Latest / The Health Care for All Podcast / EP6: Deep Dive into the Draft Universal Health Plan || Part 2: How Much Will It Cost?
Transcript
- Collin Stackhouse: The preliminary analysis shows most individuals will pay less for their healthcare under a universal health plan, and most businesses would also pay less in healthcare costs for their employees. Let's talk about the cost and the funding for this new universal health plan. So I'm gonna read the governance board's introduction for those following along at home. I'm at the bottom of page seven, something that's confusing, convoluted, and currently kind of a quagmire. This lays out a potential boardwalk lifted above the swamp, What do have to say about it? Rebecca Schoon: This is the part that everyone has been waiting for us to get to. How much is it gonna cost? How do we pay for this? so we're gonna go over these numbers. Some of them involve big scary numbers, but we're gonna help put it in context for everybody. Collin Stackhouse: One of the things that I like to say when talking about a universal healthcare system people that the current system we have in the United States is the most expensive option on the planet. So if there are changes in how the money is moving around, just know that we're moving from the most expensive option that any country has ever found ever. don't wanna say it's impossible. I suppose we could really screw it up and find a way to pay more, but I don't think we can considering we're the most expensive country out of the 200 countries that exist on the planet currently. Rebecca Schoon: on. The only way we could figure out how to pay more is if we maintain the current system because are no cost controls and we've seen it continue to get more expensive. Collin Stackhouse: So this is how the governance board introduces this kind of thorny topic. A universal health plan would enable all those living in Oregon to have health care coverage, regardless of whether they have a job or how much they earn. Instead of private insurance companies, health care would be delivered through a unified financing system. The preliminary analysis shows most individuals will pay less for their healthcare under a universal health plan, and most businesses would also pay less in healthcare costs for their employees. Rebecca Schoon: That is the most important headline here. We're going to dive into these individual numbers, but again, most Oregonians are going to pay less and businesses will save too. Collin Stackhouse: so preliminary analysis of total cost to deliver the recommended level of benefits to everyone in Oregon. So we're talking those PEBB benefits, the Public Employee Benefit Board benefits, the same thing that our legislators have, the same thing that our governor has. ⁓ The price tag to deliver this to everyone in Oregon would be between 69.7 billion. ⁓ and $76.9 billion per year. But Rebecca, why is that number not so terrifying? Rebecca Schoon: because it's less than what we currently spend. And actually, it could even get better. So this number was based on preliminary estimates that the governance board was able to get. And as they note in this report, they have not finished that work. So for example, there's all sorts of other cost savings that a single payer plan allows. In a different episode, we talked about Costco and Collin, you still haven't been to Costco, have you? ⁓ ⁓ Collin Stackhouse: No! I get it. What's the hype? Rebecca Schoon: All right. So as we talked about at Costco, you save because you're buying in bulk. Well, that's what the state of Oregon could see if we're buying all the medication at once, we get to save money. Those savings have not yet been incorporated into this plan. So all the numbers we're about to share are kind of like worst case scenario, which again is still better than the current scenario, But I would predict that we can expect these numbers to even go down. So let's see what these look like. Collin Stackhouse: So there's quite a few tables that compare individuals and families in different employer situations, different levels of income, and different insurance categories comparing the status quo, what they're paying today, to what they could potentially be paying under this new universal health plan for every person in Oregon. The first table that we can see is individuals with employer-provided health insurance. So for somebody making $35,000 a year, their current cost is around $2,800 per year. This does include premiums, copays, coinsurance, and deductibles. But still $2,800 when your income is only $35k is a lot. In this new universal health plan proposal, the cost for that individual will be $0. And the same would be true for an individual making $55,000. In the status quo, they're paying around $3,000 per year. But in this new universal health plan, an individual person making 55K would also be paying $0. Rebecca Schoon: Right, and for someone making $75,000, they're could save almost $2,000 a year. right now they might be paying around $3,300. That