Speaking this morning on CNN in defense of House Republicans' Obamacare replacement plan, Utah Republican Jason Chaffetz said that rather than “getting that new iPhone that they just love,” low-income Americans should take they money they would have spent on it and “invest it in their own health care.”
Host Alisyn Camerota started the exchange by pointing out that “access for lower-income Americans doesn't equal coverage.” Chaffetz responded:
Well we're getting rid of the individual mandate. We're getting rid of those things that people said they don't want. And you know what? Americans have choices. And they've got to make a choice. And so, maybe rather than getting that new iPhone that they just love and they want to go spend hundreds of dollars on that, maybe they should invest it in their own health care. They've got to make those decisions for themselves.”
Chaffetz's remarks comport with messaging from Republican leadership that frames their health-care proposal as a victory for consumer choice. “We dismantle Obamacare’s damaging taxes and mandates so states can deliver quality, affordable options based on what their patient populations need, and workers and families can have the freedom and flexibility to make their own health care choices,” House Ways and Means Chairman Kevin Brady said in a statement.
But framing the consumer “choice” as one between an iPhone and health coverage ignores the massive gap between the price of an iPhone and what Americans spend on health care.
Let's start with the most generous comparison, and posit that someone wants to buy the most expensive iPhone — a brand new 7 without a contract and with the luxurious “Plus” version's 5.5" screen — which has a sticker price of $769. With tax, that comes to around $800.
Conversely, a year of individual insurance coverage on the open market will run you about $393 per month, or $4,617 per year, per eHealth. For the purpose of this comparison we'll assume you're a healthy individual who doesn't have to worry about deductibles (which run over $4,000 for these plans), and that that $4,617 is all you have to pay.
Even in this expensive-iPhone no-deductible scenario, the typical annual cost of an individual market plan costs is about six times as costly as Chaffetz's “new iPhone.”
But the expensive-iPhone zero-deductible scenario isn't wholly realistic. Only 2 percent of us buy a new smartphone every year, per Gallup. Another 44 percent get a new phone every two years when their cellular contracts run out, and 54 percent of us are cheapos who only get a new phone when our old one breaks or becomes obsolete. So for a better point of comparison, let's call it one iPhone to two years of insurance.
That means that across the typical life span of an iPhone, we're spending 12 times as much on health insurance as we are on the phone.
But this, too, is an overly rosy scenario for many of us. Those individual market plans don't just involve monthly premium payments, they also have high deductibles, too — $4,328 in a year, per eHealth. That represents out-of-pocket spending you need to cover before your plan even starts kicking in.
So let's say we get sick. We break a leg. We have to get lab work done. Our health isn't great, so we need a lot of medical care and max out on our deductible each year. Under the standard individual plan referenced above, that works out to about $18,000 in premiums and out-of-pocket expenses over two years. Or, for that span, the price of 23 iPhones.
Chaffetz's iPhone argument comes as the GOP is pitching a replacement for the Affordable Care Act that would offer tax credits for individuals under certain income thresholds. In the scenario above, if you are under 30 years old and make less than $75,000 a year, you'd be eligible for $2,000 in tax credits to help offset your expenses. That would take $4,000 out of your $18,000 two-year bill, leaving you on the hook for $14,000, knocking the price down to 18 iPhones.
This all involves a lot of speculation because we don't really know yet how the GOP plan would reshape the out-of-pocket expenses landscape. But it seems pretty clear that, by virtue of the huge disparity in pricing, smartphones and health care don't really fall within the same decision-making framework for most of us.
Chaffetz himself seemed to obliquely acknowledged this, when he said in a follow-up interview that he didn't make his remarks “as smoothly as I possibly could.”