Henry Aaron says suck it up: health insurance cancellation update

Via Brad DeLong, here is Aaron:

Rather than apologizing for these cancellations, [the administration] should be bragging about them…. Imagine a new law enacted to promote food purity. As it is being debated, you are told ‘if you like what you eat, you can keep on eating it.’ The new law takes effect, and one day you find that the market no longer carries certain foods you have been buying… [which] included elements found to be bad for your health. The pure food act barred their use.

…People should be no more shocked when substandard insurance plans are removed from the market than they would be if food purity legislation caused some products to be removed from a grocer’s shelf….Obamacare is removing insurance products from the market that are bad for your health.

I am a big fan of Henry Aaron, but I see this response as representing a miscalculation and also showing a tin ear to the ongoing worries.  I suppose I would not put Henry in charge of marketing.  I have a few questions:

1. How many of the cancelled people are already receiving treatment from preferred specialists, doctors, hospitals, and so on?  They are in any case the most important “subjects.”

2. How many of these people know that their new policies (if and when they can get them) will cover the same providers?  How can these people find out that information — now — in an easily verified manner?  And if they have to switch providers, how long will it take before their previous treatments are back up and running at an acceptable level?  What kind of publicly available information is available on this question?  Might their current providers start neglecting them, even before coverage is up, figuring they are “out the door” in any case?

3. How high is the anxiety level of these patients in the meantime?  And must they feel they are getting a better deal from the new law, once they have shed their previous “substandard” treatments and providers?  How confident should those patients feel about any promises being made to them right now?  How should they feel about Aaron’s proposal for Obama administration boasting?

4. Why is Aaron so convinced that the new policies will involve no negative trade-offs?

5. We hear so much about behavioral economics, and rightly so.  Doesn’t it teach us that endowment effects and status quo bias are very strong?  Or are those always feelings we should be forcing people to overcome?

6. Are the best French unpasteurized cheeses — which do carry some health risk — “substandard”?  Or is there an offsetting benefit?  How about sushi?  How about beans?  They are delicious and good for your health.  How about a more modest mandate for ACA?  How about a stronger grandfather clause?

I thank Megan McArdle for a useful conversation related to this post.

Addendum: Via Wonkbook, here is one relevant report:

“Many new health exchanges don’t yet let shoppers see which doctors accept which insurance plans. Where exchanges do post the so-called provider lists, they often contain inaccurate or misleading information, some doctors say, including wrong specialties, addresses and language skills, and no indication whether providers are accepting new patients. Exchange officials blame the insurance industry, where inaccurate and out-of-date provider lists are nothing new. “I don’t think we realized that the underlying data had quite this number of problems. Now, it’s becoming more transparent,” said Joshua Sharfstein, Maryland’s secretary of health and the chairman of its exchange…[I]n addition to providing wrong information, the lists may give consumers a false impression of how big the networks are, some physicians say.” Melinda Beck in The Wall Street Journal.


I find Aaron's point extremely cavalier, and I feel that TC's response badly misses the mark.

Suppose all you can afford to purchase is food with a high lead content. You're not healthy, but you're not starving to death, either. Suddenly a law goes into effect that results in a disappearance from the market of the only food you can afford to eat. You won't die of lead poisoning, that's for sure.

I am not sure what is the cognitive disconnect of people who don't understand that quality food is only a relevant matter for people who can afford to differentiate.

But now the important part:
It has been widely reported that many people are only finding plans through the exchange that are both more expensive and less comprehensive. That doesn't sound like better-quality food to me.

Naive question. But why are the plans under discussion disappearing? What's the underlying mechanism? Does the new law explicitly forbid something on those plans? Or is it a more indirect effect?

Mostly it is because of new requirements for what must be covered. This article seems to be a thorough explanation:


Thanks! If so, I can understand why plans got more expensive, but why did they, as @RPLong claims above, get both more expensive and less comprehensive?

What gives?

What I think is meant:

a) The list of treatments and list of doctors in your network are obviously different aspects of comprehensiveness.
b) Once kicked off your existing insurance, you go to the exchange, which has a smaller list of doctors.

Ergo, more expensive (more treatments) and less comprehensive (in terms of network).

@Rahul, there have been reports of people paying more but having higher deductibles. That is what I took RPLong to mean.

I think that there are two things going on: (1) plans being cancelled because they don't meet minimum coverage requirements and (2) plans becoming more expensive (for a fixed level of coverage) due to community rating. So, some people are finding that the deductible on their plan is increasing and yet their premiums are also increasing, for example. In those cases, their plans are covering less and yet are becoming more expensive, but it's due to community rating rather than minimum coverage.

That's why it's so deceptive to claim that premium increases are due to plans becoming "better". The whole point of Obamacare was to extend coverage to previously uninsured. The most transparent way to do that would have been to provide subsidies to the uninsured, funded by higher taxes or deficit spending. But, Obamacare architects decided, maybe correctly, that increasing taxes would weaken political support so they decided to try to hide the fact that there is no free lunch by burying the cost of the subsidies in the form of increased premiums, a tax by another name. Community rating and minimum coverage requirements are the means for doing that. (It's easier to rationalize premium hikes by saying that the plan covers more, which Obamacare defenders are now doing, even though the premium increases are more than necessary to pay for the increased coverage.) The analogy would be like requiring everyone to fly first class instead of coach, raising airfares by more than necessary to cover the cost of first class, and using the excess to subsidize some subset of flyers. Besides being deceptive, it is also more difficult to *target* what are effectively tax hikes by hiding them as premium increases. For example, a young, healthy person with a modest income ends up subsidizing a high-income person with pre-existing conditions. So, this modest income person is being hit with *two* whammys: (1) being forced to buy more coverage than necessary and (2) being overcharged for this more-than-necessary coverage.

This resulting scenario where people are being thrown off of their existing insurance, which they were able to afford before Obamacare, all in the name of expanding insurance coverage, was caused in large part by Obama's unwillingness to concede that there is no such thing as a free lunch.

@dan1111 - correct, that was my intended meaning. However, BC and Jody bring up other important considerations, too.

That’s why it’s so deceptive to claim that premium increases are due to plans becoming “better”.

It's just a blatant lie. At least it's a lie to pretend that this is the only reason plans are getting more expensive. The young are being forced to subsidize the old. That's intrinsic to the law and it's a substantial reason a lot of cheaper plans will become much more expensive.


Isn't the intention behind the new law such that if after removing the "lead contaminated food" from the market you are unlucky enough to not afford any of the now pricier options, then the government somehow steps in and subsidizes the good food for you?

Or am I getting it wrong and they watch you starve?

Yes, that's right, but think of the implication: This means that the very poor gain a subsidy at the expense of the marginally poor. That fails every reasonable person's moral calculus.

The promise of the ACA was that the poor would get coverage at the expense of the so-called "Cadillac" insurance plans. But if these are the plans that are disappearing, I haven't seen it reported yet...

Can you explain the "very poor gain a subsidy at the expense of the marginally poor" part?

I like your analogy so let's say both the very & marginally poor ate $5 lead tainted food before. Now that it has disappeared the very poor cannot afford the pricier $10 food so they spend $5 and the government chips in with another $5 of subsidy.

The marginally poor make $10 so they are forced to spend all of it for the now pricier food. They end up spending $5 more yes, but arguably they are better off since no more lead tainting.

Am I getting it wrong?

Unfortunately, I think the analogy breaks down at that point.

But the point still holds. The marginally poor are the ones who have been going to the exchanges only to find that their rates have tripled. Before, they were buying market-rate policies that they could afford. Now, they make too much money to qualify for the subsidies, but can no longer buy the policies that they can afford.

If we want to force the analogy, then it's more like this: Some of the people buying lead-contaminated food make too much money to qualify for a subsidy, but not so much money that the new law has no impact on their grocery list.

Except it's important to note that you're making the initial product far worse than it is. Current insurance policies are not the same as "lead tainted food." It is perfectly acceptable food that meets the need of the consumer, but is not the highest quality. The government is now taking away this healthy, acceptable food and giving them something that is "better", but at a much higher price.

