There is a provision in Obamacare that went into effect a couple of years ago that forces smaller insurance companies to spend at least 80% of their costs on actual healthcare costs and for larger insurance companies that number is 85%. That means that for insurance companies only 15-20% of revenue can go to employee salaries, building rent, other administrative costs, advertising, CEO pay, profits, etc. So I'm not sure if this is actually going to make more billionaire CEOs. While more people will be buying health insurance, at the same time, CEOs are now limited in what they can pay themselves. The only way they can pay themselves more is to reduce administrative costs or cover more customers, which means making their own health insurance company more lucrative than their competitors to consumers, which is a good thing.
> That means that for insurance companies only 15-20% of revenue can go to employee salaries, building rent, other administrative costs, advertising, CEO pay, profits, etc.
> The only way they can pay themselves more is to reduce administrative costs or cover more customers...
Not true. There's one more variable you forgot: cost of care for an individual customer. Under a model where the percentage of profit is fixed, there exists an incentive to collude with care providers to increase costs across the board.
This is the fundamental issue with insurance. The consumer is once-removed from all transactions. They pay a fixed annual premium for all their care. This premium goes up and down based on market forces in which they only participate on the demand side. The costs for their usage are distributed amongst classes (groups) of users, so the user of the service might see price increases even when they haven't used the service much; confusing to say the least. This leads to the generalized understanding that "insurance costs go up over time", even though there may be no justifiable reason other than the desire for increased profit for providers.
IMO, Obama Care represents the worst possible solution to the problem. I'm not opposed to the idea of healthcare as a "right", but I am opposed to injecting for-profit organizations in to a service that is mandated by the government.
Yeah, well...there were several different single-payer proposals in the mix, but none made it out of committee, because they were "too radical" to pass the House. And once Scott Brown was elected, anything that even remotely smelled like "socialism" (i.e. simpleton socialism, not real socialism) was off the table.
There are no solutions to this problem that don't involve either making consumers aware of how much they're spending on health care (thus aligning economic incentives), or removing the profit-seeking entity from health care altogether. So long as we have consumers who don't know/care what they're paying, medical and insurance companies who have a profit motive, and physicians who have no incentive to consider cost of care, we have an economic recipe for health care hyperinflation.
The "conservative" propaganda machine has thoroughly brainwashed our poorest and most vulnerable people into voting against their own economic self-interests on this issue. I don't know what's going to fix it, but until that day, we'll get "free market solutions" that make health corporations richer and don't do anything to fix the underlying economic incentives that are causing the problems.
Consumer awareness on many health issues is not an incentive problem. Do you really think that someone wrecks their body with a poor diet over 20 years is going to change behavior based on how much they pay for health care? I really wish it was that simple.
Health care is got a nasty price-sensitivity curve. Who wouldn't pay a lot of money to live a little longer?
The solution I would like to see is:
1. Just lower the eligibility age for Medicare by 2-5 years every year. All the machinery is in place and
the gradual change gives the system time to adjust.
2. Put 10-20% of the health care budget into making it cheaper to treat and prevent diseases. Allocate the
money using the existing grant process. Require that all the results be public domain.
3. Treat lifestyle issues (weight / smoking) when people are young. Go after them aggressively as diseases
while people are still in public schools.
The only encouraging thing I have to say is that Social Security got progressively improved once it was enacted. Maybe we will get the same thing over time.
The solution I would like to see is that instead of just offloading the cost of individual health care to the collective whole of all America, we address the underlying absurd costs of healthcare, itself.
If healthcare insurance were treated like automobile insurance, it would be affordable for the individual and it would remain the individual's responsibility to take care of it themselves.
Instead, our solution to a $20,000 ER visit is to move the expense from the person receiving the treatment to the entire tax-payer base . . . the health care industry still benefits, either way and only those paying the bill for everyone feel the negative impact.
Why is our only solution "more government! More taxes! pay for everyone else's problems!". Why can't we find a way to address the pricing, in the first place? Why is this not even a discussion that has been had?
