Further problems with ACA implementation

by on May 20, 2013 at 3:41 pm in Law, Medicine | Permalink

From Christopher Weaver and Anna Wilde Mathews:

Employers are increasingly recognizing they may be able to avoid certain penalties under the federal health law by offering very limited plans that can lack key benefits such as hospital coverage.

Benefits advisers and insurance brokers—bucking a commonly held expectation that the law would broadly enrich benefits—are pitching these low-benefit plans around the country. They cover minimal requirements such as preventive services, but often little more. Some of the plans wouldn’t cover surgery, X-rays or prenatal care at all. Others will be paired with limited packages to cover additional services, for instance, $100 a day for a hospital.

Federal officials say this type of plan, in concept, would appear to qualify as acceptable minimum coverage under the law, and let most employers avoid an across-the-workforce $2,000-per-worker penalty for firms that offer nothing. Employers could still face other penalties they anticipate would be far less costly.

It is unclear how many employers will adopt the strategy, but a handful of companies have signed on and an industry is sprouting around the tactic. More than a dozen brokers and benefit-administrators in 10 states said they were discussing the strategy with their clients.

There is more detail at the link, including a discussion of some of the legal uncertainties.  Veronique de Rugy adds comment here.

mavery May 20, 2013 at 4:02 pm

If these “minimum” plans covered catastrophic stuff, I could see this as a feature rather than a bug.

Adrian Ratnapala May 20, 2013 at 4:06 pm

The quoted text makes it sound like the opposite (though that is hardly conclusive):

They cover minimal requirements such as preventive services, but often little more. Some of the plans wouldn’t cover surgery, X-rays or prenatal care at all.

Andrew' May 20, 2013 at 4:11 pm

Catastrophic is fine, as long as they cover birth control pills.

JonF May 21, 2013 at 8:07 pm

The problem is it’s the catastrophic stuff which makes health coverage expensive. Doctors visits and the like are small change for insurance plans and plans that pay for stuff like that will be cheap.

JWatts May 20, 2013 at 4:30 pm

“We wouldn’t have anticipated that there’d be demand for these types of band-aid plans in 2014,” said Robert Kocher, a former White House health adviser who helped shepherd the law. “Our expectation was that employers would offer high quality insurance.”

Really? I can’t say as any of this surprises me in the least and this kind of result has been widely predicted.

dead serious May 20, 2013 at 5:34 pm

That’s a weird way of putting it: I doubt there’s high demand for that dreck. There may be a lot of (forced) supply of it though.

Mike May 20, 2013 at 6:09 pm

The problem is the “high quality” coverage costs far more than anyone thinks it’s really worth. My company actually uses a moderate-sized deductible (and reasonable out-of-pocket max, which we hit last year when our son was born, for example) to make our plan affordable. Under the ACA this setup is illegal, so I expect premiums to go up a lot.

mulp May 21, 2013 at 12:36 am

By “moderate-sized deductible” you mean $10,000 to $25,000???

A “bronze” class plan has deductibles in the $2000 range for an individual and $5000 for a family.

The law does require HHS to monitor the deductible levels in conjunction with unpaid bills resulting in uncompensated care being billed to others. If these high deductible policies mean systematic non-payment of bills and subsequent cost shifting, that means one of the goals of ACA, ending the cost shifting of uncompensated care is not happening.

One of the things about the policies that companies like Wal-Mart was offering a number of years ago was they did absolutely nothing to reduce the uncompensated care provided to Wal-Mart employees, so employees were paying for worthless insurance that did not pay any of their medical bills nor reduce the cost to government or other users of the system.

JonF May 21, 2013 at 8:09 pm

Define ‘moderate deductible”. My workplace plan has a 500$ deductible (same as my auto and renters policies). That’s what I consider to be “moderate”– most people do not run up that high a healthcare bill during a given year after all. As far as I know that sort of plan will not be illegal under the ACA.

Thomas May 20, 2013 at 4:33 pm

It sounds like it will be a good time to be a young man looking for a job at smaller companies, and not a good time to be a young woman.

Allan May 20, 2013 at 4:36 pm

I am confused.

For those employers who offer good insurance, it stands to reason that they will continue the good insurance for their employees. I mean, really, if their employees were worth the expense before, what about ACA makes them less worth the expense?
For those employers who offer no insurance, these plans are an improvement for their employees.

Is it just me?

Andrew' May 20, 2013 at 4:43 pm

“Good insurance” are the new Cadillac plans, I say.

bluto May 20, 2013 at 4:58 pm

I would think there would be some risk of the issue of daycare late fees, where daycares found that after implimenting late fees incidences of late pickups rose, because people tended to regard late pickups as a status cost, but once it converted to a finanical penalty the status cost dropped to zero, and the monetary cost was frequently less than the cost of arriving late.

Jan May 20, 2013 at 7:26 pm

I don’t see it happening. Those companies will still have to answer to their employees, who by now expect decent insurance. It would be terrible for morale if people who used to get decent insurance packages have their compensation suddenly reduced to barebones policies, and this at the same that most of the formerly uninsured are finding they can get coverage through their employer or the state.

David Wright May 20, 2013 at 5:38 pm

These aren’t the employers who have been offering “good insurance”. It’s the employers who either offered no insurance and Obamacare is now requiring them to offer insurance, or employers who were offering minimal insurance and now have to re-shape their offerings. Instead of providing the most utility to employees for the given small amount of money they are willing to pay, they are re-shaping their offerings to provide less utility, but cover the specific things required by the ACA. The ACA architects, of course, really wanted them to spend more money.

mulp May 21, 2013 at 12:42 am

In other words, these are the free riders who expect the national and global corporations and government to provide free health care to their employees in addition to the low wages they pay which then result in their employee food and housing costs being transferred to other big employers and government. Of course, government means taxpayers.