It's important to note that while th government claims it is "better" does not mean the people affected think it is better. If they like rice and beans, but are now given okra and quinoa, the government can say it is better all they like, but that does not mean the people like the taste of okra.

You are assuming that most of the cancelled plans are 'perfectly acceptable'. At least some of them are terrible plans and the consumer just doesn't know it yet. They don't include important coverages and they have annual or lifetime limits which could easily result in bankruptcy. And the insurance company was planning on using tricks to disqualify them if they developed a long term problem (say Crohn's disease). Without the ACA, they would have never found out about their plan's deficiencies unless they had the misfortune of truly needing the catastrophic insurance aspect of their plan. I don't know what percentage of cancelled plans falls into this kind of category and I would not rely on mass media reporting to give you a reasonable sense of it.

Cavalier is being kind. Marie Antoinette would blush at the indifference shown by these people. When the president's response is "shop around" my response is something unprintable. I wasted a lot of valuable time because of this. My costs have not changed a great deal, but it cost me a great deal to end up in the same spot. People who are now worse off simply because these fanatics want to score political points have every right to be livid. Henry Aaron is lucky they are not outside his house with pitchforks and torches.

Really? I understand that there are people who are made worse off by the law and people who are made better off by the law. It seems you don't fit in either category as you've spent "a lot of time" in a one time transaction that leaves you in the same spot. Pitchforks over that? Hopefully you stay out of traffic. The time wasted might require a nuclear response.

Normally, you're stuck in traffic because you made the choice to drive and not because Caesar decreed that you had to go to Bethlehem to be counted for the census (and taxed). And stretching analogies even further, then Caesar blew up all the bridges that crossed the Jordan because he thought magic unicorn ferries would be ready in time.

You act as if the folks "left in traffic" by the pre-ACA system had a choice in the matter.

No one's premium tripled because their plan added maternity care. If your premiums went up dramatically (post-subsidy), you're probably about 25, male, healthy, and make at least $50K. I'm terribly sorry for the misfortune in your life.

I think that mavery's comment is precisely the kind of cavalier indifference that Z refers to. Since when is it ok to throw a healthy 25-year-old making 50k off of his health insurance, insurance that he was able to afford all on his own without any government subsidies before Obamacare? We can certainly debate about the morality of remaining passive rather than actively helping those that cannot afford their own health insurance. However, it is unequivocally immoral to take active government action that prices someone out of health insurance that they otherwise would have been able to afford in the absence of such active interference. First rule of medicine: do no harm.

It's a metaphor, not an analogy.

BC, while it's true that healty 25 year old's may be paying more now, the vast majority of 25 year olds will be 55 year olds at some point in the future. And then they will be getting the subsidy. So increasing their costs now is not really unfair. These 'age warfare' kinds of arguments never make any sense unless you assume the system is unsustainable.

The sadistic pleasure the Left takes in the suffering of others is quite incredible. Millions have been inconvenienced and have seen their rates jump. Maybe a few thousand have gained some benefit. Those are the numbers to date. You and your coreligionists shrug and say, "eff 'em. I got mine." You are cheering as a wrecking ball goes through the American health care system like the Taliban cheering as they blew up the Buddhas of Bamiwam.

1) I take no pleasure in your 'suffering' which a grandiose term for inconvenience.
2) Maybe a few thousand have gained some benefit? This is wrong and reveals gross innumeracy.
3) As a young, single man who makes a decent wage I am hurt by the ACA. I am not getting mine.
4) That said the fire and brimestone tone of the criticisms you're offering are just insane. There are people who bennefit a great deal from the changes stemming from the ACA. There are those who are hurt of inconvenienced. I only suggest that taken as a whole these effects are something less apocalyptic than drama queens like you suggest.

Michael Foody - An extra $2,000/year adds up over time, in 15 years it's $30,000. That's a year of college tuition. Definitely a lot more than inconvenience.

But its not a requirement to keep lead content out of food. Its more of a requirement to have steak sauce served with my steak. If I do not want steak sauce, nor feel that I need steak sauce, then I'm not going to be very happy with the requirement to purchase it.

Exactly. The intolerable part of his analogy is that there's nothing like poison in existing "not qualified" health coverage plans that are being canceled.

They didn't cover Every Now-Required Thing (which evidently didn't bother those purchasing them - because they still purchased them, not some other plan with those things). Or they had the wrong deductibles (same point).

I can't think of any remotely plausible thing in a pre-ACA healthcare plan that would be anything other than laughable when analogized as "forced heavy metal poisoning".

Such a bad analogy raises questions about either competence (for not noticing it's so bad) or honesty (for doing it anyway).

It has been widely reported that...
you do know the difference between anecdote and data ?
there are roughly, order of magnitude, 10 million people in the individual market
so if 0.1% of them have a problem, that is, by my math, 10,000 people
thats a lot of noise in the 24/7 news cycle

but what about the people who had pre existing conditions, and were desperate to sign up ?
why is it not widely reported that this cohort is receiving desperately needed healthcare ?

They were too busy still not having signed up in the high risk pools two years ago.

The main issue here is that the administration's claim "you can keep your current insurance if you like it" was misleading. Saying "you should not care that we lied to you, because Obamacare is better" would not be acceptable even if everyone agreed that Obamacare is better. And of course, everyone does not agree.

As an aside, this is yet another occasion when so much ink is wasted in debating how to cut the pie and how to hand out the pieces and who pays for how much.

Wish people gave as much consideration to true supply side solutions.

What supply side solutions will insure that doctors and hospitals always get paid for the care they provide (sometimes mandated by law, other times by medical ethics) to irresponsible individuals who listen to conservatives saying "use the moral hazard of buying insurance only when you need it" and thus fail to predict their need for insurance better than insurers?

Treat the bodies they work on like cars and consider doctors and hospitals like mechanics and tow yard impound lots?

I have consistently better experiences at impound lots than I have at the DMV. What's your experience?

How often do you visit impounds. :)

Mulp your comment reads like the only problem is with collections!

If by "misleading" you mean "an outright, pre-meditated lie, knowingly told by Obama and dutifully repeated and now defended by a compliant media" ... then you are correct.

Henry "Hank" Aaron was one of the greatest baseball players of all time, but is he the right person to go to for public policy advice?

Aaron uses the pejorative "substandard" without much effort to clarify what it means. I suppose he means that all nasty things have been removed (although his sample list of nasties is far from compelling), and have been replace wholly by (unspecified) good things. Not very convincing.

In this context, "substandard" means things like raw milk, owning your own business, paying unskilled workers the minimum wage, soft drinks in 32 ounce containers, high deductible health insurance, etc., ad nauseum.

The beatings will continue until morale improves.

All I know is that the four people I know who drank raw milk (and constantly posted about it on Facebook) all got badly ill from said milk at various points in the last few years. I now don't know anyone who drinks raw milk.

We need legal, safe raw milk! Not the back alley stuff out there now.

Toxic food can be objectively determined as substandard. A male not having maternity care coverage, not so much.

An insurance policy subject to recission when substantial claims are made could be considered substandard however.

Guaranteed issue would result in substantially higher premiums even if nobody new entered the individual market simply because it destroys the most common method insurers have to limit really large claims: recission. It isn't something most people experience with their insurance since most people make it to 65 and Medicare without making a big claim.

But if you do make a big claim, oh boy, you are about to find out that you don't actually have health insurance. About 1/2 of 1% of policies pre-ACA were subjected to recission, which seems small, but is actually huge. Since recission only happens to plans where big claims are filed, it means that if you get to the top 1% of claimants in your policy, there's about a 50/50 chance that your insurance will go poof just when you really need it.

Even if nothing at all about required services covered or risk pools changed, the end of recission would cause rates to spike dramatically.


Companies can't just cancel insurance at will; they can only do this when the customer failed to disclose pre-existing conditions. If people intentionally omit information about their health history in order to get lower insurance rates, they are committing fraud.

