Debate continues on state budget, health care reform

As September reaches its midpoint and we adjust to the chillier Pennsylvania weather, two apparently unrelated stories carry the same theme. The debate seems to go on forever and answers may depend on the numbers.

One is Pennsylvania’s state budget, which appears unrelentingly mired in disputes. It should have been passed by July 1. One day before Mayor Nutter of Philadelphia was to send notices implementing “Plan C,” the doomsday scenario laying off police officers and other city employees, the legislature approved an additional 1 percent sales tax for the city, raising Philadelphia’s total sales tax to 8 percent but preventing shutdown.

The budget problem is not over for the rest of the state, however, and service providers for multiple social service agencies have been forced to lay off employees or place them on extended leave. We understand at the time of this writing that the commonwealth is close to approving a budget.

The second is potential health care reform. As health care reform is discussed, it becomes clearer, to me at any rate, that the answer, as with the Pennsylvania budget, could lie largely with the numbers.

The U.S. Senate Finance Committee, chaired by Max Baucus of Montana, has apparently taken the much-discussed “public option” off the table and has considered health care cooperatives set up by consumers as an alternative. The result is that others have backed away. Only Baucus is left endorsing his plan, with liberals complaining that it does not go far enough and conservatives complaining it goes too far.

One positive development in all of this for both the Pennsylvania budget and health care reform is that, despite the chaos, people are openly discussing priorities and choices which, speaking as a former social studies teacher, is what is supposed to happen in a democracy. However, as to the budget, real people are being harmed now. The time for talk should have been over.

I wanted to know how organizations that I respect discuss health care reform and, in my research, discovered an eye-opening article from the president and CEO of one of the most respected health care organizations, the Kaiser Family Foundation. What it says, briefly stated, is that the cost of health care insurance now is equal to some of the highest items in our budget such as, for instance, buying a new car every year or paying annual rent. If increased cost continues as it has, the number in 10 years will be almost beyond belief. The article, “Simple Arithmetic,” by Drew Altman, analyzed Kaiser’s annual benchmark survey of employer health coverage and costs. Sections are quoted below.

“This week we put out our (Kaiser Foundation’s) annual benchmark survey of employer health coverage and costs. Two numbers jumped off the pages.

“The first number was the average cost of a family health insurance policy in 2009: $13,375. To put that number in context, if you are an employer, you can hire an employee at the minimum wage for about $15,000 per year. If you are a consumer, you can rent an average two-bedroom apartment nationwide for $11,136 per year. … You can also buy a new Chevy Aveo for $12,000, and it gets 35 miles per gallon on the highway.

“The other result that jumped off the page was the stark contrast between increases in health insurance premiums and overall inflation in the general economy. Premiums went up 5 percent and prices overall fell 0.7 percent …

” The 5 percent increase we found in premiums is moderate by long-term historical standards. … (O)ver the last 10 years premiums have increased by 131 percent while wages have grown 38 percent and inflation has grown 28 percent …

“Let’s do some very simple arithmetic … If we assume that premium increases over the next 10 years will average what they did over the last five … the average premium for a family policy in 2019 will be $24,180. That’s a big number. On the other hand, if we assume increases revert to the average of the last 10 years — an average annual increase of about 8.7 percent and a very plausible scenario — premiums in 2019 will average a whopping $30,803, a very scary number …”

The reason many of us do not recognize the cost is because, except for the self-employed and those employed by small employers, an employer picks up the cost for many of us. Altman does not advocate health care reform specifically but notes that knowing how the numbers will work is critical to decision making. See www.kff.org.

About the Author Janet Colliton

Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.

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