Dave T May 20, 2013 at 5:41 pm

I dunno, a huge rise in premiums might cause them to think twice about their insurance offering.

mdv1959 May 20, 2013 at 7:42 pm

“it stands to reason that they will continue the good insurance for their employees”

What if it those plans become prohibitively expensive under the new law? I think there’s a very real chance that premiums will skyrocket and suddenly the money that used to pay for “good” plans will only be enough to pay to minimal plans that meet the letter of the law. At that point either employers will have to kick in substantially more money to maintain the quality of their coverage, ask for greater contributions from the employees or switch to the reduced coverage in order to keep costs in line.

Jan May 20, 2013 at 9:08 pm

What about falling healthcare costs and the fact that more people will enter the insurance pool makes you think that premiums will skyrocket?

KLO May 20, 2013 at 9:13 pm

The government will be providing huge subsidies for insurance purchased through an exchange, and people’s contributions are capped as a percentage of their income. This will drive up the demand for services, increase the third-party payer problem, and ultimately increase plan premiums. Count on it.

Cliff May 20, 2013 at 10:18 pm

Falling healthcare costs??? How about all the mandated coverages, pre-existing condition coverage, age 26 family policy coverage, reinforcement of supply restrictions, etc.?

Jan May 21, 2013 at 6:36 am

I think the point of this article was that much of the insurance being offered really isn’t all that great (read – expensive) and gets around many of the items in your list. In some cases it costs less than what the employers are paying now.

Boonton May 21, 2013 at 9:45 am

What if it those plans become prohibitively expensive under the new law?

Why would they? They are essentially the same plans covering the same stuff. If anything the addition of some ‘cheapo’ plans to cover the previously uncovered might eliminate a bit of cost shifting making the good plans a little bit less costly.

JonF May 21, 2013 at 8:15 pm

Re: What if it those plans become prohibitively expensive under the new law? I think there’s a very real chance that premiums will skyrocket

Why? I mean, why would healthcare costs skyrocket beyond current levels of healthcare inflation? There’s no empirical reason to think that they would– that has not happened in Massachusetts, or in Switzerland or the Netherlands, which have ACA-like systems. Moreover healthcare inflation is slowing. Will that continue? Who knows? But the initial signs are good ones.
And if skilled employees insist on good healthcare plans (else they will quit and work for someone else) then employers will have to provide that or lose good people. Sometime markets do work after all: employers can’t simply impose whatever they want on their employees anymore than they can set the price they pay their vendors. Costs go up, you deal with it: maybe cut backs elsewhere, maybe raise the prices on goods and services. But if everyone is in the same boat then no one is at a competitive disadvantage.

Andrew_M_Garland May 21, 2013 at 1:03 am

There is a heavy tax on workers already part of Obamacare, but not yet in effect. Employers who do not provide ObamaCare approved health insurance will pay a penalty of 8% of uncovered employee salary.

This doesn’t affect employees whose current insurance meets the mandates of ObamaCare and the employer-paid part costs less than 8% of their salary. Their company paid health insurance will continue.

Say your company paid insurance costs less than 8% of your salary and does not meet the ObamaCare mandates. $13,000 of insurance is 8% of $162,500, which catches most employees. The employer will have to upgrade to approved insurance, pay the 8% penalty, or fire the employee, whichever is economically best.

Any increase in insurance costs will come out of current take-home pay. If the employer does not provide insurance, the 8% penalty will come out of take-home pay. The employee will be paying the increased costs or the penalty! Why, because the penalty is a cost of employment, and total employee earnings pay for all benefits and costs. Then, the employee will be required to buy subsidized insurance from the “exchanges” set up by ObamaCare. Most likely, the employee’s total cost of insurance will go up when you include the 8% reduction in cash salary.

Company Paid Health Insurance is Part of Your Salary
If your employer must provide say $6,000 more health insurance, then the employee will be paid $6,000 less in cash.

JonF May 21, 2013 at 8:17 pm

Re: If your employer must provide say $6,000 more health insurance, then the employee will be paid $6,000 less in cash.

See: Sticky wages. Companies will not cut wages because by and large they can’t. They may slow increases in the future of course– though that’s already happened. More likely though they will cut other costs, and raise the prices they charge.

Andrew_M_Garland May 22, 2013 at 1:14 am

Not sticky wages, but a market derived total price for labor. The total compensation for an employee is fairly constant (in each case), determined by competition. The employer can’t pay less for employees because they have other options, and he can’t pay more without losing business and cutting the least productive workers.

If you force the employer to pay more for health insurance, then he will pay less in cash wages. If the employee will not accept less cash, then the employee finds a company which can deliver that cash, maybe a smaller employer not subject to ObamaCare rules.

Wagging Finger May 21, 2013 at 9:24 pm

There is no 8% penalty. So far the only 2 explicit penalties are either $2,000 per employee if coverage isn’t offered to a group of employees, or $3,000 per year per each employee who makes less than 4 times the federal poverty limit and whose employer sponsored coverage costs more than 9.5% of his salary.

Andrew_M_Garland May 22, 2013 at 1:18 am

To Wagging Finger,

You are correct. The 8% is not a penalty, but a cost limit on the employee, above which the employee qualifies for a subsidy.

How Much Will Obamacare’s Penalties Cost You?

Hazel Meade May 20, 2013 at 5:08 pm

The banning of catestrophic-only plans infuriates me the most. Those are the only plans that are actually financially sensible for a healthy individual to purchase. Everything else on the market is a perverse by-product of the employer-based insurance system.

Worst case scenario with a catestropic-only plan is you end up with $10,000 in debt. That’s a debt load many times smaller than what the Federal government thinks students should take out to get a college degree. We’ll let you borrow $100,000 to get a sociology degree but, we think that $10,000 is an unconscionable amount to pay for medical expenses? So unconscionable that we have to FORCE YOU to buy a plan with more extenstive coverage?

Of course, we all know the real reason for this. it’s meant to force healthy young people to subsidize healthcare for older sicker people. Just force them to pay more for insurance than they ought to, and force them to buy more extensive coverage than is rational.

David Wright May 20, 2013 at 5:45 pm

+1

Todd May 20, 2013 at 7:07 pm

Those are the only plans that are actually financially sensible for a healthy individual to purchase.