Yes, there was probably some abuse by companies in this area, and there was probably room for improvement in the law. But it is misleading to act like rescission is always a case of evil corporations ripping people off.

Charitably, he may just mean "below the NEW standard", thus literally "sub-standard".

Just not substandard by any standard the consumer would have freely chosen - we know that because they had a choice to do that before the ACA passed (as no law prevented such expansive coverage or the new deductibles, etc.), and didn't.

There are other questions involved.

The first is whether citizens trust the "system" that they are being forced to adopt. They have been given multiple reasons not to do so in recent days, even if they brought no baggage to the table. The website is hosed, they were surprised to lose their policies, the President apparently lied about what was to happen, doomsayers are everywhere, not just in conservative venues.

There still can be no assurances that the millions whose policies went poof will be able to get another policy by the end of the year. It is possible that more people will be uninsured on January 1 2014 than that date in 2013, and that a substantial fraction of them will have costly conditions.

The stories about the changes are spreading fast, and are quite confusing. Joe's (younger, invincible) premiums went up along with his deductible. Kim's (older, multiple diagnoses) went down big. Kim should thank Joe for covering for her.

I like taking lunch alone sitting at bars, the conversationalists are far more diverse than your normal, self-selected associates. Many conversationalists are older, working service industry, retail, job-to-job, check-to-check, etc. In a lifetime of doing this, politics hardly ever comes up (another likeable). Over the past month, Obamacare has elevated to Topic #1 and is unanimously disparaged (and the GOP is nonexistent in these parts).

That's the view from here.

I purchase insurance on the individual market but do not qualify for subsidies under the ACA. I am healthy - and I will be losing my current coverage and will need to replace it via healthcare.gov.

There are obviously provisions in the ACA that will directly benefit me that Aaron mentions (maybe not now but in the future):
--Denying care for preexisting conditions, sometimes temporarily, sometimes permanently;
--Cutting benefits entirely when annual or lifetime treatment costs exceed specified amounts;
--Omitting coverage of particular services that are basic and important, such as rehabilitation after serious injury; and
--Cancelling coverage when a customer presented very large bills and was expected to have very high bills in the future.

However - I hate it when people say that the new coverage I will be forced to buy will be "better" maybe, maybe not -
In a perfect world I would have a very high deductible plan ($10-20K) but it would be an indemnity plan with no lifetime limit. I'm willing to self-insure or bet that my medical bills will be less than $15k a year - I'm not willing to lose everything if i get hit by the proverbial bus...

I just have liability insurance on my car (a lot like $500k) - If I crash my car into a tree or the engine blows that's on me - but I'm ok with that - its a risk that i'm comfortable with and can afford. What I can't afford is being sued for $1m or paying for some guy's Ferrari...The analogy being that now I am forced to buy comprehensive insurance that I don't need or want and am being told that my new insurance is "better"...

If you crash into a tree, nobody is really worried about your car. But if you have substandard health insurance that doesn't cover your injuries, you would still receive emergency health care at a hospital. The question is, how are those medical costs paid? If you go bankrupt because of the treatment of your injuries and the hospital is unable to collect from you, how are those unpaid medical fees (and similar fees from other uninsured of poorly insured injured persons) passed-on to others in the system? That to me is one of the issues being addressed by requiring individuals to hold insurance policies that have minimum required standards for coverage.

That's what catastrophic plans take care of, right? You run up a bunch of bills and go bankrupt, the providers can still collect from your insurance.

If you crash into a tree, nobody is really worried about your car.

ACA costs a lot more and does a lot more damage than if the Feds had just flatly indemnified ERs unreimbursed expense. Stop using that canard.

Besides, who tows the car, sweeps the street and cuts down the gimpy tree? We all do! So let's mandate insurance for any and all activities a human being undertakes.

@GovCO I wonder what you would call a system of governance in which all risks are pooled such that all outcomes are exactly alike...

Rupert's point was "I’m willing to self-insure or bet that my medical bills will be less than $15k a year – I’m not willing to lose everything if i get hit by the proverbial bus…" His "sub standard" plan fit his budget: He has an income and can pay for a lot of normal expenses. He doesn't need to pay someone to pay the basic bills for him, that's simply adding inefficiency into the system. What he needs is someone to ensure him against large, unexpected costs.

So if he goes to the emergency room, he pays. If the treatment is more than he can afford, he has insurance to cover the portion that he cannot afford. What's sub standard about that?

This is exactly what I'm saying.

As an aside, since I pay for my preventative care out of pocket on such a high deductible plan - I go to ostensibly one of the best doctors in town. He does not accept any form of insurance. I will now no longer be able to see my "regular" doctor, unless I pay for it out of pocket in addition to my new plans' fees.

I guess what I'm getting at is while it may be true that in the aggregate, giving insurance to the uninsured is a net positive (we'll see, but i'm willing to buy the premise) - please don't insult the intelligence of those of us that are getting the short end of the stick and tell us we should we should be happy about it...

The negative externality of unrecovered medical costs is a common refrain. It strikes me that ACA supporters' collective concern that patients that do pay are also paying for patients that don't is extremely ironic. ACA institutionalizes redistribution of costs.

You can "require" people to hold insurance to "pay for their own medical costs". If those people don't earn high enough incomes, you are still paying for their medical care. ACA didn't, no, scratch that, CAN'T solve this problem.

Thing is Hank, Obama-worshiping ignoramus, just some of we the people need to "suck it up."

And, Hank, what gives with Congress, federal employees, thousands of corporations and poklitically-connected unions getting exempted from ObamaCare?

There was no mention of, much less a definition of, such a chimera as a "substandard" or "noncomplying" health insurance policy.

The "big lie" that one could keep one's health plan was the ruse employed by the lying, sac-of-excrement-in-chief to get ObamaCare through Congress.

From IBD, “Obama’s ‘keep your plan’ pledges were perfectly precise. By making this false claim and repeating it over and over again, he was able to convince those who had insurance that they’d be immune from ObamaCare.”

I don't care how many HR's Hank hit.
About this he doesn't know shit.

Expresed in other words, "Shut the fuck up. We Obamas know what's good for you."

In short, Obama lied. You're health insurance died.

"How many of these people know that their new policies (if and when they can get them) will cover the same providers?"

I understand the utility implications of an individual wanting to keep the status quo, but why does a blog that usually concerns itself with the big picture really care about whether someone gets to see their old doctor or not? Is their old doctor even better than a new doctor would be? I self-diagnose, correctly, basically every health issue that I or my family have using sites like WebMD, so going to see the doctor is purely a formality so that I can get a prescription signed. Admittedly, I am young and healthy, but shouldn't we care more about the health impact rather than whether someone is seeing their (increasingly commoditized) doctor of choice? The status quo hangup seems a little irrational to me, and I am surprised that Tyler, with his obsession with MOOCs, etc, does not feel the same way.

I don't think this is as right, medically, as you assume it is. My understanding is that a close interpersonal relationship between doctor and patient is one of the biggest predictors of a "good" outcome. Medical care is an intensely personal thing, and the soft factors matter measurably.

And maybe this isn't for everyone; you seem happy with WebMD and commoditized doctors, which is fine. But you can't assume that your own personal experiences apply across the board. Even if the preferences for their old doctor is purely subjective, subjective preferences count too.

That being said, Jonathan Chait says:
"What conservatives have never fully acknowledged is that [Obamacare's] lack of popularity reflects not a broad agreement with the right’s ideological critique but a deep aversion to change."
which I think is dead on. That being said, a fear of change is rational if you feel like the status quo is working out for you.

People don't want to be told what to do y someone who should mind his own business. They then tell you it's better when it's worse. If what I had was substandard they wouldn't have to force the new plans on people. People would flock to them.

How so? Nearly every criticism from the right while it was being passed has turned out to be true. If you think no one has noticed this then that is the R's messaging problem, but it doesn't make the criticisms wrong.

Wow - Chait diagnoses complainers as those suffering from irrational fear of change. And I suspect he believes you're in denial if you disagree.

Not all of us agree that St. Sigmund and his epigones got the human psyche right!

