Concerns regarding “unaffordable” healthcare boil down to two aspects — monthly premiums to maintain the health insurance and out-of-pocket payments to receive healthcare services.
Undoubtedly, the premium hikes are outpacing every index of inflation while the coinsurance percentages are dropping like flies. Meanwhile despicable insurance practices such as kicking up brand drugs to a higher tier continue every year. Most recently and egregiously patients taking Truvada for PrEP found out that the copayment for a lifesaving medication would rocket from $100 to $800 a month (i.e. exactly what is scheduled to happen with Gilead Sciences’ see the example of Truvada for PrEP, which Mr. Yang coincidentally Tweeted about late last year).
Nevertheless, federal law has set the upper limit — the out-of-pocket (OOP) max — that individuals or families would pay if covered by marketplace health insurance plans. For year 2020, a conventional private insurance OOP max is $8,200 for an individual plan and $16,400 for a family plan. This limit is mandated by law, which means that once you pay this amount within the plan year for healthcare services, all subsequent covered procedures, services, medications, and doctors’ visits become effectively “free” for the plan holder as they are required by federal law to be 100% covered by your insurance.
With the soaring cost of healthcare, “deductible” and “co-insurance” have essentially become illusions; just additional confounding factors in the whole healthcare cost equation. Because, to be cynical at the very least – and god forbid – if any major medical condition were to happen to any individual nowadays, just be prepared to hit the OOP max from the get-go.
With all that being said, everyone should just pick the plan with the lowest monthly premium. And bully for us, most of the time such a plan is a Health Savings Account Compatible (HSAC) plan with — the mandated OOP max actually set lower than a conventional plan. For year 2020 such a HSAC plan’s OOP max would be $6,900 for an individual, compared to $8,200 for a non-HSAC plan.
With the current marketplace individual insurance rate, the monthly premiums range from around $300 to upwards of $600. Let’s view my insurance plan for example, the Blue Cross Blue Shield Texas HSAC individual HMO. My premium is $350/month. if anything were to happen to me (knock on wood) I would have to prepare to spend $350 times 12 months, plus $6,900. That is the sum of premiums for a year plus the out of pocket max.
And the magical number is — drum roll— $11,100!
Andrew Yang has proposed the “freedom dividend” of $1,000 per adult American per month, that is $12,000 a year. What a joyous coincidence! This would cover the two aspects of current “unaffordable” healthcare system on an individual basis — monthly premiums and out of pocket payments to the worst case scenario of reaching OFP max.
Hey! The government is legitimately paying for my healthcare!
Without making a chaos, the “Yang Dividend” could factually provide healthcare for all.
Mind you, I am not here to argue the feasibility of Universal Basic Income (UBI). This is only my take on how Yang could potentially solve the healthcare cost conundrum. I am not factoring in the inflation of such “free money” to all might cause, or how it might burden the taxpayers (though Mr. Yang has spoken about for many, many, many hours in the couple of years since he started running). I am fairly certain that if UBI were to become a reality there will be more regulations and choices for American people in that regard (e.g. use it as a tax deduction option for people with higher income). After all, the standard deduction for someone filing as single and dependent-free is $12,200 for FY 2020. Who is to say this is not our current limited version of a “freedom dividend” already?
https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/
https://thelink.ascensus.com/articles/2019/10/16/hsa-eligibility
https://apps.irs.gov/app/IPAR/screen/IPAR_1/en-US/summary?user=guest
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