And when you’re 55 and you and your wife are hitting that 10k every year?

AndrewL May 20, 2013 at 7:26 pm

That is the beauty of HSA’s. which function like IRA’s except that money taken out for medical expenses is also tax free. So in your healthy years, you save money in your HSA and at the same time it grows in an investment vehicle tax free, and when you retire at 65 or whatever, you have like 500k in it. Plus, the financial incentive to stay healthy and save money means you are healthier in your elder years and require less medical services. It’s win win win.

I mean, if you think about the premiums you have to pay for a HMO vs HDLP + HSA, it comes out to be very similar, only you get to keep more of your money in the HSA. The healthier you are, the more money you save.

dstraws May 20, 2013 at 9:04 pm

Yeah the guy making $25K a year, eventually reaching 50K a year 30 years into his work life is going to save enough with compound interest to make your hypothesized scenario work. It won’t happen. So you are stuck with a lot of people who will not be able to get decent healthcare. But hey too bad for the 40% of workers who will never reach that goal. Its their fault!

Skeptic May 20, 2013 at 10:00 pm

Better to screw over young people then, isn’t it?

Cliff May 20, 2013 at 10:19 pm

Well, if the premiums are enough less that you could save the difference in your HSA, then yeah. Either he will get there, or he will spend the money on other more important things.

Hoosier May 21, 2013 at 9:59 am

That somebody had to get screwed over is the ultimate indictment of the health care system in the US.

Hazel Meade May 21, 2013 at 11:14 am

Well, now there’s proof.
The only way to get to “universal” medical coverage is to screw somebody over.
No matter how you work it out, “positive rights” always involve fucking someone over.

Hazel Meade May 21, 2013 at 11:10 am

Todd, add up all the money that you pay for comprehensive coverage every year, and multiply that by 30.

Say comprehensive coverage costs you a modest $200/month. That’s $2,400/year. Which translates to ~$72,000 over 30 years. (and that’s assuming your rates don’t go up as you age).
If you had, instead of blowing it on health insurance, invested that money, you would almost certainly end up with substantially MORE than the $100,000 it would take to pay $10,000/year anually between 55 and 65, when you qualify for Medicare.
Not that spending $10,000/year is likely even at 55.

Miley Cyrax May 20, 2013 at 11:43 pm

That’s the root of the problem: insurance in America is not thought of as something you buy to protect yourself against tail-risk/catastrophic events/expenses, but instead, as something the government should provide to cover costs for events/expenses that you know will occur.

mulp May 21, 2013 at 1:05 am

Do you think those people injured in Boston should have known they would need millions in lifetime medical care and prostheses and rehabilitation? Or people shot in shootings like in that Colorado theater should have known they would be shot? Tho rare, do you think the women (and men) with the BRCA genes should have known they needed to be rich like Jolie to pay for tests and surgery?

What I find interesting is the positions held by those opposed to health insurance:
1. preventive care does not prevent bad health outcomes because doctors don’t know enough to prevent anything
2. you don’t need health insurance because you can prevent bad health outcomes by lifestyle because disease prevention is obvious

8 May 21, 2013 at 2:54 am

Those would all be covered by catastrophic insurance.

As for someone with lower income, they probably would need some help buying insurance when they were older. But the system would work much better if people saved and then the government stepped in to help the chronically ill or older people who exhausted their medical savings. The system would probably be so much more efficient that the government would not need to step in and surplus from the private medical system could be given out charitably. Furthermore, it would reduce spending of end of life care. Someone with terminal cancer and $200,000 in medical savings can decide to spend it on extending their life several months, blowing it all on doing things they always wanted to do, giving it to charity, leaving it to their children, etc.

Hazel Meade May 21, 2013 at 11:04 am

Did you not read what I said, or do you not understand the concept of a “deductible”?

The people who got shot in Colorado, or injured in Boston, or who get Breast Cancer, would pay a MAXIMUM $10,000 for that. That is what “catestrophic-only” coverage IS. Thet is what “high-deductible” means. Learn to read.

Bernard Guerrero May 21, 2013 at 12:39 pm

A) You can get a BRCA test as part of the package for $90 at 23andMe and, I would expect in short order, a number of other similar providers. You’re welcome.

B) The massive injuries and/or lifetimes of care you mention can be handled via catastrophic plans. Which are actual insurance, as opposed to a forced savings scheme + the dole.

C) The last two positions you mention are not contradictory. The most obvious preventative moves you can make to improve health outcomes _are_ pretty well self-evident, and well-noted in the culture: eat less, eat better, run your ass around the block a few times, don’t drink to excess, etc. But having a doctor scold you about the aforementioned doesn’t seem to change behavior very much.

JonF May 21, 2013 at 8:26 pm

We also know that there will be crime, and that buildings will catch fire. Should government not provide for police protection and criminal justice system, or for fire fighting? Maybe we should all just be on our own there too? And what about natural disasters? Tornadoes in Oklahoma are a given too– maybe we should just flip the finger to those people out there since they should know they are in tornado alley– after all, their senators have done as much (a bit less crassly) to other parts of the country.

JonF May 21, 2013 at 8:22 pm

Re: it’s meant to force healthy young people to subsidize healthcare for older sicker people.

Healthy young people do not stay that way– even if they delude themselves into thinking they are immortals. Unless they are unlucky enough to die young, they will eventually become sick old people (and to be sure there is such a thing as unhealthy young people and healthy old people). Basically, the money spent now is a downpayment for their future.
Ultimately healthy people will always subsidize sick people– unless one wishes to institute a eugenic “paradise” where the sick are simply killed out of hand– and which would richly deserve the wrath of every god known to mankind, and a few nukes besides.

BC May 23, 2013 at 5:10 pm

Basically, the money spent now is a downpayment for their future.

Um, no. You’re stealing money from A to pay for B. That you will someday steal more money from C to pay for A doesn’t mean that the money you’re stealing from A right now constitutes “a downpayment for their future;” that money is being spent immediately, and A is getting absolutely zero future value out of it. It just makes the whole rotten system an intergenerational wealth transfer.