"I understand the utility implications of an individual wanting to keep the status quo, but why does a blog that usually concerns itself with the big picture really care about whether someone gets to see their old doctor or not? "

Well, politically it matters because we were all promised we "could keep it", where "it" was "our coverage" and thus implicitly "our old doctor".

Practically it can matter because some people don't do all their own diagnosis or have more significant health issues, and want a doctor they both a) like and b) have a good ongoing relationship with.

Those aren't fungible.

Yeah, but why do we care about "politically"? I'm not arguing that the selling of ACA wasn't dishonest or that such dishonesty is excusable by its accomplishments. Instead, I just wonder why provider coverage is such as issue. It sounds like my experience is perhaps an outlier, but I have personally found a personal relationship with doctors to be fairly irrelevant to my health, and I think that medical care has become quite de-personalized already. Maybe this is different for sick or old people who have reasons to go to doctors other than illness or injury.

How about finding out the policy you signed up for doesn't cover any hospitals in your area? Problem?

Sounds like an elitist. Does he not fathom the outrage that would be caused by a law that banned soda? OK, ok, we all know they're bad for your health, but let's ignore the assumption that regulators can explicitly determine what's good or bad about every other food too... How about a law that forced people to buy food only in 'food packages' that all contained organic cow's milk regardless of whether or not you're lactose-intolerant? The elite apologists are like Jedis peering from their towers waving their hands saying "You didn't like your old plan." Too bad we're Toydarian.

Yeah, but "it's just like other paternalistic laws that try to save you from yourself by making good decisions on your behalf" is really all he's got.

How is it bad for my health to buy an insurance policy which does not provide maternity coverage?

My wife and I are in our 70's, and past the age for colostomies. How is it bad for our health to buy an insurance policy that excludes them? Why should our daughter, not currently in a relationship, need coverage for prostate cancer? Why should my cousin and his wife, who keep kosher, have to pay for coverage against shellfish allergies? The list is endless. Policies that exclude coverage for problems you won't get could be written, but the administrative costs would be prohibitive.

Central planning is clearly the solution to that mare's nest.

Except they had those policies, now they are illegal.

The policies are easy to write, and it results in far cheaper insurance and a market signal. Now, the price signal is dead (or even deader than it was). Prepare for a less efficient healthcare market.

@Stan, I'm not sure what your point is. Maternity coverage was previously optional on many individual plans. It is quite expensive, often a large portion of the total cost for young adults, because pregnancy is expensive and much more common than most things that would put you in the hospital. Also pregnancy is distinguished from most things that insurance covers by the fact that it is voluntary and can be avoided by lifestyle choices.

I don't see how this argument helps the cause it all. If promise is "if you like what you eat, you can keep on eating it" and you can't, then the promise was broken. A law that kept such a promise would not ban any foods. Maybe warning labels, or possibly subsidies for other, better foods (if they didn't have a market effect in practice of making foods people "like" unavailable), but no ban.

Oh I agree completely with Henry. And, as long as we're talking about food purity, Henry's arguments should be extended to help government address another critical problem facing America:.the plague of gas station tacquereias.

That's right, the sale of huarache at Maryland gas stations should be banned. Who knows what those gas fumes are doing to our chili relleno? We can push down the cost of our champurrado by consolidating the demand and limiting the service to large, crowded cafeterias that can operate on lower fixed costs. Once we bring everyone into these markets, it will be easy to insure that ceviche has been thoroughly prepared to the exacting government specifications.

That was beautiful.

It is one thing to come for our healthcare. Quite another to come for our chili rellenos...

But that would be racist.

The problem with the Aaron analogy is that it is not clear that any current insurance package is "bad for you." By the axiom of revealed preference, it is clearly better than no insurance policy at all. It is also better than any other contemporaneous plan which provided more coverage but cost more. (I am eliding problems with plans that are turly toxic, ie those that take money and then fraudulently deny covered reimbursements... that's not what's under discussion here.) It may (or may not) be worse than some other new plan which has more coverage at a higher cost. If, fully informed of whatever level of health consequences ensue from from my now impure diet, Dr. Aaron can return to his office secure in the knowledge that my health problems are now my fault, not his.

"The problem with the Aaron analogy is that it is not clear that any current insurance package is “bad for you.""

The other side of that problem is that it is not clear (at best) that the new plans are inherently better, a male in his 40's who doesn't drink is not at all comforted having his deductible and premium double just because his new plan covers substance abuse.

There's a fraud in the "substandard" argument as well - as has been pointed out very well elsewhere, part of the scheme is to FORCE everybody to buy costly insurance (more than they want or need) so as to help cover the bills for those who want/need that but cannot afford it. It will end up being a redistribution of wealth and risk from those in the private market and those without strong jobs in large entities, to others in that same group as well as the unemployed.

It is really saying "YOU Joe Healthy who doesn't happen to work for a big company, are REQUIRED via our weird slight of hand, to help pay for coverage for Bob Sick." Oh, and Dr. Dan is more assured than ever of a steady income as a result. You are not allowed to not buy, directly or indirectly, the services of Dr. Dan.

It' essentially the same as raising taxes on people who don't work for large companies.

As for network coverage - I'm with Mcardle on this one - we may soon come to a time where all policies are pretty much required to include all licensed providers.

It is also a fraud because "substandard" also means things like not including maternity care, even for men or post menopausal women or not included substance abuse care.

It is also, perhaps, more simply fraud:

1. wrongful or criminal deception intended to result in financial or personal gain
2. a person or thing intended to deceive others, typically by unjustifiably claiming or being credited with accomplishments or qualities

In answer to number 4, wouldn't the obvious response be because that's how religious people tend to think?

When you go looking for a man with a good bit of knowledge, and not a nickels worth of wisdom, look for the guy who thinks he knows better than you what is good for your health despite not having the requisite credentials to make such assessments, nor the decency to even know who you are before he insists his assessment is accurate.

What does that have to do with religious?

As Ross Douthat has noted, purchasers in the individual market are the ‘good guy’ healthcare consumers, doing everything possible to comparison shop and minimize their healthcare expense.

Now we are told that the only solution to the problem of rising healthcare costs is to force these people to spend MUCH MORE on healthcare.

Once in my life I'd like to whack people like him over the head with a policy of mine that he doesn't like. How about building a coal power plant next to his house. It is a boon for employment, cheap energy and well his environment has to suck it up.
It seems that other people's choices are irrelevant when it comes to political pet issues but when he is against us he will hold up the torch of voluntary democratic choice. These people disgust me.

Historically this does happen, except there's no policy. Just whackings to the head.

Henry Aaron strikes me as a guy who would say "Suck It Up," and you'd want to when he says it.

Okay. But doesn't your own proposal laid out in the NYTimes (repeal Medicaid, slash subsidies, lower minimum coverage requirements) raise far more (in amount and seriousness) uncertainty / anxiety / trade-off / provider continuity issues?

Are people suggesting there should be a mandate that insurance companies continue to offer existing grandfathered plans?
I have always been on an employee plan, but my plan changes every year (prices go up!) and what is covered changes. How is this different?

Nope, but they also should not be forced not to offer a policy.

Is there really any serious evidence to support the existence of an "endowment effect"? (By serious, I mean something like other than looking at whether college kids will bother to swap coffee mugs for pens.) I think Kahneman conceded (in "Thinking Fast and Slow") that it doesn't exist for people engaged in money-making activities, and most of the other cases seem to me to be mostly about transaction costs or just plain ignorance.

Not that this is essential to showing that Aaron is wrong. Does he even try to demonstrate the superiority of the new plans, or is he just repeating the administrations current talking point?

theCoach, I don't argue that there should be a mandate to continue offering plans, but if you want to promise "No one will take away your health plan" (yes, he did use those words) as a way to reassure people about massive changes in the marketplace resulting from your program, then you need to include such a mandate. Otherwise you are not keeping your promise.


