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Old 09-16-2013, 08:30 AM   #21
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It seems to me obscene that a couple earning a little over 400% FPL would be expected to spend 20% or more of their earnings for health insurance. If they had health issues with deductibles and copays it would be even more.

The crux of the problem is that our health care system is simply way too expensive. Subsidies are just a different form of cost shifting.
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Old 09-16-2013, 09:34 AM   #22
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It seems to me obscene that a couple earning a little over 400% FPL would be expected to spend 20% or more of their earnings for health insurance. If they had health issues with deductibles and copays it would be even more.

The crux of the problem is that our health care system is simply way too expensive. Subsidies are just a different form of cost shifting.
Yes sir, I agree. And unfortunately for me, some of that cost shifting is being squarely dumped on my back.
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Old 09-16-2013, 09:46 AM   #23
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Subsidies are just a different form of cost shifting.
Unfortunately, whatever we do we will involve varying degrees of cost shifting and rationing of care.

The pre-ACA system provided care based on insurance and/or ability to pay. It shifted the cost of care to those unable to pay for basic/emergency coverage to the taxpayers and people that paid for their own care/insurance. More expensive procedures were generally not provided for those unable to pay.

The ACA opens the opportunity for insurance to more individuals but will shift the subsidy cost to the taxpayers. The government has gotten hip-deep into what should be in insurance coverage and part of this will be limitations on procedures. Those that have the assets will be able to avoid this rationing of care by going to private clinics. It will be the equivalent of Canadians getting their procedures done in the US because they are denied or seriously delayed by their home country coverage.
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Old 09-16-2013, 10:40 AM   #24
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The crux of the problem is that our health care system is simply way too expensive. Subsidies are just a different form of cost shifting.
Yes, our healthcare system is not only too expensive, it is unaffordable. The average family insurance premium is 30% of the median household income. What is remarkable is how few people in the US are aware of how costly this really is, and also how difficult it is to change.

Subsidy is definitely not cost shifting. On the contrary, getting a standard level of coverage that is fully paid for and that includes the entire population minimizes the need to shift costs (and exploit gaps) by providers and allows users to make price comparisons. This is rampant and well documented, and impedes real reform.

Subsidies are transfers that enable the price to be paid by everyone, regardless of affordability. They usually have a marginal stimulative impact on demand. Can we conclude that the excessive cost of US healthcare is the result of too much demand? No research points to that, so paying less would probably not fix, or even address, the core cost issues.

The cliff at 401% of FPL is real, and families at that level of income without subsidized insurance will find themselves in dire straits and few options. We have no real way of knowing if it was a policy choice or legislative compromise, or something else, and now that really isnít important. Focus is on implementation.
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Old 09-16-2013, 10:47 AM   #25
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The reason I suggested that the subsidies are merely a different form of cost shifting is because the subsidies are funded by taxpayers so it ends up being those with higher incomes (who don't get a subsidy but pay the taxes that provide for the subsidy) subsidizing those with lower incomes (who get the subsidy but pay little in taxes).

So at the end of the day the poor pay less than the actual cost of providing their care and the rich pay more than the actual cost of providing for their care. It seems like cost shifting to me.
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Old 09-16-2013, 10:59 AM   #26
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Covered California now includes a calculator with actual provider quotes in my zip code area. I get 4 provider quotes. I am not retired yet, so I will be just watching how this unfolds very closely.

Get Covered | Covered Californiaô

In my case, the cliff happens with $94,200. My sweet spot is to keep my O-MAGI at around $65,000.
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Old 09-16-2013, 11:23 AM   #27
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The cliff at 401% of FPL is real, and families at that level of income without subsidized insurance will find themselves in dire straits and few options. We have no real way of knowing if it was a policy choice or legislative compromise, or something else, and now that really isnít important. Focus is on implementation.
Really?
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Old 09-16-2013, 11:50 AM   #28
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.....The cliff at 401% of FPL is real, and families at that level of income without subsidized insurance will find themselves in dire straits and few options. ...
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Really?
Yes, I would say really. In my state, a family of four with $95k of income, just over the cliff, would pay $12-14k a year for a bronze-silver plan. That's 12.6-14.9% of their gross earnings. And that is just of health insurance. Add in another $3k a year for deductibles and co-pays and the total would be 15.8-17.9% of their income. And I believe that my state is more affordable than many states.

