One of the alleged facts that President Bush loves to point at when he's trying to justify his veto of the State Children's Health Insurance Program (S-CHIP) expansion is that the new bill would have allowed New York to enroll children from families making up to 400% of the federal poverty level. For a family of four, that works out to an annual income of about $83,000. The President and his staff appear to find $83,000 to be a very impressive number. It's certainly one that they talk about a heck of a lot - as far as I can tell, everyone from the White House who has said anything about the veto on the record has mentioned "$83,000" at least once.
The White House obviously hopes that if they say "$83,000" enough times with a shocked look on their face, they can get everyone to agree that it's entirely unreasonable to expect the government to help pay for health insurance coverage for families making that much money. They hope that if they keep saying $83,000, they can convince people that any family that makes $83,000 a year and doesn't have health insurance deserves to be left on their own.
They also hope, of course, that nobody actually takes a good look at $83,000, and what it can actually buy in New York. So let's do just that.
The $83,000 figure that the White House keeps throwing around comes from New York State's efforts to expand S-Chip coverage to families making 4 times the federal poverty cut-off. Let's see just how reasonable it is to expect a family of four making $83,000 and living in Queens, New York to pay out of pocket for health insurance. Let's look at just how far $83,000 goes in NY.
We'll start with taxes, since the NY version of SCHIP bases eligibility on gross income. Assuming that all of the family income comes from salary, and that it's not produced through self-employment, the family will pay $6,225 in payroll taxes. If we assume that they've got a lot of deductions, and can get their taxable income down to $20,000, they'll pay another $3,650 in federal, state, and city income tax.
That takes us down to $73,125. Now, let's take housing.
Let's assume that the family is living in a $300,000 house - that's well below the median for Queens, which was $469,000 last quarter. We'll further assume that they paid 20% down, and got a nice 5.5% fixed rate mortgage. The monthly payment for that works out to $1,362, which makes the annual cost $16,344. We'll assume that they're considered to be a very good risk for an insurance company, and got a homeowners insurance policy for only $1250/month. (This chart shows 2002 rates in Queens for $150,000 of coverage, so I think my estimate is pretty reasonable.) That's another $15,000 per year.
We're now down to $41,781. Let's look at transportation next.
We'll assume that they've got one not-terribly-expensive car ($20,000) financed at a reasonable 6%. Assuming a 36 month loan, that's going to be $7,313 per year. We'll assume that they're a good insurance risk here, too, and put down a probably unreasonably low $750 for the annual insurance. We'll further assume that it's not driven much (10,000 miles/year), gets really good gas mileage (40mpg), and that they've got a source of really cheap gas ($2.75). That gives an annual total of $688 in gas.
Down to $33,030 now. This brings us to utilities.
Lets assume that the annual oil heating usage is 600 gallons - that's almost 50 gallons under the regional average. We'll also assume that they're really good comparison shoppers, and can get heating oil at $2.80/gal. That's under the $2.84 statewide average, and way under the $3.02 citywide average. The annual cost there is $1,680. We'll assume that the rest of the utilities (electric, water, sewer, phone, etc) are also cheap, and come in at only $150/month ($1800/year).
We've got $29,550 left. Now, let's take something off for basic expenses.
Let's assume that food, clothing, subway fare to work, and everything else come to only $1,000 per month. Given the cost of living in Queens (1.5 times the national average), I think that's pretty reasonable (if not insanely optimistic). That's another $12,000 per year.
After all of that, the family of four has $17,550 left for insurance - assuming no unforeseen expenses, no savings, no college fund, etc.
The absolute, rock-bottom, cheapest HMO rate that NY State lists for Queens comes in at a bit over $17,640 per year. The average comes in at over $28,000 per year. Even the cheapest plan puts our family of four making an "unreasonably high" $83,000/year in the hole, and that's before they cough up a single copay.
If, after looking at all that, you still think it's unreasonable for the government to help New York families making $83,000 pay for insurance, I'd love to know why.
Updated: OK, I've got some egg to clean off my face. As several of you have pointed out, the homeowners insurance premiums were an annual figure, not a monthly. Sorry. We've either rented or lived in government quarters, so I had no idea what was high or low, and it seemed logical to me that homeowners coverage on a 150K house would be more than auto coverage for a 20K car. (And, yes, now I've figured out the whole different risk levels thing.
After the recalculation, that frees up another 13,750, which puts the family back into the black - by 13,000 if they take the basic HMO, and by a whopping $3,000 if they take the average HMO.
Given the conservative nature of the other estimates, that's still not a hell of a lot of a safety margin - especially if you want to do things like send the kids to college, retire someday, etc.