I find the White House comments about "eliminating inferior policies" and their advice to shop around completely disingenuous. My wife and I have just had our excellent Blue Cross policy terminated as of December 31st. Independence Blue Cross advised us of this and told us to select from the Gold, Silver, or Bronze policies detailed on the back of the letter....with NO PRICES attached. This isn't insurance, this is nothing but an income redistribution program. As such, I'd appreciate it if they started by forcing the high-end corporate policies into the program first. After all, they are the folks who for decades have been getting the huge tax expenditure in their favor. It ain't me.

Arguments by analogy are interesting but often mislead. I think Aaron misses not just the point but the entire field of debate. The outrage is over millions of voters/citizens being misled, not over the objective, detached functionality of the law. The issue is that people feel they were misled in order to get a certain coalition's bill passed. That is not an economic or policy dispute, it's an assault on how a democratic republic is supposed to work. It's just more lies from the governing elite when the particular subset of the governing elite that backed the law was professing to have adopted a different approach to the public. People believe they have a right to accurate information when their opinions are solicited. Had the truth been told, they might have gone in a different direction - whatever that may have been; if the truth is told before a law is passed, a democratic republic is expected to more accurately reflect the will of the people.

Yes Mark - much of what we see is mis-direction...

Trying to get folks to look over here - so they won't see what we are doing over here...

I for one am mad at both parties because NO ONE asked Sebelius if she would consider loosening the grandfather relevant regulations - remember the fact that plans are not defined as "grandfathered" in the ACA itself - that is done in regulations written AFTER the law was passed and not openly debated - subject to Congressional hearing or open to comment.

Oh, give me back that annual policy that

+can deny you coverage based on a preexisting condition,

+can drop your coverage the next year because you get sick,

+can set lifetime limits on coverage,

+can spend less than 80% of your premium dollars on actual medical care,

+can hike premium rates by 12% a year with no explanation, and

+can charge you extra because you are a woman,

Yet were still better than the garbage being proposed now.

Is that a true statement? I've looked at my state's website. The rates are substantially--I mean substantially--below what I could have gotten before. We have 4 healthplans competing for me. I can drop my wife's employers plan ($1500 a month with $3k deductable) for a plan for my wife and myself for $450 a month and a $6k deductable). No pre-existing condition worries, no med exam, no meeting with an insurance agent, get the same network, etc.

I think you are too familiar with garbage not to see a good deal. And, you may be listening to insurance agents (they won't be getting that commission), or to a doctor who may have to offer discounts to get into a plan which attracts a number of enrollees (although he could remain attached to a high cost, open network plan...), or a fraternal group that gets a kickback in commissions for enrolling you in their plan.

Bill finally found the elusive free lunch, I'm sure a Nobel like thingy will be in the mail any day now.

I bet you someone out there is paying for it.

The free lunch is to those who are not insured, or underinsured.

I'm sure there are people who benefit from this law.

The problem isn't that some people are being made worse off. It's that they are being made worse off in a way they were told they would not be worse off.

Frum's take was good. A law that raises taxes on Peter in order to improve Paul's life isn't necessarily bad, but if you get Peter to agree to it by telling him "your taxes won't go up, period," then you have a problem.

+can charge you extra because you are a woman,

Big concerns of yours Bill?

Urso, I am married. That means, ala Becker, that the family unit, husband and wife, benefits if the wife is not discriminated against. If I were dead, I would still have those views, and if my daughter were unmarried, I would also have those views as well.

You do not have to have ovaries to care about women.

and what about choice?

Does the male gay couple need a policy that covers maternity costs, or other women's health issues? can we offer them coverage that's more suitable to their needs and more cost effective for them?

Maybe the male gay couple had a mother? Or not. Or each had a sister.

The "suitable to your needs" argument doesn't work if you are using community rating, and is the basis for why rates are lower with community rating: everyone is in the pool, no adverse selection, no insurance medical underwriting costs, no commissions to agents, law of large numbers, bidding by plans for large, undifferentiated populations, yada yada yada...

Which brings up this point: It looks to me that this site is more a political site than an economics site: no discussion of adverse selection, community rating, costs, law of large numbers, minimum benefit levels as a way to get providers (hospitals) to lower price because of less uncompensated care, etc. Instead, this is just a bunch of political bs.

Sure, and the woman has a brother. So should she be upset that his premium will be going up? Or does the concern only go one way.

But hey as you said before, your personal premium is going down, so bully for you I guess. No doubt Obamacare is a great deal for certain age cohorts. Your universal concern over healthcare premiums apparently does not stretch to young people.

"If I were dead, I would still have those views"
Well, it is Halloween...

Women should be charged more, because they pose higher risks and costs.

They shouldn't have to pay for pre-existing conditions because this is INSURANCE, that is, protection against UNFORSEEN circumstances, not a bill payment program.

Costs go up by at least 12% per year, so no other explanation for rising premiums needs to be given.

And how much should an insurance company pay to drag you through life? If their exposure has no maximum, then they have to raise premiums to cover black swan policyholders.

Seriously, I'm quite sure you understand the concept of insurance. So I'm puzzled at how you think insurance can be both sustainable and affordable without these limitations. Clearly you want and approve of a national redistribution program disguised as insurance reform. We would have been better off with a tax hike and insurance subsidy for the poor. Now the distortions in the insurance and health care markets are out of control.

Health insurance policies could not "drop your coverage...because you get sick". They could only drop you if failed to disclose a pre-existing condition (meaning you entered into the contract fraudulently).

Companies may have abused this policy, but any problems in that area could have been addressed with far less drastic measures.

Most (all?) states prohibited dropping people from plans as long as they paid. However, the company could jack up the price on everyone in the plan and then invite all the healthy people into a cheaper plan.

Of course, there are ways to fix that problem besides PPACA.

Bill, could you please explain why being allowed to charge women more, in accordance with higher expected costs, is a bad thing?

While you are at it, could you please explain how mandating equal prices between sexes, which is a redistribution of wealth from men to women, is not a sexist and discriminatory policy?

My company (a perennial top 10 best employer company) published an internal news article which I will paraphrase here: 1. We know everyone is concerned about the coming health care plan changes. Do not worry, we have you covered! 2. What stays the same: you will be able to keep the same serice providers you are happy with. 3. What changes: the monthly premia and deductible will increase (TBD).

Would you count the new plan as "the same" as the old one? Did we change the definition of "same" when I was not paying attention? How pervasive is this? Does ANYONE get to keep the "same" plan?

Man, your employee benefit is staying more the same than most people's employee benefits stated the same over the past two decades. I bought private insurance with a $5000 deductible as saw my premium increase from $350 to $900 over decade in 8-10% increments. My sister with employer benefits saw her health care provider employer change the plan significantly multiple times raising employee costs significantly, especially with families, before Obama was elected.

Unless your employer made no changes at all in the first decade of the 21st century, either you liked the unilateral changes, or you didn't have insurance you liked.

If the premium increase due to Obamacare is only 8-10%, then you have a point. But that is certainly not what most people have been reporting. This is a big cost jump in addition to existing trends.

Also note that exploding health costs were cited as one of the main reasons we urgently needed the ACA. Saying that it maintains the already-problematic status quo is not much of a defense of the law.

The assumption is that pre-ACA the actuarial cost of policies was fair and not related to to subsidizing other insurance. If subsidies need to be paid for by some group, shouldn't it be the entire country through broader taxation and not just the self-employed middle class, who really are the full-boat payers in the ACA exchanges??

I want to know who among those throwing stones actually bought individual insurance policies.

I did buy individual health insurance from Jan 1, 2003 until Nov 1, 2012.

Only when Obamacare forced the MLR to be 80% did I see a premium reduction for the one year it was implemented; in every other year, the premium increased 8-10% every single July.

I received notices several times per year of changes in the health insurance policy terms, as allowed under the terms of the insurance contract approved by the NH insurance regulator. Most of the changes were related to the drug formulary, most increasing the out of pocket costs if using the brand or class affected. Other notices changed the provider network.

While some States might not have allowed such changes, they would be the states with stricter regulation, price controls, community rating mandates, etc.

