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Healthcare premiums make no sense. Let’s quickly run through why. #ableg
From the gov side, they are expensive to administer. An increase to an existing tax has a small incremental cost of administration. Adding a whole new fee means a whole new bureaucracy to run it.
For citizens, it’s regressive. People on the low end of the income scale have to pay the same as people on the high end, which is much larger burden on the poor and middle class than on the wealthy. It takes a bigger percentage of their total income pool.
A big annual charge is the worst way to hit people up for cash. It’s difficult to budget for. This is the compelled version of the Sam Vimes Boot Theory of Economic Inequality.
(This is from Sir Terry Pratchett’s Discworld books, which note that $50 will buy a good pair of boots that lasts years, but $10 will buy a crappy pair that lasts months. If you only have $10, you end up spending more on pairs of crappy boots over the same period)
Yes, there were exemptions to the premiums if your income was below a certain threshold. But that comes with its own issues.
First, if the exemptions have to be applied for, some people won’t be aware of them even if they are eligible. This is particularly acute for marginalized groups such as people whose first language is not English.
Second, depending on the amount, it can create a welfare trap. That’s when a hard income cut off for benefits ends up being a disincentive for increasing income because the loss of benefits outweighs the income gain.
So why would anybody do this, then? Oh, because it doesn’t have the word tax in it, and small-gov-low-tax conservatives can claim it’s not one. Surely we all know better.
What about the argument that it makes people value healthcare more? I would be surprised if the research bore out that low income people, who bear the greater burden of a premium, are “abusing” the healthcare system.
For one thing, if you’re working your tail off to keep your head above water, you don’t have time for unnecessary appointments.
And if a societal misunderstanding about what does/doesn’t warrant a doc is an issue, surely it would be more equitable, less costly, and have better outcomes to a) provide more options for ‘minor’ issues, like NPs. B) educate the public. And C) FUND MENTAL HEALTH CARE PROPERLY.
