Obamacare in the supreme ct

[MichaelB]

It appears to me that large groups have less underwriting than small groups yet also have lower premiums. Changes in premiums are far more exposed to factors such as cross subsidies and tax treatment. Death spiral? Hardly.

 

[ziggy29]

I will share my opinion as I respect your also. I think the new law is somewhat better than what we have now for the following reason. I think that we only have two choices, the new law, or go back to the old system. The actions of the parties say they will not offer improvements as they have not yet in meaningful way. If they were serious the repeal bill would have detailed the replacement options and would have quite possibly garnered enough votes to pass.

There are aspects of this law I very strongly dislike. I don't like how the subsidy phases out to feel like an additional 15% tax on middle class incomes, and I don't like the stupid requirement of "going naked" for 6 months before you can buy into the federal high risk pool. And I don't like that the 800-pound gorilla in the health insurance problem -- runaway inflation -- was basically ignored. But I don't know that keeping the status quo is a better option.

I would like to see them going to work to fix some of what I think are oversights and deficiencies, but I don't want to see an outright repeal unless it comes with something better at the same time -- not later, but at the time of repeal.

 

[ziggy29]

It appears to me that large groups have less underwriting than small groups yet also have lower premiums. Changes in premiums are far more exposed to factors such as cross subsidies and tax treatment. Death spiral? Hardly.

Economies of scale are certainly a factor, but additionally many large employer-sponsored groups (including my employer's plan) are self-funded where the employer actually pays out the claims, so the only "profit" for the insurance company is in their administration of the plan, reducing overhead.

 

[fisherman]

There are aspects of this law I very strongly dislike. I don't like how the subsidy phases out to feel like an additional 15% tax on middle class incomes, and I don't like the stupid requirement of "going naked" for 6 months before you can buy into the federal high risk pool. And I don't like that the 800-pound gorilla in the health insurance problem -- runaway inflation -- was basically ignored. But I don't know that keeping the status quo is a better option.

I would like to see them going to work to fix some of what I think are oversights and deficiencies, but I don't want to see an outright repeal unless it comes with something better at the same time -- not later, but at the time of repeal.

I agree with your comments. Thanks to all for sharing. If our politicians would only do the same!

 

[explanade]

From what I have read, and the last decision by the appeals court, it looks like this might get through.... IOW, most of the people who I have seen on TV say the 4 liberal judges will vote to keep it and there are two or three conservative judges that might vote to keep it since it would follow some of their previous decisions on other cases... IOW, it might not be 5-4...

That's what some Court watchers expect, that upholding the individual mandate, as conservative Appeals Court judge Laurence Silverman did recently, would be consistent with their previous rulings.

But of course, that's no guarantee.

Then there is the issue of severability. Court could rule the individual mandate is unconstitutional but uphold the rest of the provisions, such as no pre-existing conditions, no price discrimination based on age, etc., which is what one federal court ruled.

Or they could strike the whole thing down, which means rising premiums, more people losing coverage and the politicians unable/unwilling to make major reforms on something which will eat up more and more of the GDP.

 

[FUEGO]

The timing of the expected decision is certainly convenient in one sense. The decision is due in June. If the law stands intact, it seems that those with pre-existing conditions looking to ER could decide to do so on or after July 1 and get coverage under COBRA for 18 months. This would provide guaranteed issue coverage until 1/1/2014 at which time pre-existing exclusions are no longer permitted. Think we'll see the labor force participation rate take a spike downwards if the law and particularly the mandate is upheld?

The supreme ct could uphold or strike down some or all of the obamacare provisions - sure. But that is not the only way obamacare could be impacted in the next 2 years. The 2012 elections could result in a land slide victory for the republicans who get a sufficient majority to overhaul or kill obamacare, right? And that could theoretically happen into 2013.

 

[Mulligan]

The supreme ct could uphold or strike down some or all of the obamacare provisions - sure. But that is not the only way obamacare could be impacted in the next 2 years. The 2012 elections could result in a land slide victory for the republicans who get a sufficient majority to overhaul or kill obamacare, right? And that could theoretically happen into 2013.

Your situation could happen so I wonder if the "good stuff" like keeping children on your policy was front loaded on purpose, to try to boost public support for the entire plan. Out of curiosity, since my individual plan was bought prior to the Health Care Act, I checked qoutes on my exact plan that is offered now. It is 25% higher than what I am paying. Now it isnt as bad as it sounds because my premium is about $72, and its now about $90. You take the difference in monthly premium and times it by 12 and the difference basically is the cost of the "free" annual physical that is now mandated. It appears the insurance company just passed that cost on in the form of a premium increase. In my case anyways, it appears a wash.