could go down to about $1,100. Also up to $100,000 someone is still saving. So average cost now again about $3,300 that drops down to $2,500. to individuals, so again, not anyone with kids, a single person who's making $150,000 per year, their costs might go up. So the current cost is about $3,300. Under this proposed plan, around $5,400 per year. But again, for incredibly comprehensive set of benefits that they're likely not getting now and with no deductibles, no copays, no additional costs, and prescription drugs covered under this plan. Collin Stackhouse: And I think there's no price tag to put on peace of mind for knowing that do you have the coverage? You certainly do. Will I be kicked off if I'm laid off from my job? No, you will not. Rebecca Schoon: especially in this age of AI induced layoffs, a lot of people don't feel as secure in their jobs as they did even two or three years ago. But under this plan, at least you never have to worry about your health coverage. Collin Stackhouse: into these numbers, somewhere between an income of $100,000 a year and an income of $150,000 a year is where it switches, where it goes from very clearly more cost effective to have universal health care to potentially costing more but not really taking into account the peace of mind and also the change in service that we would experience in this shift. Rebecca Schoon: And keep in mind, these are averages and every employer sponsored health plan is so different. So what we really encourage you to do is go look at how much you're actually paying with your monthly premium. You have to add in your deductible. So do you have to spend $3,000 before any coverage kicks in? What are you on average paying for prescription drugs or copays or coinsurance every year? So that is your current cost per year. And a lot of people making $150,000 are spending more than what's listed here So use these numbers as a guideline, but everyone's situation might be different. And just a little foreshadowing, Healthcare for All Oregon is working on a calculator where you're going to be able to go in and put in your specific income, what you currently pay, all the other details to get a real sense of what you would be paying. Collin Stackhouse: Right, switching to households, so the next table in the document talks about a household with a family of four, that line where potentially people are paying more in the new system, That threshold is somewhere below $250,000 per year for that family of four. So in the status quo, somebody with $250,000 income currently is probably paying around $10,688 per year. In this new system, that high earner, $250,000 a year, may be asked to pay $11,759. So I don't know about $1,000 more, again, no copays, no deductibles, peace of mind, et cetera. For people who are making less than that income in that family of four, the example in the table is an earner of $150,000. Their status quo is currently paying around 10,600 in this new universal health plan. That family of four, that earner would be contributing $4,600 to this new universal health plan. Rebecca Schoon: so we're going to have a future episode where we really break down these numbers. We will talk about the different tax credits they're applying. We'll show you the mechanisms behind those numbers. Get into the real guts of the plan. Okay, so on the next page nine, now we're gonna shift to people who are buying health insurance on the ACA marketplace or the exchanges. So these are people who are probably self-employed. They're not getting health insurance through their employer. Now, one important note. On this page, page nine, the current costs per year do not include out-of-pocket spending. So these current costs per year do not include deductibles, copays, coinsurance. On the previous page, the numbers we just went over, they did. But because ACA plans vary so widely in terms of out-of-pocket spending, this is just basically your premium costs. So the difference between the current cost per year and the universal health plan cost is actually going to be wider than what we are going to present. Collin Stackhouse: That's, I would not have noticed that and it's good. I mean, it's clear on the document, but it's not intuitive. So thank you. Rebecca Schoon: Gotta read the fine print, yeah. for someone making $35,000 per year, current cost is estimated to be around $2,500. That's going to plummet down to around $300 a year. Again, for that comprehensive plan we described. Let's say you're making $55,000 a year. Current premium costs might be something like $5,500. Now you'd only be paying $2,300. When we get to someone making $100,000, that's where we see the cost savings kind of diminish. So in this model, current cost is estimated at $6,000 a year. Under the universal health plan, you might be paying $6,800. We see that rise even more for an earner making 150,000 current cost estimated 6,000 becomes close to 12,000 under the universal health plan Now that might seem a lot, but again, if you go back to that current cost and add