Obamacare

[Mulligan]

Quote:

Originally Posted by youbet It's easy to find folks who will benefit financially from the ACA who are for the ACA. It's a bit harder to find folks who will be ACA financial losers pushing as hard for it!

That is true. I try to be tempered in my comments because I know there are truly many needy people who will benefit and need access to health insurance. But for me, this is a potentially scary cost. I am sure there are many people who are on the "wrong side " of this who are currently oblivious to it, whether in cost, or potential loss in wages from the regulations effecting part time workers. I am not smart enough to find an equitable solution for all, that is for sure.

[samclem]

Quote:

Originally Posted by youbet It's easy to find folks who will benefit financially from the ACA who are for the ACA. It's a bit harder to find folks who will be ACA financial losers pushing as hard for it!

No, but personal situations aside we should all be able (now or when the thing is put into place) to see if it really decreased medical costs overall (e.g. as a % of GDP). The other major metric will be access to care: compared to what we had, and compared to other options.
The "system" we had was a wasteful, patchwork mess. There's no going back to that--even if we wanted to. And we'll dump this new system, too, if a majority of people believe we can do better.

[youbet]

Quote:

Originally Posted by samclem No, but personal situations aside.

But I don't set personal situations aside especially when they impact folks of relatively modest means. Making some sub-group suffer for the benefit of the majority may be the best we can do. Nevertheless, I'm sympathetic towards them and regret there have to be "losers" in this new grand scheme we're implementing.

I see no possible course other than to plod ahead. I'm just not all that gleeful over seeing some folks of moderate means get it stuck to them because, for example, they're not smart enough to manipulate their MAGI to optimize subsidies. I find it disappointing that the best minds in our gov't couldn't find a way to avoid having a situation such as the "subsidy cliff." Or that the promise of being able to keep existing policies long term could not be accomodated.

I don't blame folks who are financial losers in the ACA implemention, especially if the money makes a difference in their lives, from being disappointed and worried as to where this will lead for them and their families as individuals. I don't think their concerns should be minimalized.

BTW, just a casual observer for now. I'm on Medicare.

[youbet]

Quote:

Originally Posted by Mulligan That is true. I try to be tempered in my comments because I know there are truly many needy people who will benefit and need access to health insurance. But for me, this is a potentially scary cost. I am sure there are many people who are on the "wrong side " of this who are currently oblivious to it, whether in cost, or potential loss in wages from the regulations effecting part time workers. I am not smart enough to find an equitable solution for all, that is for sure.

There's no reason for you to be on a guilt trip for recognizing that not everyone will win from the ACA in the short term and the long term is not well defined. Stuff happens.

We're on Medicare, so arm's length observers here. But my son and DIL have a special needs child (cerebral palsy) and life is a constant struggle to get him the services he needs and still keep the other two kids fed and living a "normal life." Currently DIL has excellent private insurance through her employer at very low cost which is serving them extremely well. But they're concerned the big changes coming may shake things up and either increase their costs or reduce their benefits. We'll see. In the long run, things might actually be better for them under the ACA. In the short run, it's a concern, a worry, and I don't blame them for those feelings.

[bUU]

Quote:

Originally Posted by youbet It's easy to find folks who will benefit financially from the ACA who are for the ACA. It's a bit harder to find folks who will be ACA financial losers pushing as hard for it!

It actually isn't. I spent yesterday morning with many such folks at church. At least half, probably closer to two-thirds, of our congregation is certifiably affluent, "income above the cliff". Yet support for ACA is almost ubiquitous - perhaps even more so among those who won't benefit from it as compared to those who would. Very often we focus at church on matters that clarify the reason why so many people, who wouldn't benefit so much from the act of supporting such poverty relief efforts, do so anyway.

Quote:

Originally Posted by samclem No, but personal situations aside we should all be able (now or when the thing is put into place) to see if it really decreased medical costs overall (e.g. as a % of GDP). The other major metric will be access to care: compared to what we had, and compared to other options. The "system" we had was a wasteful, patchwork mess. There's no going back to that--even if we wanted to. And we'll dump this new system, too, if a majority of people believe we can do better.

This new system is a necessary first step. ACA will make the costs of health care far more visible to folks, until now shielded from the effect of the high cost of health care on those who are less affluent. With those costs now no longer swept under the rug, I think Americans as a group will be ready to start addressing the high costs in a more comprehensive way.

For me, the most logical approach would be to allow an agency to negotiate rates for health care, pharmaceuticals and medical devices, for the entire nation. Effectively, let Medicare, the military, and the Federal government as a civilian employer, all negotiate rates, and then mandate "me too" provisions for any ACA-compliant plan that wishes to benefit from the lower costs that any of those negotiation efforts yield.

