Thursday, December 17, 2009

Your premium is a tax, get over it

For all y'all out there (I can use that expression because I live south of the Mason-Dixon line, but feel free to disagree) worried about healthcare reform and your taxes, I've got news for you. You know that premium you have to pay to private business in order to secure coverage (well, hypothetical coverage) in the event that you become sick? Hey, you might as well realize, that "premium" is really a tax.

Here's why. In the absence of a single-payer system, in which taxes and co-pays and other funds are taken in, supplemented by other government monies, and then distributed in the form of payments to doctors, hospitals, and labs (with minimal administrative overhead), we pay premiums to insurers. What is insurance? Hypothetically, it's a fee you pay to a private third-party to protect yourself against some sort of catastrophic loss. The insurer gets to make a profit and promises to protect you per the terms of your contract. You don't necessarily get anything for your premium payments in the short term (life insurance is the clearest example), but if the worst happens, Nationwide or Mutual of Omaha or some comforting corporate entity will be 'on your side.'

Ha. That's not true of health insurance, as we all know. You pay your premium to your health insurance company, dutifully, resentfully, hell-I-don't-know with what emotional timbre, and you think that if you really get sick, Blue Cross Blue Shield is really gonna be 'on your side.'

Um. no. BCBS is going to figure out whether whatever medical treatment you need is actually in your contract (one), and then (two) will try to figure out if there's any way they can wriggle out of legally paying it. Much of the time, they pay for it, but if it's expensive, they're going to pay their people (with your premium dollars, by the way) to figure out how to keep you from getting it. And even if they do pay for it, you'll be surprised at how much of the treatment is covered under the 85/15 rule (sometimes 80/20 or 70/30), which is when you pay 15% of the contracted rate with the provider (the contract rate is lower than the retail price the medical provider charges). If your treatment costs $10,000 at the contract rate, you do the math.

And as I've said repeatedly on this blog, 'medical necessity' has nothing to do with it--you're leading a life of delusion if you think that your insurance company will pay for anything medically necessary to save your life. It's all about the contract, stupid. And try to read your insurance contract and see how far you get.

So what is your "premium" really? Are you buying a service with guarantees? What about all the years you spent paying that damn premium? The thousands of dollars you poured into BCBS' coffers, expecting that when you needed care, you'd have it? Your premium is not insuring you against catastrophic loss! Your premium is just a TAX. YES, A TAX. A tax levied by private business. Because that's what taxes are--they pay for things from which you may or may not benefit, and you have to pay them, even so, or face a penalty.

And you have to pay a whopping tax to your insurance company every month. Some people only pay $300 for a family plan. I pay $600. People who don't get insurance through their employer pay $1,000 or more. Do you think the government will tax you a thousand dollars a month for healthcare? Really?

Where do these insurance premium "taxes" go? Don't you want to know? Are they paying for sick people you don't know and don't care about? Are they paying for the treatment of diseases of which you disapprove (like gonorrhea or AIDS or lung cancer of smokers or drunk drivers with spinal paralysis or the pregnancies of unwed mothers)? Are they being paid to high-salary private industry bureaucrats? Because how much insurance company tax do you pay every year? And what do you get?

The bill that's about to pass the Senate will tinker around the margins with fairness, and it will help to provide coverage for some people who don't have it. BUT. It's not going to do anything to reduce the high premium "taxes" you have to pay to your insurance company. And if you lose your job tomorrow, you're still going to have to buy health insurance from a private insurer (it will be the law), but it's going to be a higher premium than you were paying through your employer (guess what! you have to pay both the employer and employee shares now in your premium). And, you don't have any money!!!

That's right, that's what we're getting: no consumer protections, legal requirements to buy high-cost private insurance (whether you can really afford it or not), and no guarantees that medically necessary treatments will be covered under any given plan. That thing you heard about no lifetime caps? Made meaningless because the Senate will allow annual caps--which means if you develop an illness expensive to treat, it doesn't matter that you paid those premiums, you're still going to be cut off and left holding the financial bag. Oh, and one more bit of advice--you DON'T GET the contract rate once you max out; you have to pay retail.

For example, right now I pay a $600 monthly premium to my insurance company, but the items Robert needs that are medically necessary and are not covered plus the 15% copay on his enteral feeding supplies (which is how he consumes food) run us a total of $500 to 600 per month on top of the premium. And I have the 'same plan that members of Congress have.' I would be better off buying a catastrophic insurance plan and paying for doctor visits out of pocket (they are less than the cost of my monthly premium). But under the proposed legislation, I wouldn't be able to do that. And because Robert has a pre-existing condition, I can't do that now, either.

Get a serious illness? Develop a disability? Welcome to my world. And, yes, a nod to those of you sensitive to the idea of having 'savings' for such events. You can't "save" for expenses of an illness than runs more than 2 or 3 years, or for a lifetime disability. Especially if they impose annual caps on treatments.

I'm with Bernie Sanders and Howard Dean on this one (natch, I'm a Vermonter): not worth voting for.


Roger said...

Of course, once the mandate passes, your premiums will fit the classic definition of a tax -- money the government is requiring you to pay by law.

Elizabeth said...


Another brilliant piece out in the ether that no one will listen to except for little old us.

Lisa Gluskin Stonestreet said...

Thank you for this.