BC May 23, 2013 at 5:28 pm

To put it another way:

If Democrats had wanted a system in which everyone more or less pays his own way for healthcare, and younger workers were legitimately making a “downpayment for their future” by contributing during their healthiest years to some kind of health savings accounts, they could have designed one.

The ACA is not that system. Rather, it’s (a) a dole that (b) also converts health insurers into de facto public utilities and (c) forces everybody to buy their product. In no sense is anybody who is forced, right now, to buy insurance they don’t need, right now, making some kind of investment in their future.

Eliot Clingman May 20, 2013 at 5:17 pm

The relationship between these “plans” and “health insurance plans” is the same relationship as between a horse radish and a horse. Namely nothing.

If the article is accurate ( a big if) then the ACA was very badly drafted, due to either corruption, stupidity or both.

Eliot Clingman May 20, 2013 at 5:26 pm

Follow up comment….. Its a WSJ article behind a paywall. Hopefully some one with access will fact check this article with a fine tooth comb!

Sbard May 20, 2013 at 6:31 pm

Just plug the article’s title into google and click on the link.

KLO May 20, 2013 at 8:30 pm

As a follow-up, Michael Cannon’s basic argument that because employers may not need to offer expansive coverage to avoid a 4980H penalty, they will not do it, makes little sense at all. Prior to the ACA, no employer was legally obligated to offer any health coverage at all outside of Massachusetts and yet many did so anyway. If the ACA does not require employers to offer good coverage or pay a penalty, the failure of the ACA to require employers to offer good coverage alone cannot be said to be the cause of employers ceasing to offer good coverage. If Cannon is right (a big if), then employers who are not currently offering good coverage will offer the minimum crap coverage possible that will get them out paying a penalty. Their employees may not be better off, but it is hard to understand how they will be worse off.

KLO May 20, 2013 at 7:56 pm

The ACA requires that actuarial value of individual and small group plans be calculated assuming certain defined “essential health benefits.” Actuarial value is expressed as a percentage of the total cost of these defined essential health benefits that would be covered by the plan. Simplifying a bit, if the typical enrollee would have 60% of his costs covered under the plan assuming he only consumed services that fell within these essential health benefits, then the plan has an actuarial value of 60%.

Large group health and self-insured plans must meet a different “minimum value” standard under which the plan must provide at least 60% of the cost of covered benefits in order for an employer to avoid a penalty for failing to provide coverage that meets the minimum value test. The essential health benefits that are taken into consideration for determining actuarial value of individual and small group health plans are not explicitly required to be used for purposes of determining minimum value. HHS and Treasury have promulgated proposed rules that require something less than coverage of all the essential health benefits.

The issue is: (a) whether Treasury and HHS have the legal authority to interpret the ACA to require a broad class of benefits when performing MV testing; and (b) assuming such authority exists, whether HHS and Treasury will so require.

Rich Berger May 20, 2013 at 6:48 pm

Hah, ya think? These were smart people who put this together.

Nancy Pelosi May 20, 2013 at 10:03 pm

But we have to pass the bill so that you can find out what is in it.

John Skookum May 20, 2013 at 8:41 pm

Excellent. The more sabotage, the better. Let us make this country ungovernable.

Andrew' May 21, 2013 at 6:18 am

By “sabotage” I assume you are talking about adding thousands of dollars per head to the costs of small and medium-sized businesses?

C May 20, 2013 at 8:44 pm

“Part of the problem: lawmakers left vague the definition of employer-sponsored coverage, opening the door to unexpected interpretations, say people involved in drafting the law.”

How on earth do you leave such an essential term vague in legislation of this sort and then act surprised when it is interpreted to the benefit of certain companies seeking to shave costs at the expense of the public good, and certain insurance brokers seeking to make a buck on (hopefully just) the margins of compliance with the law? How can people “involved in drafting the law” call this eventuality “unexpected”?

I negotiate agreements for a living… you don’t screw that sort of legal drafting up and stay employed very long.

KLO May 20, 2013 at 8:51 pm

A lot of things in the article are wrong. Everyone involved intended this result.

The broad intention was to leave employer-sponsored coverage alone so as not to piss off the bulk of the electorate (defined as those who actually vote). It was also thought that the individual market was the market most in need of reform and standardization, because unsophisticated individuals were shopping for plans there. Employers, by contrast, were thought to be more sophisticated and less in need of help in figuring out what different plans offered. Also, employers, especially the self-insured ones, are a powerful lobby. Don’t believe anyone who tells you that there are any surprises here.

kebko May 21, 2013 at 12:23 am

The ACA is the Socialist Calculation Problem on steroids. It’s going to be nothing BUT surprises.

Jacob A. Geller May 20, 2013 at 10:54 pm

If it only covers preventive care, can it even be called “insurance”?

wrparks May 21, 2013 at 7:25 am

I would call it pre-paid medical.

superflat May 20, 2013 at 11:06 pm

i’m perhaps missing sarcasm, but it seems like a lot of folk have no clue about the clueless legislative process that got us here, or somehow seem to think employers should be on the hook for what a certain population/party believes to be the common good, ignoring that these are businesses, not charities. given how the whole thing was botched, it’s easy to believe (even if unlikely) this was a conspiracy to make things so bad single payer was the most attractive option (regardless of whether single-payer is the way to go, making things so bad it’s attractive doesn’t seem to be a particularly honest way to get there (the parallels to starve the beast are hard to miss)).

mulp May 21, 2013 at 1:21 am

ACA is the conservative Republican solution offered in opposition to various Democratic health reform plans.

It has lots of options and alternatives and complexity, all to please some conservative or Republican constituency, or just just crazy ideas in response to the repeated claims that are totally false but the repetition repetition repetition repetition repetition keeps convincing people the claims are true. For example, ACA has funding for yet more tort reform, which in case conservatives have not been paying attention is a “States rights” matter that States have been doing tort reform repeatedly without reducing insurance costs. Yet, during the debate in 2009, we heard “costs can’t be reduced without tort reform” even those the previous decade’s tort reform did nothing to limit premium hikes.