"Consumer awareness on many health issues is not an incentive problem. Do you really think that someone wrecks their body with a poor diet over 20 years is going to change behavior based on how much they pay for health care? I really wish it was that simple."
You're assuming that the problem with the US health care system is that people eat too much and are willing to pay so they don't die? Come on. That's universal human behavior. Diabetes and obesity are world-wide epidemics.
I agree that expanding Medicare systematically would be a decent idea -- in fact, it was one of the ideas that got sunk in committee. In a nation where for-profit health corporations have a lot to lose from government competition, the specter of expanding the (efficient and cheap) Medicare system is terrifying to a lot of rich people.
I still see hope for how it could play out. I forget the details, but I think states have the ability to experiment with their own alternate exchanges. Like they can experiment with state-run single-payer. And if it proves to work well, more people will switch to it, and other states could grudgingly switch to similar approaches, etc.
As I understand it, the true costs will be when employers potentially drop your heath-care coverage and make you temp worker.
Given that most people reading HN are employed in areas with high demand, this will probably not happen to you, but it could happen to those that are employed in jobs where there is a more ample pool of workers to draw from.
Sadly, it's hard to calculate the chances of this situation happening - so we'll all probably just have to wait and see.
As we all know, employers are the "job creators" and whatever they do is for the good of the economy. If they are dumping employees to maintain their current profit levels, it's the government's fault for making them do that.
Government doesn't create jobs. Every job they 'create' is paid for by someone else's 'job.' Basic economics. Government creating jobs is as mythological as Al Gore inventing the Internet.
Yeah, but that's a small price to pay for every single person in the country to get excellent best-in-world health care for absolutely free. Right? . . . . Right. . . .?
At any rate, the NPR calculator only works if you enter the number of people registering for the "Exchange". So, am I to understand that if you're not registering for "The Exchange", then you will bear no additional costs? I had hoped they'd have some crazy complex calculator that would estimate how much your premiums and taxes and other things would go up with existing HMO plans and so on.
The most important thing to note about this calculator is that it's based on CBO estimates, not actual insurance plans:
"Premiums in the calculator are illustrative examples in 2014 dollars derived from estimates of average premiums for 2016 from the Congressional Budget Office." [1]
And apparently, 94% of uninsured Americans will have premiums that are less than projected [2].
Even with those caveats, my costs are estimated to go down. This is very good news for me, as someone with individual insurance, because health costs are the dominating factor in my budget.
[1] Second paragraph of the "Notes" section under the calculator's results.
Obama Care "costs" more than their calculator because the "$100 a month plan for those making under $50k" cost $1,200 but doesn't give the plan holder anything until they incur $10k in expenses.
Basically you Lose $1,200 that you could have spent on healthcare. That $1,200 is a lot when you consider that many of the people with out healthcare end up at the Emergency Room for simple things like Strep Throat and end up paying $500 instead of $80 for a doctor's visit.
The best analogy I can think is like the Poor who opt to be unbanked. Many of the unbanked do so because the fees in banking are greater than what the fees are at the Check cashing places because a single overdraft charge.
Obama care is really just bankruptcy insurance, and that is kind of what bankruptcy is a way to not lose everything if you can't afford it.
- The annual out-of-pocket maximum for any Exchange plan can be no higher than $5,950 for individuals and $11,900 for families (2010 dollars, so will be higher now). [1]
- The out-of-pocket maximums are lower for people with incomes less than 400% of the federal poverty level, specifically:
-– 100-200% FPL: one-third of the HSA limits ($1,983/individual and $3,967/family);
-– 200-300% FPL: one-half of the HSA limits ($2,975/individual and $5,950/family);
-– 300-400% FPL: two-thirds of the HSA limits ($3,987/individual and $7,973/family). [2]
- All preventive services are covered at no cost, and are not subject to the deductible. [3]
I can't address your speculative claims on how lower-income folks think about health care, but to give a concrete example of a positive preventive outcome:
- A 55 year-old woman making $30,000 a year purchases insurance through the Exchange. She pays:
-- $2,512 for the year's premiums ($209 per month)
- She receives a preventive breast exam (no cost) that is positive for breast cancer.
