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Are You Subsidizing Health Care Subsidy?

As an insurance agent, specifically for this blog, health insurance; I am inundated with information regarding health care costs and questioned about the tax and cost implications thereof.

From a statistical perspective, or in the insurance world, actuarial statistics- the increase in health care costs are directly influenced by the increase in risk.  In other words, the fact that people are no longer underwritten for health care policies for certain risk groups, increases overall health care rates and costs…enter the US Government.

Because of Health Care Reform and the increase in overall health care costs, the financial burden is ultimately put on the US taxpayer.  Now, let me be clear:  It is a good and noble thing to provide health insurance to those previously not insurable because of Pre-Existing Conditions.  It is also a good thing there are no Lifetime Maximums on health insurance policies.  The converse to that situation is the actual cost of care increasing…enter doctors, hospitals and the health care field.  Does an aspirin really cost $8.00?  This view was expressed many years ago when Government Contractors were known to charge an excess to the actual cost of an item, hence a hammer costing $200.  Now, we all know a hammer does not cost $200, but as “consumers”, we have allowed this price gouging to continue, and ultimately we pay the price…enter Legislation to make health care “affordable”.  The Affordable Care Act was put into place so the American people could afford to pay for their health care; Health care that has increased overall for everyone.

The FPL, or Federal Poverty Level is a threshold by which the Affordable Care Act institutes subsidy levels, due to the increase in health care costs.  Interestingly enough, the FPL cut off for subsidies is <138% and >400%.  In the State of Tennessee, this leaves a large burden on the State to fund, through Medicaid, the remaining population under 138% FPL.   This population is not eligible for Federal Subsidies.

When we think about targeting a population and placing responsibility for actions, we can point the finger at ourselves and the actions by which we have allowed our system and our “representatives” to fund the overall increase in health care costs.

Photo: Humberto Moreno 

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