Sen. Blanche Lincoln Co-sponsors SHOP

Arkansas Senator Blanche Lincoln joined with Senators Dick Durbin of Illinois and Olympia Snowe of Maine to introduce SHOP as their solution to the health care crisis in America.

SHOP is the Small Business Health Options Program and, according to Senator Lincoln’s May 5, 2009 press release is "designed to make health insurance more available and affordable for the nation’s small business employees and the self-employed".

"The majority of uninsured Americans are self-employed individuals and employees of small businesses," Lincoln said. "Small businesses are the number one source for jobs in Arkansas, yet only 29 percent of businesses with fewer than 50 employees offer health insurance coverage because it is simply too expensive. Of Arkansas’s total uninsured population, more than 56 percent, or approximately 295,000 Arkansans, are employed by a firm with 100 or fewer employees. Addressing the needs of small businesses will be critical in upcoming health reform legislation. SHOP is a pragmatic model that allows us to begin to address the needs of the millions of working uninsured Americans whose top priority is access to quality and affordable health care for their families."

SHOP is designed to:

• Allow small businesses and the self-employed to band together and spread the risk over a large number of participants in order to obtain lower premiums
• Provide tax credits for small business owners and the self-employed to offset contributions to employee premiums
• Ban health status rating in order to protect small businesses and the self-employed from large rate increases simply because one employee gets sick

What They Didn’t Think About

Almost half (48.7%) of uninsured individuals are between ages 19 and 34. Other statistics show these to be the healthiest americans and see paying premiums as a waste of money. That’s understandable because these are the folks who, if they have a job, are earning lower wages and dealing with setting up life away from mom and dad: buying a car, paying rent or buying a house, having children, etc. Nothing in SHOP offers an incentive to these people to buy health insurance.

The following chart based on information from the Kaiser Foundation shows what Americans are upset about or, at least, part of what upsets Americans about health insurance. During the Bush Administration (2001 – 2008) people with family coverage saw their cost of employer-provided health insurance increase from $149.00 per month to $280.00 per month, an 88% increase. Those with single coverage saw their premium increase from $30 a month to $60 a month, a 100% increase.

Now let’s do some simple math. An 88% increase spread over 8 years averages 11% per year. According to the Bureau of Labor Statistics report titled, May 2008 State Occupational Employment and Wage Estimates, the average wage in Arkansas is $33,930.00, or $2,827.50 per month. (continued below chart)

Yep, you gotta figure in the gasoline cost of gettin to work. If you only bought 15 gallons of gas per week you went from paying $89.51 in January 2001 to paying $200.72 in January 2008. Your wages went up $485.37 but we gotta subtract your health insurance premium increase of $165.00 so your disposable before-tax income was $320.37…but we gotta subtract that $200.72 you’re not paying to drive back and forth to work, leaving you $119.65 before taxes.

Think about these young, lower-salaried workers who are not earning that average Arkansas wage of $33,930. Their 2% annual raises would generate even less income but the price they would pay for health insurance and gasoline would be the same as everyone else. Oops, I think they went in the hole. Now, Senator Lincoln, how do you entice these folks to buy health insurance because you are giving their employer a break?

Let’s Talk About Employer Breaks

The chart below shows that the employee with family coverage is only paying 27% of the health insurance premium at $280.00 per month. Well, I called in my cipherer, Jethro Bodine and he said the total health insurance premium would be $1,037.00, leaving the employer to pay $757.00 each month, or $9,084.00 out of that $2,000.00 tax credit.

I sorta hate to say this, Senator Lincoln, but I think you and your Senate buddies need to hire Jethro to do your cipherin for you. I think you folks have been spending $9,000 for every $2,000 income for too long and have started believing other folks can do it just because you do. (continued below the chart)

Dear Senator Lincoln, et al, you said competition among insurance companies would lower the premiums…and I gotta admit, I got a great big ol’ belly laugh out of that. But I’ll defer to you if you can answer this question. How’s that been working out for every body else? And, how’s that been working out for gas prices, you know, what with Shell competing with Texaco and Exxon and whoever else is "competing" for our gasoline dollars?

It’s time to quit fancy-footin around this issue and get on with a single-payer system. Expand Medicare to take in these uninsured and divert some of that war money into the Medicare program. You can even negotiate some drug prices for Medicare while you’re at it.

Many of you regular readers will remember that I predicted something like this in my article, Sen. Blanche Lincoln, Arkansas Republican?!