- She receives comprehensive treatment costing $60,000.
- Because she is at 261% of the federal poverty level, she stops paying out of pocket at the maximum of $2,975.
She would have gotten the treatment anyway. Filed bankruptcy and as a renter lost nothing, except her next car costs 5% more because her interest rate is higher.
Charities often have strict income limits regarding those who they will serve. Some of the charities your link mentions state they can only serve a limited number of patients. Many of the programs are in a single county. You may end up having to call around to many programs to only find out you don't qualify for any of them. If you have insurance through your employer, it may have a huge deductible and even if it does cover a mammogram it may not cover treatment. These factors all discourage people from getting preventative medicine done.
Bankruptcy should never be regarded as a valid solution for medical care costs. What if her state has rules that don't allow her to keep her car(or certain other items) when filing for bankruptcy? What if she had already filed for bankruptcy the year before?
I grew up pretty poor. We used preventative services regularly. I've actually gotten worse about that at the same time my income has grown dramatically.
But if you are in a car accident and need to be airlifted, have a heart attack, etc etc, it is much better for you to at least have some cap on your out of pocket.
Then an easier law that even republicans would have supported is to have the government subsidize HDHPs and be done with it. Instead they needed 1200+ pages that the lawmakers didn't even read. Government wasn't after protecting the 'uninsured'-- they wanted to control an industry that makes up 5% of GDP.
Republicans supported the ACA until Obama did. It's based on their own blueprints from the 1990s fight and Massachusetts.
And if you're going to whine about the length of the bill, get it right. It's 906 pages with legislative formatting (huge margins, lots of other whitespace). The PDF is trivially googleable.
TL;DR: In states where Republican governors are choosing not to accept federal money to expand Medicaid, the very poor are getting screwed.
From the calculator:
"If your state does not expand Medicaid
You will not be eligible for subsidies in the exchanges because your income is below 100% of the federal poverty level."
The reason for this is that the law provided federal dollars to states to expand Medicaid coverage (pretty much free coverage for enrollees) to all people making < 138% of the federal poverty level (FPL), and so the EXCHANGE SUBSIDIES were only written to apply to folks above 138% FPL.
Problem is, the law didn't say that these (very poor) people could receive subsidies for the Exchanges if the Governor refused to accept federal dollars to expand Medicaid -- basically because no one thought governors would be so brash as to refuse free money to pay for the health care of the very poor.
So, yeah. Kinda sucks to live in a Republican state right now if you're poor and uninsured.
I really think that the 'free money' is part of the $2000+ per month withheld from my paychecks. It's hardly free. It's very easy to spend other people's money. I'm willing to bet not a single person reading this voluntarily sent the government and extra payment last year. The interesting thing is that the majority of economic growth has been in republican states,, specifically Texas. and
North Dakota. So perhaps the poor are worse off, but at least there are more jobs that can provide the opportunity for them to not remain poor. This article compares Texas and California economically: http://thehill.com/blogs/congress-blog/economy-a-budget/3071...
If you're very poor, in the sense of no assets and very little income, you do still get the regular, pre-expansion, single-payer Medicaid.
I agree it leaves some problematic gaps. People between 100% and 138% of the poverty line aren't eligible for either pre-expansion Medicare or the exchange subsidies. Perhaps even worse off are people below 100% of the poverty line but with very modest savings (in many states the limit is $2000). These people are probably best served by burning their savings so they can qualify for Medicaid. The expanded Medicaid does away with the asset test because of the perverse incentives it creates: someone who spends all their paycheck on entertainment qualifies for Medicaid, but someone who saves even $3000 to have a small cushion (e.g. to make sure they can cover rent between jobs) loses eligibility.