The health insurance alone would be would be more almost double their federal income tax bill assuming the standard deduction and exemptions.
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Old 09-16-2013, 12:30 PM   #29
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The reason I suggested that the subsidies are merely a different form of cost shifting is because the subsidies are funded by taxpayers so it ends up being those with higher incomes (who don't get a subsidy but pay the taxes that provide for the subsidy) subsidizing those with lower incomes (who get the subsidy but pay little in taxes).

So at the end of the day the poor pay less than the actual cost of providing their care and the rich pay more than the actual cost of providing for their care. It seems like cost shifting to me.
We are just using the same term in different ways. We both agree that healthcare is unaffordable and too expensive and it sucks to be just beyond the 400% FPL.
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Old 09-16-2013, 12:31 PM   #30
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The cliff at 401% of FPL is real, and families at that level of income without subsidized insurance will find themselves in dire straits and few options. on
Perhaps, but their straits are not as dire as someone who has no health insurance and needs healthcare. And also not as dire as someone who has health insurance, needs expensive healthcare, and exceeds their lifetime cap and has to file for bankruptcy.

Edit: but yes, it will suck to be at 401%.
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Old 09-16-2013, 12:39 PM   #31
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Perhaps, but their straits are not as dire as someone who has no health insurance and needs healthcare. And also not as dire as someone who has health insurance, needs expensive healthcare, and exceeds their lifetime cap and has to file for bankruptcy.

Edit: but yes, it will suck to be at 401%.
Right. Both are bad situations.
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Old 09-16-2013, 12:53 PM   #32
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I find all of the speculation in this thread and the many others on the ACA to be both pointless and somewhat amusing. We won't know all of the ramifications of the ACA until it is fully implemented, and even then, perhaps not until it has been in effect for a while.

According to the Congressional Budget Office (as reported by Kaiser Family Foundation: A Profile of Health Insurance Exchange Enrollees | The Henry J. Kaiser Family Foundation ),
24 million people will purchase health insurance on the exchanges by 2019. That's a relatively small percentage of the population. However, a far higher percentage of people on this forum will be purchasing health insurance though a state exchange, and a lot of people here seem to have forgotten that we're the exceptions, not the norm. There seems to be lots of extrapolation here that has no basis.
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Old 09-16-2013, 01:00 PM   #33
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That's 12.6-14.9% of their gross earnings. And that is just of health insurance.
At that level would the premiums be tax deductible when itemized on schedule A ? I believe the threshold is now 10% for medical . I haven't run the numbers, just thinking if that might lessen the impact ( maybe that was part of 9.5% income cap for subsidy )

And yes the cost of basic medical care is beyond the reach of most working folk with out the aid of insurance.
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Old 09-16-2013, 01:03 PM   #34
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Several people have already commented on these points but it's clear that over the next year we will discover:
  1. The ACA is not going to be all that affordable to many people. They either won't buy the insurance or they will not be able to cover the deductibles even with the subsidies.
  2. Medical costs are still at an unsupportable level. Transferring some of the insurance costs and copays to the taxpayers will not change this.
  3. The subsidy system can be "gamed" by millioraire retirees. There are numerous examples of people on this forum indicating that they are considering claiming the subsidy that also mention having significant assets (like me).
Much is still to be revealed. Nobody knows what's really going to transpire in the way of legislative or regulatory changes in the coming years. Several big insurance companies have left the individual policy market until more information becomes available on the demographics of the new policy holders.
It has also triggered a movement for small businesses to limit the number of their employees (like France that has a similar limit) and for businesses to focus on limiting the hours that employees can work to limit their liability for insurance. The employees impacted by this limit are also the lowest paid and less likely to be able to afford the cost on the exchanges.
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Old 09-16-2013, 01:17 PM   #35
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Several people have already commented on these points but it's clear that over the next year we will discover:
  1. The ACA is not going to be all that affordable to many people. They either won't buy the insurance or they will not be able to cover the deductibles even with the subsidies.
  2. Medical costs are still at an unsupportable level. Transferring some of the insurance costs and copays to the taxpayers will not change this.
  3. The subsidy system can be "gamed" by millioraire retirees. There are numerous examples of people on this forum indicating that they are considering claiming the subsidy that also mention having significant assets (like me).
Much is still to be revealed. Nobody knows what's really going to transpire in the way of legislative or regulatory changes in the coming years.
Gaming is actually going to be critical to retiring unless you're substantially wealthy. The CoveredCA.com site has been a great boon in planning FIRE. In the next two years, it'll be interesting seeing what happens with rates particularly on the pre-medicare age brackets. It really highlights the steepness of the medical cost curve in the years leading up to Medicare.

