Last week I wrote about my recent IRS audit (which went well).
What I did not dwell on was one of the topics they wanted to cover – my health insurance premiums.
The tax year in question was 2013. I dutifully obtained copies of my insurance premium payments and presented them to the agent. For half the year I paid $654 per month, then my premium increased to $748.
That’s a 14.5% jump in one year. It annoyed me at the time, but nothing like the anger I felt when I saw those numbers during my audit.
In the scant two years since 2013, my premium has increased from $748 to $1456, a 95% increase in two years.
To be sure, I don’t have the same coverage.
Today, I have less. In two weeks, it will get worse.
My health insurance provider wrote to me with the “good news” that I could continue my coverage for only $2,008 per month, a mere 38% increase in one year.
This would put my premium change from 2013 to 2016 at 207%.
That seemed a bit much to me, so I spent some time on the Healthcare.gov website, doing my personal duty of “shopping” for healthcare.
I found a plan that provides even less coverage (which means more expensive to use), but costs “only” $1,393 per month. While less than last year, it’s still more than double the cost from three years ago.
The kicker is, I’ve never had claims that rose above my premiums, so every year the insurance company is making a profit on me.
I understand how insurance works. I’m not angling to get into a car accident or contract a disease just so that I can make claims. I’m happy paying for this and not using it to the extent of my premiums. But I would be happier if the rates weren’t shooting to the moon each year even though my claims aren’t.
As written the law calls for everyone to get insurance, and those unable to afford it will get a subsidy. At first glance, it might seem logical that the subsidy would go to those below the middle in terms of income and cost of insurance. But that’s not the case.
It’s the bottom 90% that get financial assistance, which comes from the other 10%. Since about 30% of us get health insurance through the individual markets, that means 3% of Americans are propping up the system.
We need a union.
Right now this small group of people, which I presume to be mostly self-employed, are fuming over their premium increases for 2016, and yet we have no outlet.
It’s because we’re not organized. If we had proper representation, we could get some relief. The example of how this would work is the famed “Cadillac Tax,” which was supposed to ding high benefit plans with a 40% tax, but is quickly on the way to the trash heap.
Starting in 2018, the Cadillac Tax was designed to tax health insurance plans that cost more than $10,200 for individuals and $27,500 for families.
But a funny thing happened as we closed in on the start date. Legislators started getting calls from groups about how the tax would hurt them. In particular, the United Auto Workers and American Federation of State, County and Municipal Employees were appalled to find that their health plans would be snared by this tax burden.
Surely there was something that Congress could do? Of course there was.
In the latest spending bill, Congress threw financial restraint to the wind. They simply granted every request for increased spending and tax cuts, with zero regard for the overall budget.
Sure, there was teeth-gnashing and tearing of cloth, but the end result speaks for itself.
Among the taxes left on the operating room floor was the Cadillac Tax. It will be “delayed” from 2018 to 2020, which pretty much makes it dead on arrival.
The tax was meant to do two things – prod groups to curb their health spending, and raise money to help subsidize the 90% purchasing plans in the individual market. Now, neither of those things will happen, leaving the general taxpayer and the 3% to pick up the tab.
At the current rate of growth, all of us will need a subsidy in a few short years. What do we do then? We could start our own union. We could call it “American Citizens United,” and demand that our legislators take our demands seriously – curbing spending and cutting out favoritism in the tax code.
Of course, this has already been tried. The United States was created “to form a more perfect union,” and we use voting to make our voices heard. We get another shot at it next year.
For some reason I’m not getting my hopes up as to the outcome. I think this time next year I’ll be writing about the same thing, just with higher numbers.
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