Unfortunately, under pre-Obamacare Medicaid rules, in most states you have to have dependents, be pregnant, or be disabled to qualify for Medicaid:
"Prior to the ACA, states could not receive federal Medicaid matching funds to cover non-disabled adults
without dependent children...
[O]verall, Medicaid coverage for low-income adults remains very limited. As of January 2013, only nine states, including DC, provide full Medicaid coverage to low-income adults,
and enrollment is closed in two of these states(Figure 4, Table 3). Sixteen states solely provide more
limited coverage to adults, and enrollment is closed in seven of these states."
It's more or less a match contribution. My governor is one of the few that has not made a decision to expand Medicade. That expansion will cost money, but the Feds will then contribute back to put towards enrolling low-income but not less than 138% of the poverty level people into health exchanges, which is something that the states are required to do.
So no, it's not free money. It's a standard "Do X and we'll fund Y in your state."
Thanks for the clarification. If the ACA proponents were banking on shaming governors into doing something to have full rollout of their plan, then that's fairly shortsighted, IMO. It's a classic "Let's blame these people for screwing over poor people" when the governors in question had no say in the original law being passed.
Either put it in the bill and face the consequences (possible rejection) or leave it out and don't claim that governors are "refusing free money."
something does seem wrong - up that to 11k and you get 'better' numbers (more intuitive) - they may not have tested with numbers as low as you put in???
Also, fwiw, you only had 1 family member, but 2 enrolling, but that didn't seem to affect the issue.
This is what I think will happen: 1% of uninsured will jump through all the hoops and apply for a subsidy (which is more complicated and more expensive than just picking up the phone and calling BCBS for a high-deductible plan.) 9% of uninsured will finally get insurance to avoid the $500 IRS fine. 90% will do nothing and get a $500 fine from the IRS. 5% of those people will pay the $500 fine which is cheaper than buying insurance. 45% of them will throw the bill in the trash, assuming the IRS knows where they live/work. The other 50% will raise hell they are not paying $500 to the IRS, Obama will feel like a bully and Obamacare will be history.
If I have it totally wrong, don't just downvote, please explain why. I really don't know if the IRS fine will be $500, that's just a number I heard thrown around last year. A $500 fine is less than half the cost a cheap insurance plan for one person, and much cheaper if you have a family. If you're living paycheck to paycheck, a possible $500 fine (that's not even a reality yet) is much less pain than buying insurance right now. My percentage estimates are off the top of my head (not scientific) but I heard 1/3 Americans don't file tax returns so that figured into my estimates. And remember we're talking about uninsured people, I'm thinking a large percentage of them are just getting by.
>(which is more complicated and more expensive than just picking up the phone and calling BCBS.
Source?
>The other 50% will raise hell they are not paying $500 to the IRS, Obama will feel like a bully and Obamacare will be history.
I am not sure how you make that leap.
I think a lot of people will go for the subsidy. Especially people with kids. Two people who together make $30000 with three kids will pay $600/yr for coverage while the fine would be $1000. It only makes sense.
At this point the fine is still imaginary. Nobody has a $1000 fine in their mailbox yet. People are used to getting money back from the IRS. Most people don't understand what a bill from the IRS means. How many people even know there will be a fine? Has Obama talked about the fine yet?
Also, even if you apply for the subsidy, you'll be paying full price for an expensive plan in the meantime. A family that's just getting by (that's why they are uninsured) it's going to be much more affordable to get a high-deductible plan and forget Obamacare altogether. If you're just getting by, you're not planning your finances a year in advance for when the subsidy check might come in the mail. The uninsured are thinking about next month, not a year from now. What percentage of people are sure they will get that government subsidy check? You're assuming uninsured people have extra money saved to pay for a full-price insurance plan right now.
Take a look at what happened with the individual mandate in Massachusetts. About 1% of the population (48,000 in 2009) paid the penalty, set at 50% of the minimum insurance premium. Even assuming that the rest of the country has people stupider than Massachusetts, and more ornery, it's really not going to be anywhere near as bad as you're predicting.