A big part of FIRE is being managing your spending so that you can live greatly on less, however, if you RE with children, that cliff is huge. In SoCal, that cliff is $7K for a mid-50s family of four making $94K. A family of three, at $78,100 has a $6500 cliff, if you're retired and still realizing $94K of income you're doing pretty well.

For an early 60 retired couple with no minor children, that cliff is at $62K and amounts to $10,000 and the difference between your Blue Cross PPO costing you $6500/yr or $16,500/yr. That's a big chunk out of $62K FIRE plan
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Old 09-16-2013, 01:20 PM   #36
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The employees impacted by this limit are also the lowest paid and less likely to be able to afford the cost on the exchanges.
In California the lowest paid (or lowest MAGI anyway) get either Medi-Cal or subsisized premiums and on the enhanced silver plan, lower co-pay and deductibles, too.

It will be fantastic for us. This year we will spend maybe $50K on COBRA / conversion policy premiums plus out of pocket maxes. Medical expenses are a major cause on bankruptcy in the US, even among people who have health insurance.

Next year with subsidized exchange insurance and we hope to spend very little on health care, maybe 3K or less.
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Old 09-16-2013, 01:43 PM   #37
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I find all of the speculation in this thread and the many others on the ACA to be both pointless and somewhat amusing. We won't know all of the ramifications of the ACA until it is fully implemented, and even then, perhaps not until it has been in effect for a while.

According to the Congressional Budget Office (as reported by Kaiser Family Foundation: A Profile of Health Insurance Exchange Enrollees | The Henry J. Kaiser Family Foundation ),
24 million people will purchase health insurance on the exchanges by 2019. That's a relatively small percentage of the population. However, a far higher percentage of people on this forum will be purchasing health insurance though a state exchange, and a lot of people here seem to have forgotten that we're the exceptions, not the norm. There seems to be lots of extrapolation here that has no basis.
Well we have to have "pointless and amusing" comments to fill the void of information. I definitely agree that this will have to play out a few years until we know exactly where we are going at least price wise on premiums. Many states appear to have brow beaten down initial prices while some companies are willing to be initial loss leaders to get as many under contract during the initial process as they know there is a certain sticking point in people renewing with the same company. This isn't a criticism, but just worried speculation as I am one who will never receive a subsidy. I enjoy this forum because of the intelligent comments and concerns. But I worry that many on here haven't dealt with many of the unintelligent masses as I have. Almost half don't even know its a law still as of August. Then if some of them do find out and enroll, what are the odds of more than one will say this after their trip to the hospital.... "What, I owe $5000 for a deductible? I don't have $5,000. I thought that insurance I was told to buy would pay for all of this." I will also be the first to say I hope my concerns are unfounded.
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Old 09-16-2013, 02:00 PM   #38
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Much is still to be revealed. Nobody knows what's really going to transpire in the way of legislative or regulatory changes in the coming years. Several big insurance companies have left the individual policy market until more information becomes available on the demographics of the new policy holders.
It has also triggered a movement for small businesses to limit the number of their employees (like France that has a similar limit) and for businesses to focus on limiting the hours that employees can work to limit their liability for insurance. The employees impacted by this limit are also the lowest paid and less likely to be able to afford the cost on the exchanges.
Well, it is true that some insurance companies have announced they will not be participating in select states, but so far this has been limited to states where they have little presence in the individual market. They are not walking away where they currently have business in any meaningful way.

Small businesses have not stopped hiring, the US economy has not stopped hiring, the one change in layoffs over the past 6 months is they too have slowed. The media reports of the employment impact resulting from PPACA implementation is not supported by any data.
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Old 09-16-2013, 02:03 PM   #39
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Well we have to have "pointless and amusing" comments to fill the void of information.
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Old 09-16-2013, 02:05 PM   #40
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At that level would the premiums be tax deductible when itemized on schedule A ? I believe the threshold is now 10% for medical . I haven't run the numbers, just thinking if that might lessen the impact ( maybe that was part of 9.5% income cap for subsidy )

And yes the cost of basic medical care is beyond the reach of most working folk with out the aid of insurance.
Yes, at that level the cost over 10% of AGI would be deductible, and the tax benefit would help somewhat IF the family's itemized deductions exceed the standard deduction. If the family was already itemizing, the incremental tax benefit would probably be ~$700 - better than nothing but not a huge help.
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