One last note: Claims that there is a "subsidy cliff" are greatly exaggerated. For the vast majority of people with income over 400% FPL, it's like claiming that there is an income tax "cliff". This kind of over-emotionalized and erroneous language is a misunderstanding, at best, a deliberate deception at worst. The subsidy is capped in a graduated manner, as follows: (Note the numbers highlighted in red.)

Up to 133% FPL
2% of income

133 - 150% FPL
3 - 4% of income

150 - 200% FPL
4 - 6.3% of income

200 - 250% FPL
6.3 - 8.05% of income

250 - 300% FPL
8.05 - 9.5% of income

350 - 400% FPL
9.5% of income

You'd have to spend over $35k (9.5% of 400% FPL) on individual health insurance for that boundary to even come into play. We have the best individual health insurance offerings in the country, here in the Commonwealth, according to a US News analysis, and not surprisingly the most expensive in the nation as well. I just did up a rate-quote for a 60 year old, male smoker, and still got a rate of under $6k (LINK) - that's without subsidy, straight-up, cash-on-the-barrel. If you want to add the out-of-pocket maximum to the rate, fine: Still only $11k. I couldn't make the rate get close to $35k, even heaping on loads of premium services.

Furthermore, there is an out-of-pocket spending limit that includes everyone, not just those under 400% FPL:

100 - 200% FPL
1/3 HSA limit ($1,983/individual; $3,967/family)

200 - 300% FPL
1/2 HSA limit ($2,975/individual; $5,950/family)

300 - 400% FPL
2/3 HSA ($3,967/individual; $7,933/family)

Above 400% FPL
100% HSA limit ($5,950/individual; $11,500/family)

I hold an MS degree in mathematics, so yes I would prefer all such arrangements by the government to be algebraic functions where you plug the input in and every difference of 1.0 in the input gets churned through the formulas and results in a chance in the result. However, that's not the way most Americans want things. Step-function tables are preferred to formulas for that reason. That doesn't make anything into a "cliff".

[MichaelB]

Concern over the impact of the PPACA is legitimate, more so for people who take charge of their lives but find themselves now with too many unanswered questions. Nonetheless, we need to acknowledge that our current health care system is not only dysfunctional, it is badly unaffordable, far too costly. How to improve it for some without making it worse for others is quite a challenge.

The subsidy cliff is indeed real for the family with income at 405% of the FPL.

[bUU]

Quote:

Originally Posted by MichaelB Concern over the impact of the PPACA is legitimate, more so for people who take charge of their lives but find themselves now with too many unanswered questions.

There is no question about that. As long as people don't know for sure the expected direction and size of the impact on them, that will be a normal condition, but that is the same as with anything else in life.

Furthermore, while an individual's own concern may be the only consideration for that individual, it shouldn't be even one of several prevailing concerns in the context of a discussion of what to do about health care in the country. I'm "concerned" about how the Roth contribution phase-out affected me, but there are good reasons why it did. Some individual concerns (the ability to afford more luxuries, for example) are going to naturally be of lower priority in the society discussion.

Quote:

Originally Posted by MichaelB Nonetheless, we need to acknowledge that our current health care system is not only dysfunctional, it is badly unaffordable, far too costly.

Let's be careful though. While I doubt anyone can dispute that the current system is dysfunctional and too costly (since there are ready-counter-examples showing that the dysfunction and excessive cost are not essential), but unaffordable cannot be stated as an absolute: It is unaffordable for some or many, perhaps, but not categorically unaffordable. That distinction is critical for understanding what benefits the ACA could offer, and without that distinction there may be no way of coming to understand those benefits.

Quote:

Originally Posted by MichaelB How to improve it for some without making it worse for others is quite a challenge.

Any system is a zero-sum scenario in the short-term, so this can get chalked up to "you cannot make an omelet without cracking a couple of eggs". Some people may see primacy in approaches that leave or shift more burden onto those who already are stretched beyond the limit, most post people consider that even more unfair that the alternative. That's why I don't see "without making it worse for others" to be a defensible, categorical objective.

Quote:

Originally Posted by MichaelB The subsidy cliff is indeed real for the family with income at 405% of the FPL.

Could you please provide a real-life comparison of how much a basic insurance policy will cost a family with income of 405% of the PFL versus how much that same insurance will cost a family with income at 400% of the FPL? Feel free to use the Mass. Health Connector for your comparison, since it is essentially what ACA will be a few years from now.

[gerrym51]

Since i have purchasedisnurance under the mass health connector i guess i', qualified to make some comments.

1.massachusettes law only goes to 300 percent of income. obamacare will push it to 400 percent starting next year.

