ACA, Subsidies and Better off Americans (which means many FIRE)

[pb4uski]

But don't the insurers submit THEIR rates to state regulators for approval and also conduct negotiate with in network hospitals for payment rates for the following year? Problem seems to be that less efficient players are having trouble competing in a transparent marketplace. ...

For all intents and purposes the health insurance rates are at most, 120% of expected claim costs and the excess of premium over claim costs goes to overhead, taxes and profit... so if claim costs increase 10% then premiums increase 10%.

I dunno whether insurers have sufficient clout to bargain hard with medical providers ... but from the premium increases that we are seeing perhaps not.

 

[Sue J]

I would be more concerned with the 400% of MAGI cutoff for subsidies being lowered rather than a wealth/asset measure being applied

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That's a very good point. I wonder why 400% of FPL was decided as the cutoff point. Also, why it was designed as a cliff rather than a slope at the higher incomes.

 

[pb4uski]

As I recall the reason it was a cliff was because if it was a slope the cost of subsidies would have skyrocketed.

 

[samclem]

I think it is unlikely that a "total assets" means test will be introduced into the ACA subsidy equation. But if it happens, that test will become widely used for all kinds of other government subsidies/taxes, etc to include SS. A lot of folks in the FIRE community have a lot riding on the idea that US taxes and "reverse taxes" (benefits) will continue to be based on income rather than wealth. I wonder if this is a risk worth hedging in some way.

+1 the reality is that in the whole scheme of things it is a nit in the federal budget and administering and enforcing it would end up being more time and effort than it is worth.

There are 4.6 millionaires in the US. Let's say 10% of them fall into that situation and the average subsidy is $8k a year, that's "only" $3.7 billion a year. The federal budget is about $3.7 trillion so $3.7 billion in savings would reduce the deficit by 0.1% if administration costs were zero.

All true, but I'm not sure how important this "practicality" argument will be. It's all about popular perceptions and sticking it to the folks who "aren't paying their fair share," etc.

 

[MRG]

Doesn't the conversion amount count as income toward ACA premium credits?

Sure does. But if subsidies are off the table I'll do the conversion that we're currently not doing.

It's all about managing income current or future.

 

[LARS]

All true, but I'm not sure how important this "practicality" argument will be. It's all about popular perceptions and sticking it to the folks who "aren't paying their fair share," etc.

I continue to think it highly unlikely, as I see most here do as well. Just hope we're not all bias in our conclusions. Still, every so often I remind myself France has a yearly wealth tax based upon assets starting at 800,000 euros. So it does happen...


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[aaronc879]

That's a very good point. I wonder why 400% of FPL was decided as the cutoff point. Also, why it was designed as a cliff rather than a slope at the higher incomes.

If the slope started at 300% and ended at 400% then wouldn't it cost less?

 

[ziggy29]

That's a very good point. I wonder why 400% of FPL was decided as the cutoff point. Also, why it was designed as a cliff rather than a slope at the higher incomes.

We have to keep in mind, IMO, that the ACA is the product of what is really an unfinished "rough draft". Recall that the bill could never be refined, "fixed" or amended in conference because of the situation where the majority party lost its 60th vote in the Senate. That forced the Senate to take a straight up-or-down vote on a flawed House bill, where they only needed a majority vote, not 60% -- since if the bill were reconciled in conference, the new one would again need 60 votes to even get voted on.

When the House bill was approved no one expected it to be the same version as what was ultimately enacted into law. I think had the process been allowed to work as usual, the final reconciled bill would have looked quite a bit different, and some of the flaws in the ACA may have been rectified. But that's all coulda-shoulda-woulda at this point. And unfortunately, there is no political will to fix even the flaws that both parties largely agree on.

 

[pb4uski]

I think it is unlikely that a "total assets" means test will be introduced into the ACA subsidy equation. But if it happens, that test will become widely used for all kinds of other government subsidies/taxes, etc to include SS. A lot of folks in the FIRE community have a lot riding on the idea that US taxes and "reverse taxes" (benefits) will continue to be based on income rather than wealth. I wonder if this is a risk worth hedging in some way.


All true, but I'm not sure how important this "practicality" argument will be. It's all about popular perceptions and sticking it to the folks who "aren't paying their fair share," etc.

I agree with all you wrote. The first part would be a firestorm between savers and spenders. Savers have more to lose and would have resources to fight it to the bitter end... plus it would be a bit un-American to penalize "self-made hard-working Americans" so I don't see that ever getting traction.

On the second part there are all sorts of sticky issues as to at what is included in any wealth measure, where phase-outs start and end, etc.

I think the practical reality is between the difficult political and practical administrative that it is unlikely ever to happen in my lifetime (I'm 60), but I could be wrong.

 

[ziggy29]

I agree with all you wrote. The first part would be a firestorm between savers and spenders. Savers have more to lose and would have resources to fight it to the bitter end... plus it would be a bit un-American to penalize "self-made hard-working Americans" so I don't see that ever getting traction.