in the thousands of dollars for deductibles, copays, coinsurance, prescription drugs, That difference is going to decrease a lot. Collin Stackhouse: I love figuring out that line, like the line of where people would potentially be paying more. And in this individual, that line was close and $100,000 a year that potentially they'd be paying more in their premiums, but again, not accounting for the coinsurance deductibles. That line for couples and also for families of four under this ACA coverage is at a higher threshold. So in comparing the status quo for a couple with that Obamacare, marketplace insurance coverage that they shopped around for at around $200,000. There is still this cost savings in the projected universal health plan, but instead of paying the status quo of around $21,000, in this new system, this couple making $250,000 a year would be paying close to $22,000, right? So they're paying about $1,000 more. For a family of four, that threshold is easier to see 195K and 250K. it goes from the status quo payment of around $22,000 to 22,500. Rebecca Schoon: And I'm just gonna beat this dead horse one more time because it's so important. And even those $250,000 households are probably saving once you add in that deductible. All right, so what about Medicare? So we already talked about how some people on Medicaid were worried about losing benefits. That's not going to happen. But what about people on Medicare, Collin? Collin Stackhouse: the easiest way to describe this system that we hope is implemented is that it would be like a wraparound, right? So one payer that is compensating the providers and covering everyone in Oregon, including those Medicare patients. So instead of any payments going through Medicare would now go through this new universal health plan. And on the backend, the universal health plan administration would be reallocating those Medicare dollars and making sure that they are appropriately billed on the federal side for these patients that have this Medicare coverage. Rebecca Schoon: there are several people on the governance board who are currently Medicare beneficiaries, so we just want to assure everyone that that the interests of people on Medicare are being taken into account. so when you're looking at these tables on page 10, the important thing to note is that this first column talks about Social Security Income. So none of that income is taxed. Now we're gonna go into the actual tax structure in a minute, so just Collin Stackhouse: Woo! Rebecca Schoon: put a pin in that But none of the Social Security Income is taxed. So when you're looking at this top table, someone is making $50,000 through social security. Let's say they also have another income source that brings in 50,000. It's only that other income of 50,000 that is being taxed to fund their health insurance. And they're also going to get a tax credit for the amount that they pay to Medicare Part B every month. So what does this look like? The cost per year for someone who's making 50,000 is ⁓ currently around 9,000 to ⁓ be on Medicare. ⁓ That would drop to roughly 4,000. ⁓ So this table's a little more complicated because not only are we seeing ⁓ different social security incomes estimated, ⁓ so that's a changing variable. We also see this other income variable changing. So really, we just encourage you to come and look at the report yourself. the hypothetical incomes listed on this table, we only see individuals paying more than they currently pay once you're getting up to incomes of over 220,000. Collin Stackhouse: for a couple with Medicare Supplemental, so not a Medicare Advantage plan. It looks like that threshold where people potentially start paying more into this new universal health plan system be after a total income of around $300,000. so the status quo for that couple on this Medicare Supplemental plan with their 70K of Social Security, their 230, thousand dollars of other income They're currently paying around 16k in their Medicare supplemental cost. They could potentially see their overall cost rise to 20k for this universal health plan. But again, no co-insurance, no co-payments, no deductibles, et cetera. Rebecca Schoon: And just to go back to that simplicity piece everyone I know who turns 65 is so confused by their options. The part A, B, C, D, Medicare Advantage versus traditional Medicare. This is just one stable plan. You know what you're getting and you're getting everything you need every year. no need to navigate these convoluted enrollment processes. All right, let's go deeper into where this money is coming from. Collin Stackhouse: Yeah, one thing that I liked that you said earlier is that the charts, which are good for us patients, people to see what we are currently paying, what we could be paying, it sort of shows us what we'd see on our end, but it actually does not explain how the funding is going to work. so that's page 11 towards the end of this document Rebecca Schoon: So one thing the governance board does at the top of page 11 is it makes