Percent of workers in self-insured companies
From Exhibit 10.1 Kaiser Family Foundation 2008 (p. 162)
Why would companies do this? Because self funded plans save money by cutting out insurance company profits as an operating cost. Self funded plans also provide more control of expenditures. There are no $800,000 a day salaries for plan employees as we've seen at insurance companies.
The underlying premise for the insurance exchange for the uninsured is flawed operationally and factually. So how will people pay for this coverage?
Tax credits! We're told that, "For those individuals and small businesses who still cannot afford the lower-priced insurance available in the exchange, we will provide tax credits, the size of which will be based on your need."
Who will be in the exchange and what can they afford with or without tax credits?
The Distribution of the Uninsured and Total U.S. Population by Income
72% of the uninsured are below the income level required to afford
employer health insurance. Based on U.S. Census Bureau data, 2005 Link
This augmented chart shows an estimate of the income level required for the uninsured to afford a "company insurance plan." Self funded plans covered 54% of those insured (p. 162) at the time this data was collected. According to the study, an individual needs income of 300% of the federal poverty level, $27,000 to afford "employer insurance." A family of four needs an income of 300% of the federal poverty level for families or $57,000 for "employer" insurance. This study didn't presume an insurance "exchange" but the analysis is applicable as a model for answers we need to determine the ability of people to purchase insurance under the president's proposal.
Even if everything worked perfectly for the uninsured, the president said, "This exchange will take effect in four years, which will give us time to do it right." If that's the criterion, do it right, it will take a lot longer than four more years before the uninsured benefit.
With a flawed basis for the exchange, no mandatory participation by insurance companies, no price controls, and a poorer, less healthy "big group," what chance is there that the very limited public option proposed will be "be self-sufficient and rely on the premiums it collects" as Obama requires? What chance is there that private insurance companies will be more inclined than they are today to insure those that they don't want to insure?
What about Medicare?
Medicare is a well liked plan with lower administrative costs, and no requirements for shareholder returns. It's also much less intrusive in care decisions than private insurance plans. But that's not in the cards. The president said:
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