 

[dgoldenz]

It appears to me that large groups have less underwriting than small groups yet also have lower premiums. Changes in premiums are far more exposed to factors such as cross subsidies and tax treatment. Death spiral? Hardly.

I am not talking about large groups versus small groups. I'm talking about group health insurance prices versus individual health insurance prices. Most of my clients cannot afford more than ~$100-200/month per person insured, so raising the price for them to obtain coverage to $250-600/month per person insured is not going to help anything. Younger, healthier people will mostly take their chances opting out of the system until they need it. As there are less young and healthy people in the pool, rates will have to increase to account for the older, sicker population of the pool. This will further drive more young/healthy out of the pool, and the process repeats itself until only the unhealthiest with urgent, immediate, expensive needs are left. That is an insurance death spiral.

On a side note, if nothing changes, the small group market will likely be obliterated when 2014 comes around. There would be no incentive for small business owners to offer health insurance as an employee benefit when it is easily obtainable on the open market at the same prices. There will probably be a lot more HRA plans where the employer just gives the employee a fixed amount each month to use towards whatever coverage they want.

 

[MichaelB]

I am not talking about large groups versus small groups. I'm talking about group health insurance prices versus individual health insurance prices. Most of my clients cannot afford more than ~$100-200/month per person insured, so raising the price for them to obtain coverage to $250-600/month per person insured is not going to help anything. Younger, healthier people will mostly take their chances opting out of the system until they need it. As there are less young and healthy people in the pool, rates will have to increase to account for the older, sicker population of the pool. This will further drive more young/healthy out of the pool, and the process repeats itself until only the unhealthiest with urgent, immediate, expensive needs are left. That is an insurance death spiral.

I understood what you meant, but you missed my point. To focus only on the rates of a select few that are young and healthy, whine that those rates will increase and call it a death spiral is an exaggeration.

On a side note, if nothing changes, the small group market will likely be obliterated when 2014 comes around. There would be no incentive for small business owners to offer health insurance as an employee benefit when it is easily obtainable on the open market at the same prices. There will probably be a lot more HRA plans where the employer just gives the employee a fixed amount each month to use towards whatever coverage they want.

If the small group market is "obliterated" the US would be better off. Pricing in that segment is an abuse and forcing health insurance through employment makes companies uncompetitive.

 

[dgoldenz]

I understood what you meant, but you missed my point. To focus only on the rates of a select few that are young and healthy, whine that those rates will increase and call it a death spiral is an exaggeration.

If the small group market is "obliterated" the US would be better off. Pricing in that segment is an abuse and forcing health insurance through employment makes companies uncompetitive.

The two go hand-in-hand. If the small group market disappears, young healthy people will be even more likely not to make the choice of buying health insurance because for most of them, it hasn't even entered their mind until the employer offers it to them (note - I personally don't think health insurance should be tied to employment).

Whether young and healthy or older and healthy, the higher rates go, the less likely that any healthy people will be to buy health insurance, and we end up right back in the death spiral. I think you may be highly underestimating the actual cost of insurance in 2014 on the individual market.

 

[Mulligan]

The two go hand-in-hand. If the small group market disappears, young healthy people will be even more likely not to make the choice of buying health insurance because for most of them, it hasn't even entered their mind until the employer offers it to them (note - I personally don't think health insurance should be tied to employment).

Whether young and healthy or older and healthy, the higher rates go, the less likely that any healthy people will be to buy health insurance, and we end up right back in the death spiral. I think you may be highly underestimating the actual cost of insurance in 2014 on the individual market.

IMHO, I have to agree with you. Although I have dutifully either paid for or recieved health insurance my entire adult years, at 47 years old now, and from here on out, I am in the individual market ( I could have stayed on my employers health plan, but prefer to pay under a $1000 a year, than over $6000 a year in premiums). But, if rates spiral out of control when the full plan is implemented and the penalty for not having it is considerably cheaper, I will be very tempted to go without and pay the fine. I say this purely from a statiscal odds stand point that what about, a quarter or so of the population consume most of the healthcare costs. Knowing where I am healthwise and my family health, the odds are very stacked in my favor that Ill be past 65 before I need much medical assistance. Im sure healthy 25 year olds would be more inclined than I am to gamble, too. Barring a car wreck or falling off a roof, I truly believe I will spend more on my teeth than any health issues, before 65. I would have preferred "A National Dental Care Act" more than the Health Care Act, but I admit for the time being that I am fortunate that health costs and premiums are minimal expenses to me now. If I had unfortunate health issues, I know my opinion would be very different, or I would still be working staying teethered to the company paid health plan.