explicit the principles behind their funding strategy. So for example, the funds have to be dedicated to the universal health plan. cannot be used for other. projects and neither will it draw money from other projects. The one that I want to bring some attention to because we see this question a lot is the fifth principle, is that they're designed to leverage federal funds. So many people ask about how does this work with Medicare and Medicaid funding? So this plan is reliant on getting what's called federal waivers. And this is permission essentially from the federal government to use dollars that are currently earmarked for Medicare and Medicaid for this system. Now, that's a question mark. We all know it's a question mark. The governance board. has looked at this straight in the eye and they built this assumption into this plan. There are some plan Bs and Cs being floated about, but right now this is the assumption that we're building on. Collin Stackhouse: a factor to know in this discussion about leveraging federal funds is that there's certain timelines to apply for different waivers as a whole state. Likely Oregon voters can expect to vote on this in 2028. And we could expect an implementation of this plan if it all goes according to schedule by 2032, which is quite some time from now, but one of the reasons for that is the schedule, which is a five year cycle of receiving Medicare and Medicaid waivers. And so that's just a factor in that timeline that I wanted to mention. So not pertinent to page 11, but pertinent to this whole work and something for our listeners to keep in mind. Rebecca Schoon: And one last little footnote, this notion of federal waivers, there is precedent for that. this is not as if Oregon is dreaming up a unicorn method to get funding. The federal government has granted waivers for a variety of state-level policies in the past. Collin Stackhouse: So for individuals in this new plan, there would be shifts in how funding works. And the overall goal is to reduce or eliminate cost sharing, reducing or completely eliminating the payment at the point of care. So the first one is insurance premiums. That idea of a premium would be replaced by this potential new T word, it's a tax. Deductibles Rebecca Schoon: You Collin Stackhouse: no longer factor into our discussions about healthcare, neither do copayments, coinsurance or balance billing. What is balance billing? Rebecca Schoon: Right, so that's when you go to the hospital or go see a doctor, get treatment, you give them your insurance card, and then a month later, you get a bill you thought this was a covered procedure. So we also call it surprise billing. Some states have tried to... make it illegal. But it's one of those things that cause so much stress and concern because you have no idea how much this treatment or care regimen is going to cost. And you do just get surprised. So no more of that. It's all stable and predictable in terms of the tax. It's a tax, everyone. We're going to talk about that. One thing I want to say, know, cost sharing, point of care, some of these more jargony terms. What we are saying is that you've heard of this happening in other countries. Imagine you get a diagnosis, a cancer diagnosis, you have to have heart surgery. You go in and get the care, you pay nothing at the point of care. You've already taken care of it through this one ⁓ tax ⁓ that you're going to pay, for all of your care. There's no concern about whether you need labs or whether it's out of network. the idea is to eliminate most or all of your healthcare spending beyond the tax. Collin Stackhouse: So that sounds great for you and me, but let's talk about what employers could see in this new system, Rebecca Schoon: I love this one because everyone's always saying, this is going to drive businesses out of Oregon. So right now, if your business that is offering health care to your employers, You have to dedicate considerable staff time to researching different plans and all of a sudden seeing premiums rise and having to somehow absorb that into your budget with no notice. Under this plan, it's stable, it's predictable. It's a 9.6 % payroll tax on any salaries above 500,000 cumulative per year. Collin Stackhouse: Yeah, accumulative salary, right? So not just if there's one person who makes that much. Rebecca Schoon: Exactly. So let's say I am an employer and for all my employees, if I add all their salaries up together, that equals to about $600,000. So that means I would be paying 9.6 % tax on $100,000. cumulative salaries of below $500,000 per year, you don't pay any payroll tax. And all your employees have these full comprehensive benefits that we're going to keep talking about because they're so awesome. Collin Stackhouse: Have you heard that they're comprehensive? Rebecca Schoon: And includes prescription drugs? Yeah. So let's say you are a small business and you don't offer health insurance to your employees. You no longer have to worry about those employees leaving because they have to pursue a different