NH health insurance choices have been very limited for as long as insurance has existed, and attempts to increase competition by getting out of State insurers to offer insurance in NH has constantly driven up costs to 90% of NH businesses and individuals over the next five years. NH has stabilized as the second highest cost of health insurance and medical costs by stopping trying to increase competition from out of State. The only thing the out of State insurers did was cherry pick the healthy, as long as they were healthy - not having a large business in NH, they canceled policies when profits fell, leading to demands from the business community for the State legislature to do something about out of control health insurance costs.

The not-for-profit Blues were sold by the State, in effect, to Indiana based Anthem, based on the promise that a bigger more experience for profit insurer would be able to drive down health care costs by running rough shod over providers. The State of NH was instrumental in creating the landmark common law for converting a not-for-profit coop like the Blues into a for-profit entity.

Eliminating the NH based not-for-profit Blue has been a disaster - costs are higher, the State has no partner in working on safety net services, providers have lost control and the conflicts have gone into the courts multiple times over various restraints of trade. NH has been trying to convert Medicaid into managed care, but Anthem has not been a low bidder, even though it covers over 70% of everyone in the State, so mostly out of State care management arms of insurers are trying to negotiate with providers. Nearly all the hospitals refused to negotiate with them due to the State effectively hiking their taxes.

Would everything be wonderful if the NH created and based not-for-profit NH Blue hadn't been sold down the river?

No, the attempts to control costs had been at times high drama, but the problem was all within the NH public sector, all within the government, the public interest NH Blue, the mostly public hospital system - private but not-for-profits governed under a public service law. NH is no longer in control of much of anything as a result of trusting in for-profits to deliver free lunch cost savings, better service, more choice, and ultimately more control.

Charging 65-year-olds rates that are as much six or eight times higher than they charge 25-year-olds

I really see no downside to charging 65-year-olds 6 to 8 higher than 25-year-olds. Especially if we subsidize the poor which the law does! Can someone explain the reasoning to me?

I think that I might be dropped from my blue cross insurance because it has a $10,000/year/person deductible. I am not complaining but I thought that people like me were a benefit to others because we shop for price.

I think that we need health insurance only because most people have health insurance. I think that it would work out better for most of us if everyone had very high deductibles like about $50,000/ year.

BTW I wonder if Henry is a for a motorcycle ban.

If your policy is canceled on or before Dec 31 2014, that is purely a business decision by your insurer, because any policy in effect on Dec 31 2013 is grandfathered.

Few State insurance regulators prohibit entire classes of policies being canceled, as long as one or more replacements is offered, even if inferior. Regulators must protect the insurer to protect the insured.

Given savings are less than $50,000 for most people over age 50 heading quickly to retirement, what is your plan for doctors and hospitals collecting on $50,000 medical bills for the majority of patients? Are you thinking that a family earning $30,000 a year at minimum wage jobs should let their child die of leukemia because they won't be able to pay $50,000 per year for several years to save her?

Given savings are less than $50,000 for most people over age 50 heading quickly to retirement, what is your plan for doctors and hospitals collecting on $50,000 medical bills for the majority of patients?

You do not need savings you need to be able to amortize the bill.

Are you thinking that a family earning $30,000 a year at minimum wage jobs should let their child die of leukemia because they won’t be able to pay $50,000 per year for several years to save her?

Certainly not! I have never been against medicaid or help for the poor. Now they should bear some of the cost.

The state would provide insurance to all Americans but the annual deductible would be equal to the family’s trailing year adjusted income minus the poverty line income (say $25,000 for a family of 4) + $300. So a family of 4 with a trailing year adjusted income of $30,000 would have a deductible of $5,300. A family of 4 with a trailing year adjusted income of $80,000 would have a deductible of $55,300. Middle class and rich people could fill the gap with private supplemental insurance but this should be full taxed. This would encourage the middle class and rich, who are generally capable people, to demand prices from medical providers and might force down costs. They could opt to pay for most health-care out of pocket while the poor often less capable would be protected.
It is not a perfect plan but it might help. Some deregulation of health-care would also help the poor gain access. The gauntlet that Doctors have to run these days to get to practice seems like an anachronism in today’s world. Let smart people get to practice medicine after on the job training. Let the medical businesses decide who is qualified to practice medicine. 12 years of training to tell if my child has an ear infection is overkill and reduces access to health-care for the poor.
Another benefit of my plan is that it would encourage capable Americans (the rich and middle class) to be a counter weight politically against the providers.

BTW I do not believe that it is possible to subsidize those with above median income and thus it is folly to try.

The law intentionally creates conditions that make continuing the grandfathered policies untenable. The insurers the ability to modify the grandfathered policies and can't sign up new customers. Of course they won't continue the policies under those conditions.

It's not "purely a business decision by the insurer"; it's a business decision in response to the new insurance environment created by the ACA. And the only meaningful way to measure the ACA is by its systemic effects.

Tyler - here are my empirical answers to your questions in the post:


cliff notes c&p:

Currently, my wife and I have a plan where we pay $315 per month. We don’t need referrals to see specialists, we have out of network coverage, and we have an $8.000 in-network deductible (another $8,000 max out of pocket if we go out of network).

How about the new plan Anthem is offering me? $581 per month (84% increase), $10,000 deductible PLUS 20% co-insurance after that up to a $12,000 out of pocket maximum. Also, it’s an HMO so I need to see my primary care physician for referrals, and oh by the way, the network of doctors has shrunk and my local hospital is out of network. There are no out-of-network benefits.

That’s what we call the triple whammy – higher premiums, higher deductibles, less access. Lose, lose, lose.

Put differently, I will have to pay an additional $3192 per year in premiums alone, and then I’ll have a higher deductible to boot, while being subject to the disruption of care that comes with finding new doctors.

Kid, If the previous plan was an annual plan, did they have to offer you a renewal. No. If you got sick during this period, did they have to offer you a plan the next period. No. Was there a cap on medical expenditures. Probably yes. You are talking about an apple and an orange. And, by the way, did you look at your local exchange to see what price you get with that or with another carrier. You can shop for different plans meeting minimum requirements. Do you qualify for a subsidy. Did your plan give you a rebate last year because they spent more than 20% on admin costs? Do you have a kid under 26 looking for insurance?

As to the rates, my rates are going down substantially, as are other persons I talk to. We are opting out of an employer based plan, as is my brother, because we are getting a better deal on the exchange.

All health insurance that does not come with a pony is substandard

You think a $70 bronze plan is a pony?

I figure if you and the admin get to require all health insurance plans to include all sorts of expensive additions that I don't want or need, I ought to be afforded the same opportunity.

And I want a pony.

Too expensive? Suck it up.

You think it's unnecessary? Your opinion doesnt matter. We've already established (Barro) that the average consumer doesn't know what's best for themselves.

Think it irrationally subsidizes the pony industry? Hey, we had to do that to get their support to pass the bill. And I think you'll find that after you've ridden a pony, your mental health will be much better.

Think it's unConstitutional to require everyone to buy a pony? But it's just a tax err penalty err tax err whatever we need it to be today.

David, I don't believe you, having looked at national data. What state are you in and what is you age range. We're you choosing a platinum plan?


From Forbes magazine: "The weighted average of the lowest cost “silver” plan runs from $192 per month in Minnesota to $403 in Mississippi. This plan would cover 70% of health care costs up to out of pocket maximums. These premiums do not reflect the availability of premium tax credits. Two other listings are included – average rates per state for a 27 year old and for a family of four, and averages for the same cohort in major metropolitan areas – this reduces some of the variation around the averages if you happen to be in the two groups singled out as examples."

David, here is a link: http://www.forbes.com/sites/carolynmcclanahan/2013/09/25/health-insurance-rates-are-out-for-the-obamacare-exchanges-is-it-good-news/

It seems to me that most of this discussion misses the simple fact that a high deductible, low coverage policy is not synonymous with 'inferior'. If I can easily afford a high deductible, there is no reason for me to pay a higher premium for lower deductibles, and I'm better off not doing so because insurance is always a negative expectation bet - the insurance company gets a cut, and you're paying for it.