 

[ziggy29]

I am not talking about large groups versus small groups. I'm talking about group health insurance prices versus individual health insurance prices. Most of my clients cannot afford more than ~$100-200/month per person insured, so raising the price for them to obtain coverage to $250-600/month per person insured is not going to help anything. Younger, healthier people will mostly take their chances opting out of the system until they need it. As there are less young and healthy people in the pool, rates will have to increase to account for the older, sicker population of the pool. This will further drive more young/healthy out of the pool, and the process repeats itself until only the unhealthiest with urgent, immediate, expensive needs are left. That is an insurance death spiral.

I don't know anyone who is advocating a system that produces massive adverse selection as you are describing here. Yes, if done wrong -- if there is no universal mandate and there are insufficient penalties for going uninsured -- this could happen.

Pretty much everyone who supports a system with no underwriting recognizes that it can not happen without a "universal mandate" -- and the penalty for noncompliance needs to be stuff, at least as expensive as a high deductible health insurance policy would cost. And as I've said before, with public subsidies (or a public option) there are ways to recoup the costs of "unhealthy lifestyle choices" at the cash register.

 

[dgoldenz]

I don't know anyone who is advocating a system that produces massive adverse selection as you are describing here. Yes, if done wrong -- if there is no universal mandate and there are insufficient penalties for going uninsured -- this could happen.

Pretty much everyone who supports a system with no underwriting recognizes that it can not happen without a "universal mandate" -- and the penalty for noncompliance needs to be stuff, at least as expensive as a high deductible health insurance policy would cost. And as I've said before, with public subsidies (or a public option) there are ways to recoup the costs of "unhealthy lifestyle choices" at the cash register.

The penalties in the healthcare bill are not even close to the cost of health insurance, making it an easy choice for people who wouldn't otherwise buy anyway. The way the bill is written, anyone buying a policy outside the exchange will have to pay the penalty in addition to the cost of health insurance simply because their policy doesn't meet the government's definition of the health insurance that people should have. Therefore, with the cost of health insurance inside the exchange being so expensive, many people will opt out and the adverse selection will begin. That is my opinion and while you don't have to agree with me, I challenge you to try selling health insurance for more than $100/month to young healthy people and see how far you get.

 

[Mulligan]

The penalties in the healthcare bill are not even close to the cost of health insurance, making it an easy choice for people who wouldn't otherwise buy anyway. The way the bill is written, anyone buying a policy outside the exchange will have to pay the penalty in addition to the cost of health insurance simply because their policy doesn't meet the government's definition of the health insurance that people should have. Therefore, with the cost of health insurance inside the exchange being so expensive, many people will opt out and the adverse selection will begin. That is my opinion and while you don't have to agree with me, I challenge you to try selling health insurance for more than $100/month to young healthy people and see how far you get.

Concerning the governments definition of health insurance, I know many people have expressed concern over the future of HSA's. There has been a furious movement to this type of coverage by companies for their employees. Will this unfolding process help protect HSA's after 2014 you think, since so many people will be involved in them by then?

 

[ziggy29]

The penalties in the healthcare bill are not even close to the cost of health insurance, making it an easy choice for people who wouldn't otherwise buy anyway.

I agree that's a problem with the law as passed just as it was (and is) a problem in the Massachusetts law. But that's not something that can't be "fixed" -- it's just something where the political will wasn't there to adequately *enforce* a universal mandate.

 

[samclem]

Pretty much everyone who supports a system with no underwriting recognizes that it can not happen without a "universal mandate"

We may get a chance to find out, if the SC invalidates the universal mandate but not the rest of the law.

If the mandate is thrown out, I still challenge the notion that universal coverage cannot be accomplished. But it would take a very big change in our collective present mindset. Fundamentally, which is the statement we (as a nation) believe is most accurate:

1) There is no right to health care and we should have no mandatory taxation to force one person to pay for the health care of others.

2) There may be no "right" to health care enshrined in the Constitution, but we should have mandatory taxation that provides everyone the opportunity to buy their own affordable (defined as XXX--probably a sliding scale based on income or assets) health insurance (defined as xxx). If, despite this, they don't buy the health insurance and have not been legally declared incompetent, we have no further obligation to provide for their health care. Americans may choose to support such cases through voluntary charitable contributions. In addition, we should expect non-governmental "sanctions" for those who elect not to purchase this affordable insurance, as this is a sign of financial and personal irresponsibility. (Credit ratings, rates for other insurance, hiring actions/promotions, child custody decisions, civil suits, etc).

