour instead of the $7.00 hour he charges to an employer) to folks less fortunate than them?

If they did, I might consider your notion of percentage payments for the same service.

7

I thought the purpose of an insurance pool was to spread the risk evenly across the whole pool. Therefore everyone in the pool should be paying for the same risk.

Regards,
Shodan

8

I think your math is wrong. Do you mean 1.3%, 1%, etc? Cause even if you were only paying $1,000/yr in premiums, 0.01% would mean you are making $10M/yr

9

Yes, in many ways he does, albeit at a smaller proportion than the person at the top. Although the point is to eventually establish a minimum level where the individual’s contribution becomes so small as to be insignificant. Similar in style to the minimum amount of income before you start paying income taxes.

YES, I was right the first time, which is why it started to seem weird. I knew I was paying 1% now, but when I was putting together something didn’t seem right.

So to clarify, I’m paying 1% of my pre-tax income to premiums, with a maximum out of pocked of 10% of my yearly salary.

It’s entirely possible for someone else at my company to be paying 4% of his salary to premiums and have a maximum out of pocket of 40% of his salary!