It is totally rational and sound financial strategy to buy a policy with a deductible as high as you can financially afford without a major disruption to your life. One of the advantages of building your own wealth is that you can start self-financing your own risk, which saves you money in the long run by cutting out the third parties who are selling you risk avoidance at a price.

I choose to carry collision insurance on my car only when my financial situation is such that I absolutely could not afford to repair my car without major hardship. For me personally that means I buy collision insurance if the value of my vehicle is above $10,000, but as it ages and the value drops below that amount I eliminate the collision coverage and buy only liability. I'm essentially changing my insurance policy from a low-deductible collision policy to a high deductible policy (I pay the first $10,000, and it will never be more because that's all the vehicle is worth). The end result is that I save a lot of money unless I get unluckier than average.

From a social policy standpoint, we want to encourage this kind of behavior not only because it's economically efficient, but because people behave more responsibly when they are paying for the consequences of their own actions. If I'm paying for my own collision damage, I have an incentive to be a better, more defensive driver.

One problem with high deductible health insurance, however, is that we treat people whether or not they can pay. So a high deductible policy might just offload the costs onto the hospital or society in general. That could be handled by only selling such policies to people with a demonstrated ability to pay, just as we should only give loans to people who can demonstrate the financial ability to pay them back.

Some states and provinces allow people to waive auto insurance by showing they have the financial ability to self-insure. Why should health care be different? Why should Bill Gates carry any health insurance at all?

Re: "From a social policy standpoint, we want to encourage this kind of behavior not only because it’s economically efficient,"

Premise is wrong. No, from a social policy standpoint, we want to have community rating, having insurance work on the principal of the law of large numbers, no adverse selection, guaranteed issue, and no lifetime caps.

I am also in the position to self insure. But, I also know that when I don't self insure, I purchase a product in a market for which I receive value, so I can self insure, or invest, in another area where I face risk, where I can pursue other risks, such as a higher deductable on my homeonwers or car insurance, or doing more risky things in the stock market.

What people seem to miss is that there is an externality from how I purchase, or fail to purchase, health insurance, because if I inadequately covered, someone else pays. So, the premise is wrong: From a social policy perspective, WE DO NOT want to encourage certain behavior.

"What people seem to miss is that there is an externality from how I purchase, or fail to purchase, health insurance, because if I inadequately covered, someone else pays."

What you seem to miss is that I was talking about self insurance, not avoiding paying for my medical bills. You also seemed to miss the whole section of my post that addressed your point and said that perhaps verification of financial ability to self-insure could be included when allowing someone to buy a very high deductible policy.

Dan, you can still self insure. Just pay the $95 tax to pay for the free riders or those who misjudged their capacity to assess risk.

That $95 number is a smokescreen, put out to make the penalties seem reasonable. The number that will matter to the vast majority of people is 1% of income in the first year, to a maximum of $285. By year 3 it's 2.5% of income, with a maximum penalty of $2085.

You hit that level with an annual income of $83,400, which I think it's safe to assume would be at least the income of anyone who could afford to self-insure. So self-insurance would carry an annual penalty of $2085 for almost everyone.

I swear, I've never seen so much dishonest math surrounding a program than I've seen from the defenders of Obamacare.

Who would possibly pay the $95, anyway? You'd have to make an income of less than $9500 for that figure to be at all relevant, and I assume that anyone who makes less than $9500 would pretty much qualify for full health care under Medicaid, wouldn't they?

Dan, Your argument is one that says a person making over $100k does not have health insurance, because that is the basis for your claim that person would pay a penalty.

As an income based penalty, as you claim, it is clearly false when you say: "So self-insurance would carry an annual penalty of $2085 for almost everyone."

Your rhetoric got ahead of your ability to multiply an AGI penalty by AGI.

It also got ahead of reality if you believe that a person with income over $100k isn't purchasing health insurance.

Bill, you're mischaracterizing my argument (again). You said that anyone who wants to self-insure can just pay a $95 penalty and do so. My response is that anyone with the means to self-insure will almost certainly be paying far more than $95. Your response to that was a complete non-sequitur.

Do you have any evidence that people on high deductible plans were burdening the system by not paying for their care? I seriously doubt that was the case. I think it would be extremely rare that someone could afford to buy individual insurance and yet not have enough assets to cover the deductible when they get sick. The truly poor are eligible for Medicaid, so we are talking about people in the lower middle class at a minimum.

The people with no insurance at all were the ones likely to burden the system. And Obamacare arguably increases the incentive to go without insurance.

Dan, the bronze perpetual renewal plan is high deductible. Frame your question as: do you have evidence that high deductible plans were not renewed because you became sick, or such plans had a cap, and you answered your question. And, yes there are atudies on this, but answer the questions first as this is the easiest to see for yourself. Go to Kaiser Health News for the studies.

You are right, I should have asked totally different questions that are much easier for you to answer in a light favorable to the ACA.

That's how Bill always operates, dan, more than anyone I've ever seen on the internet.

Are Bill and Jan paid by the post to support the ACA?

I would advise Jan that if she is "paid by the post to support the ACA," that she has to report it as income. As for me, I am providing my experience, intelligence, and wit as a free good. To address your claim that I am "paid by the post to support the ACA," Tyler is not paying me, either. But, you never know about Alex, or Tyler's evil twin.

@JWatts, paid by which side?

Apparently aaron knows about my health needs more than I do. I'm glad someone has all the possible market information on me.

I would love to know why a health young dude like me needs a 270+ premium, a sky high deductible for a bunch of coverage that I don't need and don't want. Unless the technology related to letting me deliver babies progresses real fast, I'm certainly not going to need the maternity coverage (that my previously, evil substandard plan failed to include). Maybe I can develop a mental illness or drug addiction that can get me more bang for the buck.

I went from 90 dollars, to the possibility of well over 270. My previous policy was fine because I don't go to the doctor and don't use any medical services. I just want something that prevents me from being destroyed financially in case of a bus hitting me. Is that just so substandard, so insane?

I wish Aaron et al would just admit the purpose: the redistribution from the young to the old, from the middle class to the marginally lower middle class and be done with it. There are trade-offs, it was not the free lunch these guys sold it as. And it has NOTHING to do with bring me better coverage.

Skinny, Unless you are making more than $94k a year, it is I who is making a transfer to you, even if you are young. And, I can assure you, that, unless you die in the interim, you will get older, too, so the wheel will turn. And, may you earn more than $94k when you do get older so I don't have to chip in to your policy, as I have chipped into the care of all those who went before you who did not pay their hospital or doctors bills, which became care that I picked up in my insurance costs.

Do you get paid to make pathetic spin-tastic justifications for this policy? My premiums tripled for a policy that I have no interest in, my old one was far from "substandard" or "rotten milk" for my specific financial objectives.

How are you making a transfer to me in any fashion when my premiums triple for a medical coverage that I will never use. Seriously I don't have routine appointments, proscriptions, any even remote connection to medical services.

Skinny, please look at the Forbes article before you ask me to believe your story about your change in policy. Unless you are making more than $94 k, I am paying for your credit, just as I have been paying for free riders who don't pay their hospital bills because they are persons who claim they will never need or use insurance, like yourself.

Oh, and Skinny, here is a link to the amount of subsidy I am giving you if your income is below $94k:


If you want to discuss this further, and are willing to give me the state you live in, I will link you to data that makes me doubt your claims about how much your policy increased and the apparent great quality of your policy, but for now, read the Forbes article above.

But, for now, I really like your statement: "for a medical coverage that I will never use. Seriously I don’t have routine appointments, proscriptions, any even remote connection to medical services." Yeah, I never did either, just as my house has never burned down and I have fire insurance, and just as I never have an accident and have car insurance, and so forth.

I guess we're both lucky.

You're just an asshole, Bill. The new obamacare bot line is now not only "you don't know what kind of policy you really want", but additionally "I don't believe you".

I am a grad student, so I don't make enough to get a subsidy while simultaneously not being eligible for medicad in my state. I know you probably want my address to verify.

So really, fuck off you pompous, self-righteous prick.

