I figured I would plug in some real world numbers as they would be today if the new health care legislation was fully intact. This is something I haven’t seen during the whole debate and I want to take it from the angle of a single person earning 150% of the FPL.
Currently the FPL for a single person is $10,830. 150% of that would be $16,254 per year. Going by the table I published earlier, which is taken directly from the CBO estimates, a person earning a 150% of the FPL would end up paying about 9% of their income in health care when the new legislation comes into play. To refresh, here is the chart with the lines I am using highlighted:
Since every line goes off the “middle of income range”, I decided the 7% would be at 125% and 12% would be at 175%. I added those together and came up with 19% then divided by two, which gave me 9.5%. For simplicity I went ahead and rounded down.
So you are earning $16,254 a year, but 9% of your income is now going to health care. Time for another calculation:
$14,791 (rounded down)
So a single person this year would be living off $14,791 a year, a reduction of $1,463 per year.
Let’s break that down per month:
$14,791/12 = $1233 (rounded up)
That’s how much you have to live on per month. Going by averages here in Butler County, Ohio, let’s figure up the basic cost of living.
Single bedroom apartment – average $600/month
Utilities – average $120 month
So we are now at $720, but we are missing a few items. To figure those up I am going to go off another federal guideline – National Standards. These are used in helping people calculate such things as hardship cases for the IRS. The numbers are at he high end, so I am going to go by 50% – a very generous compromise:
|Expense||One Person||Two Persons||Three Persons||Four Persons|
|Apparel & services||$86||$162||$209||$244|
|Personal care products & services||$31||$55||$59||$65|
Remember, we are in the single column, so let’s go with 50% of that, or $258. That brings us up to $978 a month.
But we are forgetting something. How about transportation? Again, we have a standards chart on that. I am going by my area so I will use that amount. That is $186, but I will be nice and go at 75% of it, or $140. Now you are at $1,118 a month. Subtract that from our $1,233 a month and you are left with a whopping $115 a month. Forget if you want cable (an almost necessity now given digital television) and/or internet. You start adding those in and your left over amount per month is down to the single digits.
Also this doesn’t take into consideration those pop up costs. We all know how those things happen. You can quickly see how a single person at 150% of the FPL will come out in the hole with this system.
This is why I said earlier that when you have very tough decisions to make, things like health care quickly end up on the chopping block, especially if you are young and healthy.
Now this isn’t to be construed as a way to get rid of the current health care legislation, but rather to fix it. If we were to adjust the FPL to something more realistic then things will change quickly. What if we increased the FPL by 10%? That would put it at $11,913. Someone making $16,254 a year would now be at 136% of the FPL. Their monthly out of pocket medical expenses would go down to about 5%, or $812 a year. That means $1286 a month. That’s an additional $53 a month. Not great money, but it is a big help.
When the FPL was created it had a baseline established based on food costs in the late 50’s and early 60’s. Since then it has been adjusted annually based upon inflation, but that is seriously flawed given the calculation methods. Here’s the computations for the 2009 FPL for a single person:
Persons in family or household
Poverty thresholds for 2007 — published Aug. 2008a/
Column 2 multiplied by 1.038 price inflatorb/
Difference between successive Column 3 entries
Average difference in Column 4c/
January 2009 poverty guidelines
The FPL is adjusted on a split of the previous FPL with the inflation rate added in. The 2007/08 FPL was $10,590. They multiplied it by 1.038% for inflation, which gave them $10,992, but that wasn’t the FPL. Somehow I guess inflation doesn’t effect the poor the same as everyone else, so they made it $10,830, $162 less than what it should be once inflation is added in. This has been going on since the 1960’s. See the problem?
Also basing the FPL off of just food costs is an antiquated system. There are a lot more expenses associated with life today than there were in the 60’s. Like I said, cable television. Even if it’s just the bare basics, you still need it to receive a signal anymore thanks to digital television, the television is a vital source of information. Internet has also become pretty much a necessity in life, as well as auto insurance and other minor things – not to mention actual housing.
The system worked great for years, but as with everything else, it has had its time. We really need to come up with a much better system to calculate what people need to live off of and use that to help calculate the help people will get with health care. Don’t forget that health care costs have risen 20-30 times faster than the inflation rate. While the bill will help calm that down, it isn’t going to totally remove it. We need to use this as an indicator to calculate the FPL from now on.
Fixing the FPL will fix health care to a point that I think most people will happily accept. It won’t be a public option, but given the fact that the government will feel the affect of insurance rates a lot more now, they will be more out to act and fix the problems.
I am going to start a big push after Christmas to get people to contact their Congress members and urge them to fix healthcare by fixing the FPL. A fix to the FPL isn’t just a fix to healthcare, but to numerous other social services. This will be a big help for America over all and one every progressive should get behind.