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I'll Have the Red Pill

Well I still don't have gas and my high-speed internet won't be installed until tomorrow, but my hair looks great, thanks for asking. The dogs are doing well -- carsick-prone Katie staged a bloodless coup for the front seat while we were on the road. She's only 40 lbs. but she managed to terrorize the other two much bigger dogs into ceding that prime piece of auto real estate. She was all hopped up on Dramamine and never quite went to sleep, just sat there drooling with heavy eyelids while her head bobbed up and down, kind of like you'd imagine Peggy Noonan looks like when she's writing. And probably when she's not, come to think of it.

Boy, you're out of the loop for a couple of days and it seems like years. I see Dick Cheney and Karl Rove are still evil, and nobody has yet burned them at the stake, tragedies both. The Power Tools are taking umbrage at Liberal Hate Speech. Well chew on that, you chickenhawk bastards.

I'm going to try to spend some time on health care over the coming weeks -- I always say stuff like that and then things start happening and my best intentions get hijacked. But I thought I'd start off by pointing to Hale Stewart's excellent article on the healthcare crisis, and what the spiraling costs mean to middle class Amercians:

In a recent CBS news survey, 28% of the respondents stated health care was the most important domestic issue, making it the number one main concern of Americans. Clearly, this is on the public's mind. However, no one is addressing their concerns.

To explain why Americans are so concerned about health issues, it's important to see the effect of health costs on the average American. To do this, I will use two hypothetical families and trace their financial condition for the last 5 years.

Family 1 is a single person who made $36,000/year in 2000. He takes two prescriptions daily and his family has a history of heart disease, although these have not manifested in this particular person.

Family 2 have a husband, wife and 2 children. Their combined income was
$50,000/year in 2000. Everyone is in good health.

For the last 5 years, their wages have barely grown. According to the Bureau of Labor Statistics, the average earnings increase from 2000-2004 was 3.86%, 3.22%, 3.12%, 1.71% and 2.39% respectively. However wages have to be compared to inflation to determine the real rate of wage growth. For the same years, annual inflation was 3.4%, 2.8%, 1.6%, 2.3% and 2.7% respectively. When inflation is subtracted from wages, overall wage growth becomes .46%, .42%, 1.52%, -.59% and-.31% respectively for 2000-2004.

Therefore, family 1 who started in 2000 with $36,000 now makes $36,538.37 and family 2 makes $50,747.73.

According to the Kaiser Foundation, the average annual cost of medical insurance for a single person in 2004 is $3627/year and $9813 for a family. Therefore, for our single person, his average annual premium is 9.92% of his annual income. For the family, the premium is 19.33% of annual income.

Think about those figures for a moment. Before any other expense is taken into account, medical insurance is already a hefty expense for both families. However, their respective problems don't end there. According to a USA Today article (Medical costs prove a burden even for some with insurance): "Some employers are embracing high-deductible policies -- requiring workers to pay $1,000 or more a year in expenses before insurance kicks in. Such policies are also common for the self-employed, who buy their own insurance, because premiums are generally lower."

In other words, their respective annual or monthly insurance payments don't represent either family's total out-of-pocket medical expenses. Suppose both families have a higher deductible policy to lower their costs. If that deductible is $1000, then health costs increase to 12% for the single person and 21% for the family.

Compounding these problems are the higher than average wage growth increase in insurance premiums. According to the Kaiser Foundation, the average annual inflation adjusted increases for insurance premiums for 2000-2004 were 5.9%, 8.5%, 9.1%, 6.1% and 5.5% respectively. Compare this increase with the after-inflation increase in wages for each of those years of .46%, .42%, 1.52%, -.59% and-.31% respectively.

Up until now, I have focused on premiums. Another important component of health care is prescription drugs. As with premiums, escalating costs are deleteriously affecting the average American. According to a Health System Change study titled Tracking Health Care Costs: Declining Growth Trend Pauses In 2004, spending on prescription drugs increased 14.2%, 13.5%, 13.1%, 8.9% and 7.2%. Finally, According to a Health System Change study titled An Update on American's Access to Prescription Drugs: "In an effort to control rising prescription drug spending, health plans started using formularies more aggressively and increasing patients' out-of pocket payment requirements."

Putting all the above facts together, we get this picture: Assuming a health plan has a prescription drug component, people are increasing spending on prescriptions at a rate that is growing faster than their annual inflation-adjusted wage increases. This is on top of the increases in their premiums and total out-of-pocket expenses caused by higher-deductibles.

So where does all of this information lead? To bankruptcy. According to a recent study by Harvard University:

"To investigate medical contributors to bankruptcy, we surveyed 1,771 personal bankruptcy filers in five federal courts and subsequently completed in-depth interviews with 931 of them. About half cited medical causes, which indicates that 1.9-2.2 million Americans (filers plus dependents) experienced medical bankruptcy. Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11,854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick."

Having insurance is no help in preventing bankruptcy. So the heavy increases in premiums, prescription drugs and overall medical spending lead to half of the people declaring bankruptcy to do so for medical reasons.

As I've said before, I believe the best chance for booting the kleptocrats from office will happen when people start wising up to the fact the bill they are being handed is just too high, both personally and financially. Yet the entrenched lobbying muscle of the health care industry makes it incredibly difficult to maneuver around -- one of the reasons the Clinton health care plan went down in flames is because in trying to accommodate all these special interests, it became unwieldy and extremely difficult to explain to anyone.

It still amazes me that for all the burden health care costs place on working class people, they are not even tax deductible in any meaningful way. And one of the ways BushCo. hoped to pay for the war in Iraq was by eliminating the business tax deduction for employee-sponsored health insurance, as well as eliminating the deduction for state and local taxes, which it estimates would raise nearly $926 billion over five years, according to the WaPo. If Newsweek should've known its story on the Koran would provoke riots in the Middle East, any idiot should be able to predict armed insurrection at that kind of insultingly regressive taxation.

Don't forget, George. Thanks to your beloved NRA, those fuckers are armed.

posted by Jane Hamsher @ 6/26/2005 04:43:00 PM