Skinny, I am sorry if I offended you, but if you are a graduate student, (a) your school has coverage for you, (b) you qualify for support and subsidy, and (c) you have insufficient assets such that I would have to pay for your care if you needed hospitalization.

My school coverage would be 240 dollars a month (it was nearly half that the year before), I do not make enough money to qualify for a sub (way under the poverty level income tax wise).

But thanks for finally regressing to the bottom tier justification of "I will pay for you anyways though hospitalization". You are a prick, Bill. Have fun wasting your life making pithy comments on internet forums.

Obviously skinny is married with 2 kids, Bill, making that $94k number even a little relevant

You're very good at this.

You need it because if you don't buy it Bill and the womenfolk won't get subsidized.

Mr. Aaron's remarks are all spin. The fact is that President Obama and all of his minions lied because if they had told the truth - that Obamacare would force millions out of their policies into more expensive ones in order to subsidize the poor and chronically ill - the law would never have passed, notwithstanding Democratic supermajorities. Mr. Aaron's ex post facto rationalizations don't change that fact.

People who like cheap insurance plans are people who aren't sick. I saw a news article on a woman whose premiums increased 900%. She had been paying $54 a month and would now have to pay over five hundred (not including subsidies.) But her insurance only covered the first $50 of a hospital stay. $50. She loved that plan because a) she had never needed hospital care and b) if she had needed hospital care, she would have passed the bill to either the hospital, charities, family members or the taxpayer.

For all economists' talk about having skin in the game and internalizing externalities, now it's a different story.

The mask is off. Get used to it, peasants, your betters have spoken. I smell desperation. Press the attack!

Why the massive concentration on the insurance factor? How about doing something to actually lower the expense of medical care? Like produce more doctors and nurses, for instance. Or at least medical personnel that can do some of the things a doctor does for a smaller salary. Why do we need degreed pharmacists to walk across the room to hand us a prescription? As everyone should know, every penny spent on medical care goes to some person, a doctor, administrator, biotech corporation executive or shareholder, etc. The ACA is going to result in a national healthcare expense that will change everyone's primary goal from finding an affordable and convenient parking space to paying their health insurance.

FWIW record numbers of people are heading to medical school these days.

And we don't need pharmacists to physically hand us a prescription, but they do some other vitally important things, in the literal sense of the word.

They applied, the number of spots is not increasingly greatly.

The power of the AMA should be severally curtailed, and we should have way more medical schools or residency spots. Currently, the power association restricts their supply through licensing. We don't need someone with a decade or more of higher education seeing kids with stuffy noses. It would be like having highly educated engineers assembling widgets.

Just like pharmacists, that are unneeded in 95% of cases, use the power of the law to make themselves necessary to the process. The people handing out pills at walmart don't need a decade of schooling.

These were two basic ways we could have gotten lower health prices in addition to any adjustments to insurance or public investment.

good comment, +1!!

Are you high?

You gave Aaron's excuses more words than they deserved. All analogies are suspect, and his was abominable. Insurance plans are not analogous to food which is pure or impure, healthy or unhealthy.

People were satisfied with their old plans. Obama promised that people could keep their plans and their doctors if they wanted. Obama's critics said, in advance, that his scheme would result in plans being discontinued or going up in price. That is exactly what happened, and now the country is realizing they were sold a bill of goods. Of course, at least half the nation knew this was going to happen.

So is this a bug or a feature?

People were satisfied with their old plans
really ?
Ya know, I seem to recall this very faint memory of people complaining about price increases in the 80s, 90s, 00s..naw, must be a dream
I seem to recall people being denied coverage, after years of paying, cause the insurance company claimed that the person lied 10 years ago about something on the application form...naw, must be a figment

People in wheelchairs have a name for us: the temporarily ablebodied.
The same rule applys to people happy with their insurance; they are happy till a 250,000 dollar bill comes in and the insurance company says no, ain't payin...

I mean, what is it with you conservatives: there were a lot of prolbems.
Obama offered a heritage foundation plan; you are unhappy.

I really don't like saying this, cause I don't believe it, but your (in general, not you specifically) excuses and behaviour are so bad, I have to think, is it racism ? and i feel like a really bad person thinking that, cause I am sure that 99% of republicans are not but , still, you are so extreme and so one sided and so unwilling to admit to facts...I really don't undertand, and it distresses me

Look out, Bill, you have competition!

I'm not going to buy health insurance, and I'm not going to pay the fine. Instead, I am going to self-insure by buying CDS on U.S. Treasuries. By the time I need to tap the insurance, I'll have enough money to cover it.

It does strike me as odd that they are banning insurance that is cheaper and less comprehensive since they want everyone to buy a "better" product. Maybe since there is broad agreement that 4-bedroom single family homes are better than one-bedroom condos, we should outlaw one-bedroom condos. And no more Honda Civics - now everyone has to buy a Lexus or nothing.

a better analogy would be that we are banning civics that don't have brakes or turn signals...which raises the point, why do i have to have brakes ?
cause it harms others ?
just like going to the ER for $$ care that would have been cheap if taken care of hurts you and me ?
just like an uninsured person racking up 500,000 dollars of care after a car accident hurts you and me ?

a better analogy would be that we are banning civics that don’t have brakes or turn signals

One that's actually better would be banning Civics that aren't designed with the "help" of a team of feng shui experts.

Is it just me or does there seem to be a gigantic hole in ObamaCare. Specifically, the penalties can only be deducted from your tax refund. It seems to me the thing to do is to go without insurance. Then patronize the growing ranks of doctors that won't take insurance. They are about half the price and spend more time with you. Many don't even have a receptionist and do all their scheduling themselves. Then if you do get something serious, sign on to ObamaCare with your pre-existing condition. As for the penalties, a good accountant costs a couple hundred dollars. Course, you will probably have to file four times a year to minimize refunds.

Yes. This point doesn't get the attention it deserves. The only way the government can collect the penalties is to take them out of people's tax refunds, so if they don't get refunds there's no penalty. All you have to do is make sure your withholding is less than your tax liability (not too much less, or you could incur a penalty for underwithholding). Low-income people with this problem would have to arrange for advance payment of the EITC.

This came about because the republicans were talking about people being sent to jail for not buying health insurance. So, to make this impossible, the bill was changed so that the usual methods for enforcing tax liabilities didn't apply.

I think "if you like it you can keep it" was always drected at the majority who gets their insurance from their employers and was aimed at a Ted and Loise kind of misunderstanding of what was being proposed. I think that it was presumed that almost no one with individual insurance "liked" their coverage, subject as it was to caps, withdrawal of coverege when one's health status changed, etc. (We sure did not hear much from them in the year that health insurance finance reform was being debated, nor did that seem to be a big problme in Massachusetts.) Should more thought have gone into acommodting those who really DO like their coverage? Perhaps but would that not make a pretty compicated system even more complicated?

Ah, the "We lied, but it was because we didn't know what we were talking about while we were working on an overhaul of the system we didn't know about" defense

Tyler - Can you answer a question for me ?
Do you think there is a group of people who were not getting desperatly needed healthcare (say because of pre exisiting conditions) and that they are now getting healthcare ? (or will shortly)
And, how do you compare the negative value of someone who has to change policys and pay some more each month (which may be a substantial burden) vs the positive value of someone not , say, loosing their eyesight cause they couldn't afford medicine.
can you put a numeric value on these things ?


Question for Bill on the ACA premiums:

Why is the cost of a silver plan $192 a month in MN and $403 in Mississippi?
MN has the Mayo Clinic and many other expensive hospitals. MN is also a relatively high wage state (note: I live in MN)

I am stumped. Is this because the ACA depended on insurers in each state deciding whether or not to offer plans in the exchanges?

If so, that is going to be a serious flaw as time goes on.

One other note to all: Henry Aaron is a fine writer, but I believe he has been an academic all his life. That almost certainly means he has had group insurance with no age rating, and most likely his university paid most or all of the family premium.

Conservative professors can be just as unsympathetic to those of us in commission jobs and in flyover country.

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