While all the attempts to get Republican support added lots of complexity, and yielded no Republican votes, what ACA does do is eliminate all the options for Republicans. When Republicans promise “repeal and replace”, the only replacement left is single payer, or nothing at all which would mean lots of “free health care” as tens of millions of bills would go unpaid.

Andrew_M_Garland May 21, 2013 at 7:55 pm

To mulp, you say “ACA is the conservative Republican solution offered in opposition to various Democratic health reform plans. It has lots of options and alternatives and complexity, all to please some conservative or Republican constituency,”

Do you have a source for that?

The PPACA was passed without a single supporting vote by Republicans.
( http://apwinsurance.com/PPACA.html )
=== ===
The PPACA passed the senate on December 24, 2009 by a vote of 60-39 with all Democrats and two Independents voting for, and all Republicans voting against. It passed the House of Representatives on March 21, 2010 by a vote of 219-212, with 34 Democrats and all 178 Republicans voting against the bill.
=== ===

Nancy Pelosi famously declared that public discussion was not needed. “We will have to pass the bill to see what is in it”. Republicans were locked out of negotiations, which were carried out in the back room.

Despite this, you seem to be making up the idea that the faults of the PPACA are due to Republican opposition, or a mistaken compromise by the Democrats, or somehow a Republican plot, because they remained in opposition. Now that the failings of the PPACA are coming to light, it is the Republican’s fault!

x May 21, 2013 at 12:03 am

Why the fuck are employers supposed to pay for health insurance?!?

mister mister May 21, 2013 at 12:07 am

Because rich capitalists should take care of the downtrodden workers who aren’t even paid a living wage. Don’t worry workers, government is here to help you.

Andrew' May 21, 2013 at 5:17 am

Path dependence is why they did provide insurance, not why they should. Why they did was, I suspect, because back in the day the cost of insurance was much below the psychic value of the insurance. It did not cost much out of pocket to provide people with the peace of mind that any unforeseen medical bills would be too much for them. We simply did not at the time have a crushing medical system. Now (that we do have a crushing medical monstrosity), the cost of insurance is often higher than the psychic value of the insurance. It is now a “disbenefit” in almost every way. Either way, economists have almost unanimously agreed that linking insurance to employment is both anomalous and inefficient.

mavery May 21, 2013 at 9:37 am

I think it was the tax incentive.

mrmandias May 21, 2013 at 7:25 pm

Wage controls. Under FDR, at one point the government instituted wage and price controls. Employers started offering generous benefits packages, including “health insurance” that was basically pre-paid medical, as a way to get around it.

msgkings May 21, 2013 at 1:02 am

Sadly, due to path dependence. When wage controls were implemented during WWII, companies trying to find a way to compete for pretty scarce labor started offering health benefits instead. This went into overdrive during the 1970s wage and price controls. Pretty soon, that was the de facto way to get health coverage if you weren’t a senior covered by Medicare.

It grew from there, getting more and more complex, and now people are so used to this system that it’s become almost impossible to change it significantly in either direction (more free market, or single payer). Hence the crazy Rube Goldberg mess of the ACA.

mulp May 21, 2013 at 1:54 am

ACA is the system devised by accepting almost all conservative and Republican ideas for how to improve Romneycare which was what resulted when the earlier Republican proposal from circa 1990 was endorsed by Heritage.

ACA is the Rube Goldberg of all conservative and Republican ideas related to health care. It is superbly free market, whatever that means. Every free market solution offered is in it. Competition between insurers in a market, Competition between providers by publishing their secret prices. Competition between kinds of plans: deductible, copay, high deductible. Competition between States, which is the most interesting – the conservative States that scream States rights and the we want to do in just for our State, are the States that have refused to act, but instead told Obama to do a Federal solution.

The only thing ACA does not include is single payer. Almost no individual can afford to be the single payer, so everything is multiple payer – Medicare is 5+ payer. Dedicated taxes, general taxes, premiums, deductibles, copays, out of pocket, and multiple insurers.

One thing providers agree on: we need to be paid. Conservatives and Republicans have offered nothing on that front now that they reject all their previous solutions to providers-not-being-paid because they are in ACA and they reject everything in ACA.

Andrew' May 21, 2013 at 5:05 am

I’ve shown that this is not true several times. And the whole notion is ridiculous on its face- that a party with majorities in every branch would choose to institute the other party’s plan. The guy, as in the singular dude, who came up with the mandate at Heritage has since disavowed that idea. And the ACA mandate is not even the same type of mandate that the Heritage guy proposed. If it is chock full of Republican ideas, how can the constant criticism be that the Republicans never came to the bargaining table to help craft the bill? It can’t.

mavery May 21, 2013 at 9:41 am

Like you said, once Obama threatened to make it into a law, the Republicans disavowed all of their party’s positions from 10-20 years prior. I’m not saying there’s necessarily anything wrong with that. (except for those folks who had actually endorsed these ideas back then; that’s just hypocrisy.) But let’s not pretend like much of the content in ACA was in Republican legislative documents and policy papers in the not-so-distant past.

Boonton May 21, 2013 at 9:53 am

“If it is chock full of Republican ideas, how can the constant criticism be that the Republicans never came to the bargaining table to help craft the bill? It can’t.”

Andrew’, you really can’t be this uneducated in human nature. Do you really think the Republican party cares more about its ‘ideas’ than winning elections? If given the choice between seeing their ideas implemented by Democrats who hold office, or winning elections by ditching their ideas, are you so brainwashed as to be confused about which one they would choose?

You seem to know how the game is played. When Obama embraced the mandate, Heritage and associated ilk suddenly ‘discovered’ their mandate wasn’t Obama’s mandate. Obama’s mandate was a three bedroom apartment whereas their mandate was a two bedroom apartment with an extra ‘sewing room’. Obama’s mandate was a sunday with two cherries on top, their mandate was really a scoop of ice cream with two cherries on top!