2. i purchased a plan that covers my current doctor.

NONE of the subsidized plans had my current doctor as a provider. all of th subsidized plans had provider networks that currently use most that deal with medicaid providers.

3. since Obamacare uses a different formula for income i probably can start to be subsidized next year-BUT i will only apply for subsidy if my Doctor is in the subsidized plan

[MichaelB]

Quote:

Originally Posted by bUU There is no question about that. As long as people don't know for sure the expected direction and size of the impact on them, that will be a normal condition, but that is the same as with anything else in life.

Not knowing if I can afford health insurance next Jan 1 is not in the same ballpark as wondering if tax rates will change. Not nearly the same as everything else.

Quote:

Originally Posted by bUU Let's be careful though. While I doubt anyone can dispute that the current system is dysfunctional and too costly (since there are ready-counter-examples showing that the dysfunction and excessive cost are not essential), but unaffordable cannot be stated as an absolute: It is unaffordable for some or many, perhaps, but not categorically unaffordable. That distinction is critical for understanding what benefits the ACA could offer, and without that distinction there may be no way of coming to understand those benefits.

Yes, healthcare at 17% of GDP is categorically too expensive.

Quote:

Originally Posted by bUU Could you please provide a real-life comparison of how much a basic insurance policy will cost a family with income of 405% of the PFL versus how much that same insurance will cost a family with income at 400% of the FPL? Feel free to use the Mass. Health Connector for your comparison, since it is essentially what ACA will be a few years from now.

Family of 2, average age mid 50's, income 60k. Premium is $1723, but they pay $5.7k per year after subsidy.

Family of 2 average age mid 50's, income 65k. Premium is $1723, but they pay $20.6k, or 1/3 of gross income.

Edit to add: the example is from pb4uski's posts in this thread http://www.early-retirement.org/foru...vel-65896.html and seems pretty "real life" to me.

[Mulligan]

Quote:

Originally Posted by MichaelB Not knowing if I can afford health insurance next Jan 1 is not in the same ballpark as wondering if tax rates will change. Not nearly the same as everything else. Yes, healthcare at 17% of GDP is categorically too expensive. Family of 2, average age mid 50's, income 60k. Premium is $1723, but they pay $5.7k per year after subsidy. Family of 2 average age mid 50's, income 65k. Premium is $1723, but they pay $20.6k, or 1/3 of gross income. Edit to add: the example is from pb4uski's posts in this thread http://www.early-retirement.org/foru...vel-65896.html and seems pretty "real life" to me.

It's one thing to have significant assets in retirement and draw down your assets, while still paying 1/3 of your gross income for health insurance. But what if that above couple were a working couple? If your busting your hump as a couple with few assets, and then 1/3 is taken away in health insurance premiums, plus all your taxes you are paying on top of that. Why bother working? At what point would one give up and just join "the system"?

[pb4uski]

Quote:

Originally Posted by bUU It actually isn't. I spent yesterday morning with many such folks at church. At least half, probably closer to two-thirds, of our congregation is certifiably affluent, "income above the cliff". Yet support for ACA is almost ubiquitous - perhaps even more so among those who won't benefit from it as compared to those who would. Very often we focus at church on matters that clarify the reason why so many people, who wouldn't benefit so much from the act of supporting such poverty relief efforts, do so anyway...... One last note: Claims that there is a "subsidy cliff" are greatly exaggerated. For the vast majority of people with income over 400% FPL, it's like claiming that there is an income tax "cliff". This kind of over-emotionalized and erroneous language is a misunderstanding, at best, a deliberate deception at worst. The subsidy is capped in a graduated manner, as follows: (Note the numbers highlighted in red.).....

WADR to your math skills, I think your're dead wrong that the subsidy cliff is greatly exaggerated. The thing that you are failing to consider is that for greater than 400% FPL the amount that one could pay for insurance is unlimited since the subsidy is zero. (The 9.5% and other percentages you cite are essentially 100% of premium less the subsidy (90.5% at a minimum)).

If you just take an example of a 64 couple. At 400% FPL (~$62,040/year) they pay 9.5% as you cite. If you add $5 of income so they are just over 400% FPL, they pay 33% of income in health insurance. That my friend, is a bloody cliff.

And if you combine premiums and maximum out-of-pockets, that same couple who is just over 400% FPL could pay 54% of their income to health insurance premiums and medical costs while their friends next to them in the pew who earn $5/year less "only" pay 30% of their income to health insurance premiums and medical costs.

On the first part, I think most people are blissfully unaware. The certifiably affluent couple in your congregation whose income is $100,000 and whose insurance increases from $800 a month now (9.6% of their income) to $1,723 a month next year (20.1% of their income) in 2014 may feel differently once they understand the implications of ACA.

