Typical Health Insurance Costs

I was prompted to rant again about health insurance, after
reading a post at Blogcritics.  The author was highly critical
of the href="http://www.washingtonpost.com/wp-dyn/content/article/2007/09/25/AR2007092501474.html">SCHIP

It's for the Insurance Companies, Not the Children

Written by Dave Nalle

Published September 25, 2007

Whenever someone in government makes a proposal and says it's 'for the
children' you know you're about to be screwed. The 'for the chidren'
argument is one of pure emotion and when it's being used you can be
sure that there's no rational way to argue for that piece of
legislation, usually because it's such a bad idea that based on facts
and logic no one would suppprt it.

That's exactly the situation with the State Childrens Health Insurance
Program which is being considered today in the House and later this
week in the Senate. It's a massive handout to health insurance and
medical companies to the sum of $35 billion dollars and it's also a
back-door attempt to impose a fiscally irresponsible and inefficient
national health insurance program on the states whether they want it or

Nalle makes a number of arguments.  He states that "the 'for
the chidren' argument is one of pure emotion."  I reject that.
 Children would benefit from this program,
other people would benefit, too, but it is not accurate to say that it
is purely an emotional argument.  

He argues that "there's no rational way to argue for that piece of
legislation."  In his post, he does not present any rational
arguments for the legislation, but that does not mean there aren't any.
 It just means that he did not consider them in his analysis...


Children would benefit from the proposal, if enacted.
 That is one rational argument.  Expansion of SCHIP
is also a step on the way to a sensible
and efficient universal-coverage, single-payer health plan
 While one could argue that it would be improper to develop
such a program, one cannot say that it is irrational.  There
are many intelligent, well-informed people on both sides of that
argument.  So while it is controversial, it is not irrational.

Oddly, as Nalle develops his argument, he states that the plan is a
"payoff to the insurance companies."  He also claims that it
is "an opportunity to get a foot in the door for national health
insurance."  Of course, if the expansion of SCHIP did lead to
a universal-coverage, single-payer health plan, if would hardly be a
payoff to the insurance companies; it would be the end of most of them.
 Both statements cannot be true simultaneously.

I suppose that a universal-coverage, single-payer health plan could be
administered by a private company, in which case that company could
make money off of this.  But in order for that to make sense,
the private company would have to demonstrate that it could operate
more efficiently than Medicare.  That is highly unlikely, as
Medicare is one of the most efficient organizations known.  

His biggest error is implicit in this statement:

It's a massive handout to health insurance
and medical companies to the sum of $35 billion dollars and it's also a
back-door attempt to impose a fiscally irresponsible and inefficient
national health insurance program on the states whether they want it or

He makes the assumption that a national health insurance program would
have to be fiscally irresponsible and inefficient.  That
assumption is incorrect.  The facts plainly speak
.  Both the VA system, and Medicare, are
fiscally responsible and efficient.  

Comparison of overhead expenses is a complex issue, but it href="http://books.google.com/books?id=aUV51PYXSJ0C&pg=PA145&lpg=PA145&dq=medicare+overhead&source=web&ots=yQKDDY6aYR&sig=6rLfYn_Oe5R6YKftmD6yMKqaSoU#PPA145,M1">is
clear that one cannot blithely assume that private companies
are always more efficient than government agencies.

Nalle also makes an error when he criticizes the SCHIP proposal because
it goes beyond the original intent of the program.  

It is true that the proposals passed by the House and Senate are
expansions of the program, not merely extensions.  That does
mean that the issue should be considered carefully, but it does
necessarily mean that the expansion would be wrong.
 We need to look at the facts, as the facts have changed
substantially with regard to insurance costs and the percentage of
uninsured persons.  

To start with a specific example, look at the insurance costs for 2008
for employees of the University of Michigan.  The UM is
probably typical of Universities, in that it tends to offer lower wages
than other employers, but better benefits.  It also happens to
be in an area where the cost of living is fairly high, so increased
paycheck deductions can be a problem for the employees.

bordercolor="#000000" cellpadding="3">

href="http://www.umich.edu/%7Ebenefits/events/oe/08medrates.htm"> style="color: rgb(0, 0, 102);">University of Michigan

style="color: rgb(0, 0, 102);">Medical Insurance Option

style="color: rgb(0, 0, 102);">Your 2008 Monthly Deduction

style="color: rgb(0, 0, 102);">University 2008 Monthly

style="color: rgb(0, 0, 102);">2008 Total Premium

style="font-family: Verdana; font-size: 10pt; color: rgb(0, 0, 102);">Blue
Cross Blue Shield of Michigan Community Blue PPO
      You Only
$ 85.04
$ 381.90
$ 466.94
+ Adult
$ 249.98
$ 683.90
$ 933.88
You + Adult +
$ 385.24
$ 931.54
$ 1,316.78
You + Child(ren)
$ 174.10
$ 545.00
$ 719.10

The monthly deduction for family coverage is going to be
$385.  That is up about $30 from last year, so the increase is
not huge in absolute terms.  But for someone making, say,
$35,000 per year, a monthly expense of $385 is pretty steep.

Has this kind of increase had a discernible effect across the nation?
 Of course it has.  The percentage of the population
going without insurance is increasing rapidly.  A figure of 47
million is often quoted.  However, the latest numbers are much

finds 89.6 million lacked health insurance

By Jordy Yager, Los Angeles Times Staff Writer

September 21, 2007

WASHINGTON -- -- More than one-third of the people in the United States
under the age of 65 had no health insurance for some or all of 2006 and
2007, according to a study released Thursday by Families USA, an
advocacy group for the uninsured.

The 89.6 million individuals identifying themselves as lacking
insurance for at least a month, according to the advocacy group, was
almost double the number of uninsured reported by the Census Bureau for

...More than 70% of those without insurance in part or all of 2006 and
2007 were employed full time, the report said.

Half lacked insurance for nine months or more.

"This is a story of working people, working families. This is not a
story of people looking for a handout," said Ron Pollack, executive
director of Families USA. "These are people who simply can't afford to
pay for health coverage with their modest paychecks."...

The significance of such statistics is sometimes questioned.
 Some will say that it is misleading because many of those
without insurance are uninsured "by choice."  Yeah ... they
had to choose between buying groceries, and buying insurance.
 I guess that's a choice.

Finally, on a more philosophical note, it is important to recall what
government -- and government spending -- is for.  National
security is a legitimate function of government.  Protecting
the health of the people is a part of national security.  This
relatively modest expenditure will save a lot more href="http://en.wikipedia.org/wiki/Quality-adjusted_life_years">quality-adjusted
life years than could be saved of the money were directed to
the military.  It will also contribute to economic growth,
without increasing inflation.  Military spending is profoundly

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The federal government is the most inefficient, ineffective (Katrina response, social security, medicare, medicaid, immigration) organization in the country. I have not heard a good argument yet for putting more responsibility in their hands and putting them in charge of my physical health.

Rudy said it best: "If we socialize medicine, where will the Canadians go for health care?"