The criticism isn’t the Republicans didn’t come to the table to help craft the bill, the criticism was that Republicans insisted “we won’t for this bill unless you have X”, when X was provided the demand suddenly turned to Y. Then to W, Z, and so on at no point did any of them yield a single vote despite getting what they claimed was their way. Then at the end of the day they have the gaul to claim because not a single one voted for the bill, the Democrats weren’t really bipartisan enough.

Andrew_M_Garland May 21, 2013 at 8:18 pm

To Boonton (May 21, 2013 at 9:53 am)

Your point seems to be this:

The ACA is a good law, but didn’t go far enough. It is full of good, Republican proposals from far back, originating with Heritage. It is better than nothing.

For political purposes, Republicans did not support this good law, despite its being an implementation of what they wanted. If the ACA fails, it is the Republicans fault, as the originators of the ideas.

This, despite the full crafting of the ACA outside of regular order, presented full-blown for a vote without the usual committee meetings, without a review period, and with zero Republican support and some Democrat opposition.

The Republicans were correct in policy, as implemented by the Democrats, but the Republicans are so craven that they decided to vote against what they really wanted, just to score political points. The apparant difficulties with the law are the fault of Republicans.

Do I have that right?

Boonton May 22, 2013 at 2:44 pm

Andrew

“Do I have that right?”

Not quite.

Let’s take your points:

1. The ACA is a good law, but didn’t go far enough. It is full of good, Republican proposals from far back, originating with Heritage. It is better than nothing.

More like ACA is a good law, whether it went far enough remains to be seen.

2. If the ACA fails, it is the Republicans fault, as the originators of the ideas.

Depends on why it fails. If private insurance companies cannot achieve any real savings despite being in competition with each other for patients then single payor advocates will have a potent choice. If it fails because of relatively minor issues like shoddy coverage provided by employers, well the answer would simply seem to be to increase the quality requirements on standard coverage or simply accept the fact and note that shoddy coverage trumps no coverage. If it fails, say, because the mandate is too light and people game the system by paying the $600 fine and then jumping into insurance only when they get sick, then it would seem the failure is in the parameters not the structure.

3. This, despite the full crafting of the ACA outside of regular order, presented full-blown for a vote without the usual committee meetings,

“Regular order” is for a bill to be passed by the Senate and House, and the ACA was. Please don’t think anyone cares about quibbles over parlimentary procedure, plenty of bills rode over the ‘usual procedures’ when they were contraversial (such as the Bush tax cuts).

4. The apparant difficulties with the law are the fault of Republicans.

Except this whole assertion hinges upon the meaning of ‘apparant’. The bill worked on multiple goals.

* Increase coverage to universal or near it levels
* Min. disruption to the majority who are covered by their work
* Create a market paradign where individuals buy insurance from private companies with subsidies based for low income.
* Leave it open as to whether this will replace employer provided coverage as the norm or simply be ‘option B’
* Shift, modestly, away from fee for service and more towards outcomes based reimbursement for gov’t healthcare spending.

If you’re willing to ditch most of those goals, you can create a simple bill that’s easy to implement. For example, single-payor concentrates almost entirely on the first goal so many such proposals were quite simple (i.e. ‘Medicare for all’).

If you’re not though, any bill you come up with will have ‘apparant difficulties’. It will be complicated, it will take time to implement, it will require tweaking along the way. That by itself does not indicate ‘failure’. If, like single-payor advocates, your position is that those goals are not worthwhile therefore many of them should be ditched in the cause of a more simple, more direct bill, then do so. But it would be dishonest to present onesself as supportive of those goals but then trash a law because it strikes a complicated balance.

* Be roughly budget neutral

Eliot Clingman May 21, 2013 at 1:10 pm

Ideally, employers should not be the source of health insurance.

However, if the federal government is going to charge a penalty to those employers who don’t provide health insurance, it needs to define what health insurance is on some minimal level. A policy that pays $100 per day in the hospital is to insurance, as a horse radish is to a horse.

Boonton May 22, 2013 at 5:04 pm

Perhaps but keep in mind if that’s what Republicans (or anyone) wants to implement they should be honest about it. Employer provided health care is very popular in the US so a real reform proposal that challenged it is likely to either be very unpopular or require a very serious campaign. Go ahead and propose eliminating the tax deduction for providing health care to employees but tell people the way 60% of them get health care is going to change radically.

IMO I understand the arguments against it. It puts smaller businesses in a bad spot. It asks businesses to negotiate with insurance companies, which some of them may not be very good at. It makes the labor force less mobile because people are less willing to take new jobs or consider going solo because of health insurance. If we were doing this from scratch I would say no to employer provided coverage being a major piece of health care too. But we are NOT building the system from the ground up. We are working with a system that’s been evolving for over half a century. This means one has to consider what’s cheaper, the costs of scrapping it all and rebuilding or simply adapting it.

For example, rather than scrap employer provided insurance for millions to help put smaller businesses on a level field, it seems like it would be easier to just make a system where small businesses can bundle their purchases together and leave most people’s insurance alone. Or even better, have a system that leaves the long run future of employer provided insurance undecided. The ACA, IMO, has a lot of this flexibility. I can see a future where more and more people end up in exchanges and insurance becomes disconnected from your job. Or where most people get insurance from their job leaving exchanges for the minority of businesses that can’t afford insurance. One of the values of the ACA is that it refrains from deciding that issue. Since it’s ‘to be determined’ we can tweak as needed and go with what seems to work better based on experience.

For the ideologically inclined, though, that’s not a comfort. Single payor advocates would rather go straight to pure gov’t insurance, individual payor advocates would like to see companies scrap insurance for employees tomorrow. Being told that they aren’t getting their way now but must continue to make their case is uncomfortable for the ideological but comforting for the rest of us.

prior_approval May 21, 2013 at 7:27 am

‘I’ve shown that this is not true several times. And the whole notion is ridiculous on its face- that a party with majorities in every branch would choose to institute the other party’s plan.’

Tell it to Fox News, please –

‘The controversial individual mandate that was upheld Thursday by the U.S. Supreme Court stems back more than 20 years, believed to have originated with a prominent conservative think tank.