3) There is (or should be) a right for every American to have health care, and we will have mandatory taxation of some people to pay for as much health care for everyone as we (collectively) decide is best. No one needs to buy individual health insurance policies. But if you aren't happy with the services provided by the "collective", you are on your own.

None of these options requires an individual mandate to buy health insurance.

 

[MichaelB]

The penalties in the healthcare bill are not even close to the cost of health insurance, making it an easy choice for people who wouldn't otherwise buy anyway. The way the bill is written, anyone buying a policy outside the exchange will have to pay the penalty in addition to the cost of health insurance simply because their policy doesn't meet the government's definition of the health insurance that people should have. Therefore, with the cost of health insurance inside the exchange being so expensive, many people will opt out and the adverse selection will begin. That is my opinion and while you don't have to agree with me, I challenge you to try selling health insurance for more than $100/month to young healthy people and see how far you get.

You are focused on individual health care insurance for young healthy people. They have much more to fear than a health care reform bill being implemented. Underwriters will deny them coverage or make their price unaffordable when they are no longer "young and healthy". Keeping a low premium for a few helps sell new policies each year but it does nothing to advance or enable health care for the vast majority of people.

Prices and coverage for health care are badly distorted by cross subsidies, unequal tax treatment, uneven regulation, price gouging, and underwriting. There are many aspects of the reform that need to be improved. Fix, not impede.

 

[ziggy29]

You are focused on individual health care insurance for young healthy people. They have much more to fear than a health care reform bill being implemented. Underwriters will deny them coverage or make their price unaffordable when they are no longer "young and healthy". Keeping a low premium for a few helps sell new policies each year but it does nothing to advance or enable health care for the vast majority of people.

This is true, but today's 20-somethings have their older GenX cohorts to look to. It's fine and good to say "we need to transfer from young to old for the protection of all older generations, including those who are young today" -- except that we GenX 40-somethings have seen that this "deal", whether it is Medicare, SS, pensions or any other number of transfer programs to older people, are getting to be a worse and worse deal for each successive generation. We're old enough to remember the 1980s SS "reform" that raised our taxes, increased our FRA to 67 and being told that would "secure" us for the next 75 years or more (i.e. that would "fix" SS for our lifetimes). Fool me twice, shame on me?

Today's young people can't be faulted for believing that the deal they would get in their elderly years won't be as good as what today's seniors (or my generation, for that matter) will get.

This is one of the ongoing problems with any "generational warfare" issue involving intergenerational wealth transfer -- the "deal" erodes with each successive generation, starting out to be a great deal for the current elderly, a decent deal for the next generation and terrible for the youngest generations. And I think it's why younger people are more likely to think something must be a terrible deal for them if AARP is for it. That's why what we need to do needs to be sustainable across generations, and we need to resist the urge to "increase" the benefits during boom years that never last forever.

 

[dgoldenz]

You are focused on individual health care insurance for young healthy people. They have much more to fear than a health care reform bill being implemented. Underwriters will deny them coverage or make their price unaffordable when they are no longer "young and healthy". Keeping a low premium for a few helps sell new policies each year but it does nothing to advance or enable health care for the vast majority of people.

Prices and coverage for health care are badly distorted by cross subsidies, unequal tax treatment, uneven regulation, price gouging, and underwriting. There are many aspects of the reform that need to be improved. Fix, not impede.

We will agree to disagree then. Of the different market segments, the individual health insurance market is going to be the most impacted segment by far. Again, I would challenge you to try selling health insurance for more than $100/month to people under age ~30 and see how well it works out. Unless they plan on "using" their health insurance with a pregnancy or scheduled surgery, you won't get many takers. Jump that price to $200-400/month for an individual and $800-1500/month for a family and you will have few, if any healthy people signing up. I can probably count the number of my under-35 clients that can afford $1000/month for family coverage on one hand.

This is true, but today's 20-somethings have their older GenX cohorts to look to. It's fine and good to say "we need to transfer from young to old for the protection of all older generations, including those who are young today" -- except that we GenX 40-somethings have seen that this "deal", whether it is Medicare, SS, pensions or any other number of transfer programs to older people, are getting to be a worse and worse deal for each successive generation. We're old enough to remember the 1980s SS "reform" that raised our taxes, increased our FRA to 67 and being told that would "secure" us for the next 75 years or more (i.e. that would "fix" SS for our lifetimes). Fool me twice, shame on me?

