||[Apr. 11th, 2008|09:39 pm]
Rep. Paul Thissen
The health care reform bill that passed off the House floor last evening includes an affordability standard - a first in the country as far as I am aware. The provision sets a standard that no Minnesotan should be expected to pay more than a certain percentage of his or her income on health care. In many ways it is establishing for health care what has long existed regarding housing -- a family should not pay more than 30% of its income on housing. |
The legislation establishes a sliding scale affordability standard that sets 6% of income as the cap at 300% of the federal poverty guideline and at 8% of income at 400% of the federal poverty guideline.
There was significant analysis underlying the establishment of this standard. More information can be found here.
But what does it mean practically. Here are some examples: For a single adult, 300% FPG is about $31,000. Six percent of $31,000 is $1,860 per year. The JOBS NOW COALITION has calculated that a metro area single adult will spend $18,228 per year on essentials of food (no meals out), housing, transportation and clothing. The number does not include life insurance or retirement savings; big ticket items like washers, dryers, other basic household repairs; no entertainment; no gifts.
In addition, a single adult making $31,000 will pay approximately $6400 in taxes. After accounting for those expenses and subtracting out 6% for health care, the individual will be left with about $12.50 per day for all other expenses. And I would reemphasize that the totals include NO SAVINGS for retirement which is simply creating a bigger disaster for all of us in the coming decades.
(As an aside, the average 27-year old single male adult will pay $3,622 for health insurance in a year for an individual policy. A 57 year old female will pay $6,112 -- about 20% of the person's income.)
Using a similar analysis, a single adult at 400% FPG will be left with $26 per day (or $12.50 a day of you factor in a minimal retirement savings).
A family of three at 300% of FPG (about $53,000) will pay $3,100 for health care under the 6% affordability standard. Using the same analysis, that family will be left with $8 a day to cover school expenses and activities, to save for college and to cover all the other "non-essential" expenses described above. A family of three at 400% will have about $13 left for everything else, assuming the family does save a minimal amount for retirement.
The point of the analysis should be clear: these affordability standards are not unreasonable when one considers the real lives of families in Minnesota. See this Familes USA Report for more information.