The mandate, requiring every American to purchase health insurance, appeared in a 1989 published proposal by Stuart M. Butler of the conservative Heritage Foundation called “Assuring Affordable Health Care for All Americans,” which included a provision to “mandate all households to obtain adequate insurance.”

The Heritage Foundation “substantially revised” its proposal four years later, according to a 1994 analysis by the Congressional Budget Office. But the idea of an individual health insurance mandate later appeared in two bills introduced by Republican lawmakers in 1993, according to the non-partisan research group ProCon.org. Among the supporters of the bills were senators Orrin Hatch, R-Utah, and Charles Grassley, R-Iowa, who today oppose the mandate under current law.

In 2006, Republican presidential candidate Mitt Romney, who was then governor of Massachusetts, signed off on a law requiring individuals of the state to purchase health insurance. American Bridge 21st Century, a Democratic opposition research group, on Wednesday released a 2006 video in which Romney says he is “very pleased” with the mandate.

“With regards to the individual mandate, the individual responsibility program that I proposed, I was very pleased that the compromise between the two houses includes the personal responsibility mandate. That is essential for bringing the health care costs down for everyone and getting everyone the health insurance they need,” Romney says in the video.

In 2007, a bi-partisan Senate bill authored by Senators Bob Bennett, R-Utah, and Ron Wyden, D-Oregon, contained a mandate. In 2009, however, Republican senators declared such a provision “unconstitutional.”’

http://www.foxnews.com/politics/2012/06/28/individual-health-care-insurance-mandate-has-long-checkered-past/

The timeline should help answer you final question – ‘If it is chock full of Republican ideas, how can the constant criticism be that the Republicans never came to the bargaining table to help craft the bill?’ The answer might be that people like Hatch, Grassley, and Romney were just RINOs. At least until they repudiated what they had previously supported, of course.

I realize that Fox News might be just a touch too unbiased for you to accept as a reliable source of information concerning RINOs and how toeing the party line is a hallmark of one of America’s two parties, especially when it involves contradicting what they had previously touted as being better policy.

But even Fox can publish the occasional factual timeline, like here.

Hazel Meade May 21, 2013 at 11:17 am

Was it a Republican idea to outlaw catestrophic-only coverage, or make it not meet the requirements to avoid the penalty?
Was “community rating” a Republican idea? Was “guarenteed issue”?

Boonton May 23, 2013 at 12:29 am

Let’s examine this comment carefully.

If catastrophic only plans were part of the exchanges would any Republicans have voted for the bill? No. Ohhh wait, catastrophic plans are permitted (http://www.bcbsm.com/content/microsites/health-care-reform/en/reform-alerts/cms-issues-proposed-rule-catastrophic-plans.html) and guess what? Republicans still didn’t vote for it!

So Hazel, am I to take it you think catastrophic plans are something that can be termed a ‘Republican idea’? Or at least something Republicans want to have as part of health care reform? If so guess what, you got it in the bill! Don’t you hate it when the facts just refuse to confirm what you think is true?

Community rating and guaranteed issue are two sides of the same coin. If everyone has to have coverage exactly what happens when someone discovers no insurance company wants to offer them insurance because their genes say they have a high risk of early disease? Or because they have a history of cancer that’s currently in remission?

It’s a take it or leave something. If you want to have more coverage, insurance companies will rightly say either everyone has to have coverage or they will have to price plans so as to make it hard for sick people to buy them. If you want the later then your choices are to have universal coverage by having the gov’t act as unlimited subsidizer for sick people to buy insurance, or you have to reject universal coverage.

More importantly, do respect the fact that your argument is coming from a side with zero credibility. Back when it was the ‘public option’, we were told that was so important to keep out of the bill that no Republican would vote for the bill unless it was removed. then it was the trigger. Then it was doctors talking to patients about owning guns. Then it was abortion. And so on. After going thru a half dozen “I won’t support the bill unless I get X” and then not even giving token support when X is provided let’s not pretend that ‘if only’ those mean partisan Democrats were willing to bend on guaranteed issue or community rating we would have had a glorious bipartisan bill that everyone would have gathered around.

Alan May 21, 2013 at 8:16 am

An employer has no incentive to look after low skill workers, as long as they continue to breed at the right rate.

Yancey Ward May 21, 2013 at 12:20 pm

You can tell easily that ACA is a disaster in the making when every Democratic supporter here is calling it a Republican based idea.

Well done, especially to Mulp.

Urso May 21, 2013 at 1:27 pm

That was my first thought. Whether or not what they’re saying is true (and I don’t really care whether it’s true because it’s irrelevant other than to score cheap debating points) it’s certainly eyebrow-raising that just a couple years after the Ds passed a signature law, over basically 100% opposition intrasingence, they’re falling all over themselves to pin the law on the other side.

For what it’s worth I highly doubt Obama himself is walking around saying “this was really a Republican plan!”

Boonton May 21, 2013 at 2:00 pm

Yea the 2012 election was a real diaster for the Democratic Party.

Sorry dudes, the reality is the Republican origins of the ACA isn’t some new idea by Dems to deflect blame for the bill to Republicans. Back when it was being debated and passed Democrats were pointing out all its major ideas were Republican. The rejection of single payor, the rejection of a public option, even the rejection of a public option with trigger (which even Bush’s Medicare D had) were all Republican demands. The idea that everyone who isn’t so poor that they are covered by Medicare should have to get coverage from somewhere or pay a penalty is, like it or not, a Republican idea.

In fact if you read what the left was saying at the time of the debate, much of it was along the lines of “we’d rather have single payor, but better to do this than nothing”.

So yes “100% opposition intrasingence” is a good way to phrase the way most unbiased people view the Republican Party when it comes to the health care debate. The GOP and associated anti-Obama obsessives made it clear their #1 priority was to generate a defeat for Obama rather than achieve some type of health care financing reform. Even now what is the argument here that it’s a diaster? It’s a diaster for you because Romney didn’t get elected. For everyone else you’re telling us that it’s a diaster because people who wouldn’t have any coverage instead of crappy coverage? Maybe you’d have some credibility if it wasn’t clear that your alternative would be for them to have zero coverage.

mike May 21, 2013 at 2:57 pm

So if Democrats pass a bad “Republican” law with zero Republican support, it’s the Republicans’ fault?

