July 14th, 2008
Numbers show Obama plan won't work
Some numbers today to show you how big the health gap is in America.
Democrat Barack Obama has proposed a 50% tax credit to help employers afford health insurance. His opponent, Sen. John McCain, calls this a vague and expensive mandate with a “devastating impact” on small businesses.
Maybe. But the real problem is the numbers don’t add up.
The National Coalition on Health Care estimated the health insurance premium for a family of four, in 2007, at $12,100. This was up 6.1% from the year before, and is likely up again, but we’ll stick with that number for now.
The minimum wage is going up a week from now, to a whopping $6.55 per hour. Earn that for 40 hours every week, 50 weeks a year, and your total pay is $13,100.
There’s your problem. For lower wage workers health insurance doubles costs. Were you to give a minimum wage worker health insurance, that $6.55/hour would immediately become $13/hour. And that’s something most businesses can’t afford.
You can argue that health insurance should cost less, that health care should cost less, but costs are rising worldwide, regardless of the economic system, whether it’s single payer, private insurance, or a mix.
Changing the system does not change cost trends. Costs are now exceeding wages employers can afford. (Remember the fight over getting the minimum wage to where it is now?)
Even if your salary is twice the minimum, health insurance is a 50% bump on your pay. Give the employer a 50% tax credit and it’s still a 25% bump, so you’re costing your employer $30,000 in real dollars, for salary and health care.
Increasing numbers of employers can’t bear this. It is making them uncompetitive in international markets. The tax credit won’t change that.
This is why we need a more basic discussion on health care. Honest numbers and real straight talk about who will pay those costs have yet to come from either side in this debate.
Dana Blankenhorn has been a business journalist since 1978, and has covered technology since 1982. He launched the Interactive Age Daily, the first daily coverage of the Internet to launch with a magazine, in September 1994. See his full profile and disclosure of his industry affiliations.
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