For weeks now, the health care debate has largely centered around the public option and its political feasibility. But some policy experts are concerned that a separate shortcoming of the health care plans under consideration could be damaging to working- and middle-class people. It’s a substantive problem only gets worse if there’s no public option, and could become a political disaster for Democrats.
Government premium subsidies and limits on patient cost-sharing are critical components in the Democratic approach to help more people afford private insurance. The financial support from the House bill would offset costs for as many as 27 million low- and moderate-income Americans, both those lacking coverage and those struggling to afford their existing policies, according to the Congressional Budget Office.
In July, the House Energy and Commerce Committee reduced the portion of premiums the government would subsidize. This month, under pressure from Republicans and conservative Democrats to draft an even less expensive bill, the Senate Finance Committee may also lower the maximum annual income a family could earn to qualify for subsidies, from four times the federal poverty level (about $88,000 for a family of four) to three times of poverty ($66,000 for that family). That would mean millions of Americans would have no possibility of being eligible for subsidies….
But reducing subsidies too much could threaten the entire architecture of the Democratic health care overhaul strategy. The major bills pending in both the House and Senate require everyone to obtain health insurance. Without adequate financial support to buy insurance, millions of people would have to be exempted from the mandate and left out of the pool for insurers to spread their risk between healthy and unhealthy enrollees. A diminished pool would make it hard to lower premiums for everyone, and for Congress to require insurers to sell policies to everyone regardless of their condition. It might also jeopardize the measure’s political viability.
Along the same lines, if subsidy levels are lowered and premiums are higher as a result of a diminished pool then even those who do get government assistance will be required to pay the difference. That scenario is all the more likely in absence of a public option. And for many individuals and families, the difference could amount to hundreds of dollars a month.