I predicted 5% of uninsured who don't want insurance will pay the fine. About 15% don't have health insurance. If it turns out 1% of the population pays an IRS fine, that's even more people than I predicted.
1. I said 90% of uninsured. That would be 90% of 15% of the population. Clearly I'm not saying 90% of the population will get fined. But my estimate will be way off, see #2.
2. Getting fined (what I said) and paying a fine (what you said) are totally different. Only 41% of people file tax returns. You can bet that percentage is much higher among the uninsured. So right off the bat, over half the uninsured should be fined. Those people were in my 90% estimate but there's really no way to fine them. I just did some searching and it apprears you are "exempt from the requirement to obtain minimum essential coverage...if you are not a U.S. citizen, a U.S. national or an alien lawfully present in the U.S." http://www.irs.gov/uac/Questions-and-Answers-on-the-Individu...
This is also interesting:
"44% of (people who file taxes) were unaware that they would face a penalty for not purchasing coverage."
> Also, even if you apply for the subsidy, you'll be paying full price for an expensive plan in the meantime.
This isn't true. The subsidy is estimated and applied when you sign up for a plan, and your premiums are adjusted to account for the estimated subsidy:
That's interesting but according to your link, Advance Premium Tax Credit <> Refundable Credit. In practice, what will be the difference?
How does an existing high-deductible plan compare to a Bronze plan with the Advanced Premium Credit applied? If it's significantly more coverage, if it's significantly cheaper, if it's easy to sign up for, then it might be attractive to that percentage of uninsured smart enough to jump through the extra hoops, if they actually want insurance, if they can afford a Bronze plan with the "advance" applied. That's a lot of ifs. I think a large percentage of uninsured will opt for the status quo (do nothing) that's just human nature.
According to your link, you have to file your tax return to get the difference (refundable - advanced) paid to you. What percentage of uninsured file tax returns?
What are the hoops you think you have to jump through to get a subsidy? The way I understand it is that the exchange website where you shop for plans already has your 2013 income tax return's MAGI figure and will automatically present you with the subsidy based on that. You can tweak it if you predict your 2014 income will differ significantly, and when you file your 2014 tax return there will be a true up if you actual income is really different from the prediction your subsidy was based on.
Well, there's the marketplace application. Let's see the bounce rate on that baby. Then you need to file tax returns to get the tax credit. According to this link, 41% of the population does not file a tax return. I bet the percentage is higher among the uninsured, think about it. http://taxfoundation.org/article/number-americans-paying-zer...
Sure, if you smoke a pack a day. What if you just have a couple of cigarettes when you go out, a couple nights a week? What about once a month? If you smoke a cigar when your baby's born?
Unlike the other categories, "tobacco use" doesn't make a lot of sense... and out of all the dangerous, life-threatening activities you can partake in, why is only this one singled out? Why not change premiums based on BMI too? It's kind of bizarre.
"Under the final rule, “tobacco use” is defined as the use of a tobacco product or products four or more times per week within no longer than the past 6 months by legal users of tobacco products (generally those 18 years and older) and includes all tobacco products."
This is just a calculator. A real individual health insurance application would probably also ask for weight, which is the other important statistical indicator that you're likely to be expensive to insure. Most of the other dangerous, life-threatening activities you're thinking of are more likely to simply kill you than to require an insurance company to spend 10 years paying 150x the costs of a typical policyholder.
I'd assume what "counts" is any tobacco use. If you smoke when you go out a couple nights a week, you're a smoker.
It is interesting that the subsidies are based on your Modified Adjusted Gross Income (MAGI). A nice example of tax code naming conventions: it is both Modified and Adjusted! One of the items you deduct from your income to get your MAGI is self employed insurance premiums.
I am curious how this will work in practice for the self employed...it seems a bit recursive. My premiums paid will be influenced by how big of a subsidy I get, and the subsidy calculation depends on MAGI which is influenced by the total of my health insurance premium payments.