See National Health Care Calculator and plug in a 64 yo couple with income of $60,040 and $60,045 and you'll see the "cliff" appear before your very eyes.

[REWahoo]

I don't think this has been posted prior to now. Here's a website devoted entirely to an explanation of the "Obamacare Cliff" - and how to turn it into a more gradual slope:

The Obamacare Cliff

[MichaelB]

Quote:

Originally Posted by REWahoo I don't think this has been posted prior to now. Here's a website devoted entirely to an explanation of the "Obamacare Cliff" - and how to turn it into a more gradual slope: The Obamacare Cliff

Thanks for the link. Interesting and sensible suggestions.

[pb4uski]

Quote:

Originally Posted by REWahoo I don't think this has been posted prior to now. Here's a website devoted entirely to an explanation of the "Obamacare Cliff" - and how to turn it into a more gradual slope: The Obamacare Cliff

Very interesting. The key issue would be what the slope of the green and blue lines in the first graph on the "Fix the Cliff" page should be. I could see an argument for keeping the slope similar to the slope of the lines at less than 400% FPL but extend the graph to the right (to higher incomes) to eliminate the cliff. Or something in between.

While I like the proposed fixes in principle, I do wonder if they would make the whole program so much more expansive that it would become prohibitively expensive and dramatically increase the budget deficit and national debt such that we are just trading one problem for another.

[bondi688]

Looks like there will be a fair number of people ending up having to get subsidy to help pay for health insurance premium when one looks through that chart. Where is the government getting that money and where is the overall saving if the government has to come up with a lot of money as subsidy for those who cannot afford paying the premium? And how many government workers need to be hired to figure out, process and pay out all those subsidy? Again, please do not take it as a partisan question, but a budgetary question.

[REWahoo]

Quote:

Originally Posted by pb4uski While I like the proposed fixes in principle, I do wonder if they would make the whole program so much more expansive that it would become prohibitively expensive and dramatically increase the budget deficit and national debt such that we are just trading one problem for another.

As usual, the devil is in the details...

[REWahoo]

Quote:

Originally Posted by bondi688 Looks like there will be a fair number of people ending up having to get subsidy to help pay for health insurance premium when one looks through that chart. Where is the government getting that money ...

Once again, the devil is in the details...

Quote:

+.9% Increase in Medicare Tax Rate (plus next item…) 3.8% New Tax on unearned income for high-income taxpayers= $210.2 billion ($200,000 for individual and $250,000 for joint filers) New Annual Fee on health insurance providers = $60 billion (For calculation - Sec 9010 (b) of the PPACA.)[1] 40% New Tax on health insurance policies which cost more than $10,200 for an individual or $27,500 for a family, per year = $32 billion (inland tax as opposed to an importation tax) New Annual Fee on manufacturers and importers of branded drugs = $27 billion (For calculation - Sec 9008 (b) of the PPACA)[2] 2.3% New Tax on manufacturers and importers of certain medical devices = $20 billion +2.5% Increase (7.5% to 10%) in the Adjusted Gross Income floor on medical expenses deduction = $15.2 billion Limit annual contributions to $2,500 on flexible spending arrangements in cafeteria plans (plans that allow employees to choose between different types of benefits) = $13 billion All other revenue sources = $14.9 billion 10% New Tax imposed on each individual for whom “indoor tanning services” are performed. 3.8% New Tax on investment income. Includes: gross income from interest, dividends, royalties, rents, and net capital gains. Investment income does not include interest on tax-exempt bonds, veterans’ benefits, excluded gain from the sale of a principle residence, distributions from retirement plans, or amounts subject to self-employment taxes. (The lesser of net investment income or the excess of modified Adjusted Gross Income over a the dollar amount at which the highest income tax bracket, typically $250,000 for married filing jointly and $200,000 filing as an individual).

Obamacare Funding

[gerrym51]

one other thing-in massachusettes you have to apply for the subsidy every year

[samclem]

I wonder about the incentives for fraud given the subsidies, cliff/cutoffs, etc. If my cousin is below 400% of the FPL, has 3 kids and is getting the subsidy and a family insurance plan, there's a lot of incentive to enroll my child under her insurance plan if I'm above the 400% cutoff. She's paying the family rate for insurance (so one more child won't cost more, right?). That would be the most difficult dodge to conduct (requiring one false birth certificate), the easier stuff (income hiding, etc) will be very common near the subsidy cutoff.

[marko]

Not to add another line in a very long formula, but won't insurance premiums still be tax deductible?
For those over the cliff, that could provide some small solace, or is there a 'second cliff' (income level) where that deductible would no longer apply?