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Wage and salaried employees rarely see the true cost of health insurance. Why should they? It's a benefit, a part of their employment contract. The self employed, however, are well aware of these costs when they pay their premiums and deductibles every month.
Not all of the fifteen million self employed citizens purchase health care directly. Some benefit from a spouse with subsidized coverage through a business or government agency. Nevertheless, they know that they're just a layoff away from the horrors of the direct purchase of health insurance.
Why not allow the self employed to cross state lines to buy less expensive health insurance? Wouldn't this solve the problem?
That's a myth based on massive distortions by the right wing business lobby and the uninformed like Whole Foods Markets' CEO John Mackey.
Mackey's sentiments are shared by the National Center for Policy Analysis (NCPA) of Dallas, Texas in this analysis on Small Business Health Insurance. The study compared health insurance premiums in three "heavily regulated" states (Massachusetts, New York, New Jersey) with three "lightly regulated states" (Michigan, Utah, Wisconsin) and found much higher premiums in the lightly regulated states. New York premiums came to $12,000 a year while Wisconsin's were only $3,000 annually.
This is a shameless distortion. The NCPA comparison leaves out one critical element of health coverage -- the deductible for each of these plans. To obtain any benefit from health insurance, hefty deductibles from $5,000 to $16,000 must be met before the first insurance payment ever takes place. The only benefit found in "lightly regulated" states was to insurance companies by allowing them to quote premiums only without including the cost of deductibles.
The Self Employed Pay Too Much No Matter Where They Live
The graph below shows the claimed benefits of buying health insurance in "lightly regulated" states -- Michigan, Utah, and Wisconsin -- compared to "heavily regulated" states -- Massachusetts, New Jersey, and New York. True insurance costs were calculated for the graph below by adding (a) the cost of the premiums plus (b) the total plan deductible. The pink line represents a basic dollar for dollar comparison. The blue line uses the NCPA figures which show premiums only.
Blue line from NCPA analysis (premiums only). Pink line (premiums plus deductibles) from Insure.Com ("Get Quotes") for the state capitols of each state. Quotes here.
The right wing NCPA analysis (blue line) is entirely misleading since the low premiums in Michigan, Utah, and Wisconsin are offset by very high deductibles ($5,000, $16,000, and $10,400 respectively). For an insured to reach dollar one of insurance payments, he or she must cover costs to the limit of the deductible. Once deductibles are added, the real world costs of health care are higher in the "lightly regulated" states of Utah and Wisconsin than in the "heavily regulated" states of New York and New Jersey. Costs are equal in Utah and Massachusetts.
Mobilize the Self Employed
When your health insurance costs are so high they could buy you a home, you know they're too high. What are the alternatives for the self employed? There are none. If you have insurance, you pay because you need at least some coverage and a hedge against catastrophic expenses. The self employed are trapped and have no viable choices.
The self employed are the ideal group for a strong appeal to support overall health reform and a viable public option. It's a good deal for the self employed and it promotes job creation as well.
The Congressional Democrats and Obama administration need all the allies they can get. How about serious health care reform with a public option. How about actually making an appeal to the self employed? It's not too late.
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