kind of job does offer health insurance. Right now, larger companies, who have to offer health insurance have this built-in advantage Small businesses have suffered in trying to compete with that. That goes away. This levels that playing field. Collin Stackhouse: if it's not a factor in labor unions, like if they're negotiating at the table. If there is a baseline of the best healthcare that the state of Oregon can offer, the same healthcare as our governor and our legislators, provided to every single person in the state, businesses have to compete for you in other ways. So whatever their other benefits are, if they've got some supplemental insurance, if they wanna give you more money, because now everybody's saving money in this new system, it seems reasonable to me to consider this to be beneficial to. businesses Rebecca Schoon: there are some additional corporate income taxes too. So now let's talk about the impact on households, you, me, families. we're going to say a number here and it might cause an initial gasp. That's what happened on this Reddit thread. But this number isn't really real and we'll talk about why. So in the report, they mentioned a 10.1 % personal income tax. this is the important part, Not all of your income is subject to that tax. So everyone gets to subtract double the federal poverty level. Now we're already getting into terms that some people might not be familiar with. There's this thing called the federal poverty level that is decided, every year by the federal government, and it's basically the amount that determines whether you are living in poverty or not. ⁓ So for an individual, it's Currently almost $16,000 a year. Again, if you have no kids. So double that would be close to $32,000 a year. So let's break this down. If I make $70,000 a year, I am not paying 10.1 % income tax on 70,000. I get to take that 70,000, subtract 32,000, which leaves me with 38,000. So the 10.1 income tax applies to just that remainder, so it's an effective tax rate of anywhere from like three to seven and a half percent for most households. The 10 % does not actually apply to anybody. Collin Stackhouse: In this proposal, it says that this threshold of 200 % of the FPL, the federal poverty level, this a progressive tax structure. I've heard people in other organizations in Oregon and also within Health Care for All Oregon talk about how it could be more progressive, Meaning the wealthiest Oregonians could be taxed even more. There's the potential to build that into a system, not in the proposal that's being put forward today. Rebecca Schoon: And if you think they should, again, that's feedback you can give to the Governance Board. Collin Stackhouse: And eventually to your Oregon State Legislator. Rebecca Schoon: Now let's talk about one other big important thing. So remember when we looked at those tables and people who were buying insurance on the marketplace had much different numbers in terms of what they'd be paying compared to people who got health insurance through their employers? Well, the main reason for that is this built in employer payroll tax credit. This is another thing that's come up on social media. Some people have said, you know, do you really think that employers are going to give employees their monthly premium back. So again, let's say you work for a big company, you get insurance through them. If you look at your pay stub, your W-2, you see this monthly amount that you pay that gets taken out of your paycheck to go to your health insurance. The idea that employers will just say, hey, I'm going to send you that check. Some people don't believe they would. Well, the governance board agreed with you. So they built it into the plan. It would be structured into the law. that we're not relying on employers to do that. Instead, you'll get a tax credit back when you file your taxes. And the amount will be 50 % of the payroll tax that your business is paying on your behalf. So again, this would be half of that 9.6 % amount. So let's walk through an example. You are making that $70,000. You work for a company that provides its employees health insurance. paying that 10 % on the 38,000 that the tax applies to. But then you're also going to get 4.6 % of your salary back during income taxes. so that will dramatically reduce what people are paying who are, that premium taken out of their Collin Stackhouse: this is confusing, but I do appreciate how the governance word is outlining these things in layman's terms I see that overall most Oregonians will be saving money. I see that there are built in protections for individuals. to reap the benefits both of this new system and also the benefits from this new cost savings that the state of Oregon could work towards. Rebecca Schoon: Yeah, and Medicare beneficiaries also get a tax credit. So that monthly amount they pay every year, they get 100 % of their Part B payment back as a tax credit. the governance board is making sure that no one's paying these extra unintended penalties. Collin Stackhouse: Nice.