Today's young people can't be faulted for believing that the deal they would get in their elderly years won't be as good as what today's seniors (or my generation, for that matter) will get.

This is one of the ongoing problems with any "generational warfare" issue involving intergenerational wealth transfer -- the "deal" erodes with each successive generation, starting out to be a great deal for the current elderly, a decent deal for the next generation and terrible for the youngest generations. And I think it's why younger people are more likely to think something must be a terrible deal for them if AARP is for it. That's what we need to do needs to be sustainable across generations, and we need to resist the urge to "increase" the benefits during boom years that never last forever.

x2 on everything said here. As a (relatively) young person myself, this is how I see the future of all entitlement programs. Great deal for older people now, but I have no hope of counting on SS or Medicare to be anything remotely close to their current form by the time I am 65 and have to plan my retirement accordingly.

 

[dgoldenz]

Concerning the governments definition of health insurance, I know many people have expressed concern over the future of HSA's. There has been a furious movement to this type of coverage by companies for their employees. Will this unfolding process help protect HSA's after 2014 you think, since so many people will be involved in them by then?

I really have no idea how things will shake out with HSA's in the future. They will probably become nearly extinct in the individual market unless the law is changed since anyone with an HSA plan will have to pay the penalty and for the insurance on top of that. Remains to be seen how the group market will be impacted. Self-insured groups will probably see no change.

 

[haha]

I believe that this plan, no matter it looks when it is set into motion, will work at best for a few years. We then will turn to taxation to pay premiums, and some sort of control of what gets done for (to) whom.

Ha

 

[fisherman]

We will agree to disagree then. Of the different market segments, the individual health insurance market is going to be the most impacted segment by far. Again, I would challenge you to try selling health insurance for more than $100/month to people under age ~30 and see how well it works out. Unless they plan on "using" their health insurance with a pregnancy or scheduled surgery, you won't get many takers. Jump that price to $200-400/month for an individual and $800-1500/month for a family and you will have few, if any healthy people signing up. I can probably count the number of my under-35 clients that can afford $1000/month for family coverage on one hand.




x2 on everything said here. As a (relatively) young person myself, this is how I see the future of all entitlement programs. Great deal for older people now, but I have no hope of counting on SS or Medicare to be anything remotely close to their current form by the time I am 65 and have to plan my retirement accordingly.

Since over 90% of the 30 and under group will get a significant subsidy to purchase it might not be to hard to sell. This is based upon the fact that over 90% of 30 somethings make less than 80K per year.

 

[dgoldenz]

~

Since over 90% of the 30 and under group will get a significant subsidy to purchase it might not be to hard to sell. This is based upon the fact that over 90% of 30 somethings make less than 80K per year.

That's only with a family of 4 and the closer they get to the 400% of FPL mark, the less the subsidy is. A single person making ~$40k or a couple making a combined ~$56k will get no subsidy at all.

 

[fisherman]

That's only with a family of 4 and the closer they get to the 400% of FPL mark, the less the subsidy is. A single person making ~$40k or a couple making a combined ~$56k will get no subsidy at all.

Okay I will work with your numbers and provide some more info. 75% of the individual population in the US that has an income makes less than 53K per year. Another data point 6.24% make over 100K per year. So in your example 75% would still be able to afford insurance as they would get a subsidy and of that 75%, all would be able to buy it as they would not have to pass underwriting. This is way way better than the numbers that could today. Not the perfect solution but better than today.

 

[dgoldenz]

Okay I will work with your numbers and provide some more info. 75% of the individual population in the US that has an income makes less than 53K per year. Another data point 6.24% make over 100K per year. So in your example 75% would still be able to afford insurance as they would get a subsidy and of that 75%, all would be able to buy it as they would not have to pass underwriting. This is way way better than the numbers that could today. Not the perfect solution but better than today.

Getting a subsidy doesn't mean they will buy it. Someone making $35k is unlikely to spend $300/month on health insurance if they are healthy. The subsidies phase out as income gets closer to the 400% of FPL mark. Joe Taxpayer is funding those subsidies too, so anyone not receiving is a subsidy is not only paying more for their health insurance, they are also picking up the tab for everyone under 400% of FPL too. The real cost to someone making over the subsidy limit is a massive increase for anyone under age ~50 or without major health issues.