Not to mention that savers have been getting shafted by low interest rates for 7-8 years now. They may not be in a good mood as it is with respect to feeling like saving is being punished.

 

[pb4uski]

If the slope started at 300% and ended at 400% then wouldn't it cost less?

Yes it would cost less but it would also make health insurance much less affordable to those in the 300-400 range, which I suspect includes a lot of people (votes).

 

[ShokWaveRider]

I would be more concerned with it being eliminated and replaced with something that does not work for those who REALLY need.

 

[Big_Hitter]

What do others think is the likelihood that ACA could be modified after election to eliminate subsidies for those with low income, but high assets? In other words many on this Forum...


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zero

 

[Big_Hitter]

Not to mention that savers have been getting shafted by low interest rates for 7-8 years now. They may not be in a good mood as it is with respect to feeling like saving is being punished.

shareholders have done great though

 

[pb4uski]

shareholders have done great though

WH... eh, fugetaboutit.

 

[MichaelB]

That's a very good point. I wonder why 400% of FPL was decided as the cutoff point. Also, why it was designed as a cliff rather than a slope at the higher incomes.

These are good questions, and also relevant, as the OP is addressing a very specific issue.

The most likely reason for the cliff and the 400% limit is that's all they could afford when the calculations were made and the law written. Our legislative process determines the net cost of each action and deals with self-imposed limits, and this legislation is no different. If they could have afforded more, they most likely would have done that - especially the cliff, which must be a legitimate cause for ongoing complaint.

If, at some future point in time, there were specific concern about subsidies being given to high net worth individuals, one possible remedy that already has a precedent and process in place is the clawback. Easier to approve and implement (IMHO).

 

[Clone]

They had better not touch the <insert name of subsidy, incentive, or tax break that benefits me>! After all, you don't see them doing anything about <enter subsidy, incentive, or tax break that benefits a different group>, or even <enter subsidy, incentive, or tax break that benefits a different group>! The legislators should have to give up their <enter perk or benefit> before they ask me to give up anything!

 

[ivinsfan]

Well FAFSA and colleges seemed to figure what do with a combo of assets and income, I do think it's certainly possible in ACA rules. It certainly would be possible to come with a family expected contribution based on income and a % of your assets.

 

[NW-Bound]

I'd say the odds were about as good as finding a pulled pork sandwich in Mecca.

I do not have reasons to go to Mecca, oh wait, I would not even be allowed to be there. But would one be satisfied with a pulled lamb sandwich, if they have such a thing? Time for me to go search the Web to see if anybody makes a lamb or goat sandwich.

Oh wait. We just came back from a grocery run, and happened to see a newly opened grocery store. Dropped in to look around, and discovered that it was a Mediterranean store. So, I looked on their spice rack, and saw a package of Sumac. I always wanted to try it in a recipe that I found on the Web, but am too cheap to order it off Amazon. Now, I have a bag for just $2. Off to the Web I go, looking for that grilled meat dish again.

 

[Fermion]

They might decide to capture the whole thing on the back end and lower the estate tax exemption. What is it now, $5.5 million? Drop it to $1 million and recapture any ACA subsidies millionaires might have been getting while they were living.

 

[Fermion]

I do not have reasons to go to Mecca, oh wait, I would not even be allowed to be there. But would one be satisfied with a pulled lamb sandwich, if they have such a thing? Time for me to go search the Web to see if anybody makes a lamb or goat sandwich.

Oh wait. We just came back from a grocery run, and happened to see a newly opened grocery store. Dropped in to look around, and discovered that it was a Mediterranean store. So, I looked on their spice rack, and saw a package of Sumac. I always wanted to try it in a recipe that I found on the Web, but am too cheap to order it off Amazon. Now, I have a bag for just $2. Off to the Web I go, looking for that grilled meat dish again.

What about an MLT?

 

[LastOfTheBoomers]

On the topic of ACA is one proposal to lower the age of Medicare to 55 - that would benefit many on this forum
There seems to be less stigma with Medicare that ACA - something my wife ran into once.


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[NW-Bound]

Somebody in Australia makes this sumptuous looking grilled lamb sandwich.

As for me, I just found something to try with my newly acquired bag of Sumac: grilled chicken with Sumac. See the sliced mint sprinkled on top? That also gives it a more Mediterranean flavor.

I am telling you, I do not know how I will get health insurance next year, but eating well will take your mind off things that you cannot control. And you do not have to spend a lot of money like Robbie does either.

 

[MichaelB]

For those truly interested in some pulled pork in Mecca, just a few minutes south, about a 10 mile drive to neighboring Warren (both in Ohio) is Cockeye BBQ (here). Their pulled pork sandwich

Pulled Pork - Our famous slow-smoked pork shoulder, lightly sauced and garnished with creamy house slaw - 3.79

 

[scrabbler1]

I could see that 400%-of-FPL being lowered, gradually. Or the 9.5%-of-MAGI. I am between 300% and 400% of FPL, so a change like that would impact me greatly (and negatively).