Is there a class of the donut hole problem where you forecast that you will pay enough in premiums to get your MAGI down to qualify for a subsidy, but that subsidy reduces your actual paid premiums and now you no longer have a MAGI low enough to get the subsidy? Maybe I need to spreadsheet this and it isn't such a trap, or maybe the MAGI deduction is based on the gross premium with the subsidy being a separate credit. Also bear in mind that the whole thing gets trued up when you file your 2014 taxes with your actual (rather than projected) MAGI.
Something I've been wondering: I've got a pretty fair amount of savings. Suppose I go on sabbatical for a year to do a startup, spruce up my github, whatever. For the sake of argument say I don't have COBRA.
Everything I've read talks about income, not net worth. If I'm not making income, am I stuck with Medicaid, even though I have a decent net worth? Or if I do a little consulting and make $20K, do I get subsidies on the exchange, even though I really don't need them?
Yes -- subsidies are tied to income, not assets (specifically, modified adjusted gross income [MAGI]).
There are reasonable arguments around the equity of this, but, as you describe, it actually opens a big door for wishing to try a more entrepreneurial venture -- especially for those with health conditions.
Interesting. What about medicaid though? From what I've seen there's a minimum income to get the regular plans on the exchange, and below that you have to go with medicaid (assuming there aren't net worth qualifications for that).
Below 138% of the federal poverty level, you would qualify for Medicaid. [1]
If you had ethical qualms about it (or couldn't pass the asset tests) you can absolutely purchase a plan on the Exchange -- you just wouldn't receive a subsidy.
[1] In states that have opted to expand it, see my other comment.
It's structured as part of your taxes. If you got too much subsidy during the year, you'd pay the difference next April, if you got too little, you'd get the difference back as part of your refund (or use it to offset the rest of your bill).
You're supposed to be able to elect to take a lower subsidy than you expect to qualify for, if you want to make sure you don't end up with an oversized tax bill next April. Presumably this will be part of some form when buying coverage on the exchanges. We'll know what it looks like in a couple days...
Good question -- you estimate what your income will be when you sign up, and then report actual income later (your subsidy will be adjusted to your actual income).
As a European (Dutch to be exact) that has put up with a very similar universal healthcare, the numbers are actually about the same for me - based on income, I get about the same amount of tax credit here. I'm guessing the conditions of said insurance will be different - no deductible is mentioned for example, while the Netherlands has a 350 euro required deductible.
The deductible is sort of smeared into the out of pocket maximum and actuarial value (but for lots of people it would amount to quite some more than $500).
I actually think their tobacco section is a little buggy. On Chrome on Fedora 17, I wasn't able to get the tool top to pop up to see how "tobacco usage" is defined (some states define it as use within the last 12 months, some states define it as use right now).
Ethical people, and people who don't want to be bankrupted after paying for health insurance when that insurance doesn't pay out after discovering you lied on the application.
If I have to penalized for smoking the occasional pipe of tobacco, then I want people to be penalized for buying groceries from Wal-Mart, eating GMOs, anything with high fructose corn syrup in it, and not taking the elevator instead of the stairs for a few flights.
It's not ethical to let yourself be gouged by unethical rules.
The number that came up is the cheapest health insurance ever, man. Who could possibly complain about that. It is like 5% of my income unless something went wrong in the calculation.
Are you young, with no history of health problems? Under the ACA, older people pay less and younger people pay more (because "old people" premiums are limited to 3x "young people" premiums), and people with a poor health pay less and people with good health pay more (because health history is no longer considered in premiums).
If not, do you have a very high deductible and max out-of-pocket? The ACA puts limits on the maximum out-of-pocket.
If not, are you on a group plan of some sort? Individual rates tend to be more expensive than group rates.
If not, can you sign me up? 'Cause I'd love to cut my healthcare premiums by 3x. :-D
I consider myself progressive and this is the most asinine solution I've ever seen.
Instead of fixing health care costs we are going to make more billionaire CEOs.