Boonton May 21, 2013 at 3:59 pm

Whose saying its a bad law? Many Democrats felt single payor would have been more efficient in the long run but a system that’s partially single payor (Medicaid/Medicare) and partially private health insurance with subsidies for those without coverage better than nothing.

Andrew_M_Garland May 23, 2013 at 5:57 pm

To Boonton,

Modifying Mike above: So if Democrats pass a good “Republican” law with zero Republican support, do Republicans get the credit?

Or do they only get the credit (blame) if the Democrat constructed and implemented law makes things worse?

Yancey Ward May 21, 2013 at 4:46 pm

Talk to me again in 2016 when it is largely in place. You just prove my point, by the way.

Boonton May 21, 2013 at 7:03 pm

Yes no doubt at some point in the future there will be an election that will go badly for Dems. I guess that ‘proves’ the Republicans were right about the ACA all along. Sort of like the Clinton boom was all to the credit of Reagan’s tax cuts in the early 80′s (but what about his tax increases in the mid 80′s?).

But the proof in the pudding here is trying to figure out why Republicans think they are right. Are they against insurance? Against universal coverage? Against insufficient universal coverage? The mandate is either a horrible infringement upon liberty, or too minor to be effective! Too many people are covered and too few.

Dems are at a disadvantage here in that they are actually trying to approach this debate honesty while Republicans have the advantage of being neither consistent nor coherent. Don’t buy that? OK explain Mitt Romney in less than 200 words and do so in a way that wouldn’t make an honest man burst out laughing.

Andrew_M_Garland May 21, 2013 at 8:31 pm

To Boonton (May 21, 2013 at 2:00 pm)

If the Dems wanted single payer, why didn’t they implement it? The Dems passed ACA without Republican support. So, why the half measures?

Your point seems to be that the Republicans would have opposed anything Democrat, and that in fact they opposed a bunch of ideas which they in fact secretly supported. So, why compromise by using all the Republican ideas, and fail to implement single payer, the ultimate Democrat idea?

Brandon May 22, 2013 at 10:01 am

Progressives wanted single-payer. Center-right blue dogs didn’t.

Boonton May 22, 2013 at 1:49 pm

Brandon nailed it.

I should modify my position to be that Dems are more open to single payor, but they are hardly unified. Many like the market idea of having private insurance companies offering products in an exchange and patients picking among them (which, BTW, is the model Bush used in Medicare D, which was expanded rather than gutted in the ACA).

This demonstrates that while Democrats are generally open to Republican ideas on the grounds that they might work, Republicans are mostly interested in seeing Democrats fail.

My challenge still stands, give us a concise summary of how exactly the party made Mitt Romney their standard bearear on an anti-Obamacare platform that doesn’t inspire cynical laughter in anyone honest?

Or if you wish use Medicare D as a model. It seems possible to me that in an alternative universe where Romney won the nomination and election in 2008 we would have something very much like Obamacare today, but with only modest grumbling by the hard right. (Don’t believe me? How many Tea Party rallies have there been against Medicare D?)

Boonton May 23, 2013 at 11:21 am

And the whole notion is ridiculous on its face- that a party with majorities in every branch would choose to institute the other party’s plan

Notice this method of logic. If you want to know what type of food a restaurant serves, the best way to find out is to look at it’s menu. Empiracle observation. Trying to figure it out by ‘reasoning about it’ (“well this town has lots of Koreans so it probably serves Korean food…”) is not likely to get you a good answer.

The structure of Bush’s Medicare D is public record.
Mitt Romney’s health reform in Mass. is public record.
Romney’s statements praising his health bill are public record
Past statements and position papers by the Heritage Foundation are public record.
Discussions of the mandate and arguments from conservatives why its better than single payor are public record.
The mass ‘discovery’ by conservatives that they don’t like any of this after Obama and Democrats settled on this style of reform is also public record…including the Pravada-like attempts by outfits like H.O and Cato to ‘scrub’ past papers from their archives.

The case is closed at this point, IMO.

Andrew_M_Garland May 23, 2013 at 6:02 pm

Here is a bit of the public record.

Romney/Obama Care

Democrat Timothy Cahill was Massachusetts’ State Treasurer. He said on 3/16/10:
=== ===
[edited] Implementing the MA health insurance reform nationwide will threaten to wipe out the American economy within four years.

Our experiment has nearly bankrupted Massachusetts. Only federal aid is sustaining our law. We’re being propped up so that Obama can drive a similar plan through Congress.
=== ===

KevinH May 23, 2013 at 3:29 pm

I for one would need more info before considering this a bug, not a feature. Cheap, simple plans that focus on preventative care would provide a huge chunk of the public good associated with healthcare for a fraction of the cost. Compare this to the interview with Bill Gates by Ezra Klein you linked to earlier. The above description seems to follow that notion of getting 50% of the benefit of healthcare at 2% of the price. Of course there could be unknowns (unknown by me) that change things considerably. Please feel free to share them with me.

Andrew_M_Garland May 23, 2013 at 6:14 pm

People often claim that more preventive care will cost less overall, because it will eliminate expensive visits to the ER. Actually, more preventive care costs more overall, but it does lead to better outcomes.

Will More Preventive Care Help Reduce Healthcare Costs? – March 6, 2013 by John C. Goodman,
=== ===
For an individual with a health problem, the old adage that an ounce of prevention is worth a pound of cure is true.[3] For the few patients who are diagnosed with a disease, preventive screenings are definitely worth the cost. But the cost of screening thousands of healthy patients to find one patient with a problem usually swamps any savings on patients whose diseases are diagnosed early.
=== ===

IGotBupkis, "Faecies Evenio", Mr. Holder? May 24, 2013 at 7:08 pm

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