Why is Obamacare still unpopular?

Robert Laszewski writes:

After all of this and two complete open enrollments, only 40% of those who are eligible for Obamacare have signed up—far below the proportion of the market insurers have historically needed to assure a sustainable risk pool.

If this were a private enterprise enjoying these kinds of benefits [ namely legal coercion], and only sold its product to 40% of the market, its CEO would be fired.

Looking at this picture, only 20% of those eligible for Obamacare, who make between 251% and 300% of the poverty level, bought Obamacare. Why?

ACA

The Obama administration will in fact be increasing the subsidies it will pay to insurance companies.

Comments

The implication here is that the subsidies in the law are not nearly generous enough to entice people into coverage even with the penalties. Therefore, you need to subsidize everyone. At one point, this was mostly accomplished via employer provided healthcare... which is a slowly dying program due to how expensive it is for employers. I wonder what the alternative is?

Here's your answer:

The administration will in fact be increasing the amount of your money it will use to pay insurance companies.

If Obama wasn't doing it, you would call if profit sharing.

"Section 1341 of the Affordable Care Act established a transitional reinsurance program to stabilize premiums in the individual market inside and outside of the Marketplaces. The transitional reinsurance program will collect contributions from contributing entities to fund reinsurance payments to issuers of non-grandfathered reinsurance-eligible individual market plans, the administrative costs of operating the reinsurance program, and the General Fund of the U.S. Treasury for the 2014, 2015 and 2016 benefit years. " - cms.gov

This mutual insurance program has raised more revenue than was required to pay claims under the original reinsurance risk sharing formula distributed:

"Those payments to insurers with higher shares of sick enrollees are less than the $8.7 billion collected so far from insurers with less costly claims, according to a report from the Centers for Medicare & Medicaid Services (CMS). The agency had expected to collect $10 billion, but also had anticipated higher shares of costly claims. The agency expects to collect and pay out another $1 billion by Nov. 15 from the insurers, which covered a total of 6.3 million enrollees in 2014.

"Because the number of qualifying insurer claims was lower than CMS anticipated, the agency increased from 80 percent to 100 percent the share of enrollees’ claims between $45,000 and $250,000 that it will reimburse."
-- http://www.hfma.org/Content.aspx?id=32076

You can argue that a different method of returning excess premiums is superior.

You could argue Sec Burwell should pocket the excess to reward operating the program authorized by Congress at a profit instead of loss to taxpayers.m rebates,as that would be in effect what would happen for a for-profit insurer giving the CEO a massive bonus for collecting excessive premiums. Why should the customers benefit from the payouts being lower than premium revenues? Right?

Note, the number of enrollees is less than hoped, and it is expected that those who did not enroll are healthier than those who did enroll, but the unhealthy people did not exceed the insurers' planned payouts as much as expected. In other words, the unhealthy people turn out not to be as unhealthy as expected by anyone: the ones claiming a death spiral nor the insurers or the people designing and implementing the law.

Although the larger subsidies for the poor are probably a part of the explanation, I suspect that a more significant factor is the distribution of financial sophistication among the population. In the United States, those with higher income and greater wealth are generally (although certainly not exclusively) those with more knowledge and interest in financial matters. Even for the very poor, insurance obtained on the Obamacare exchanges is a bad deal unless you happen to have a chronic medical condition or a recent history of severe illness. Yes, the subsidies mean that premiums and deductibles are lower than they would otherwise be. But if you have no wealth to protect, there is no point in having health insurance (except to avoid the Obamacare "tax-penalties").

In the long run, even the (healthy) poor will wise up.

My guess is the School Lunch Paradox.

The paradox is that the goal of school lunches are to be cheap, nutritious, and delicious, and are none of those things.'
I can spend $1 at mcdonald's and get better food than I can at my local middle school.

The insurance provided by Obamacare simply must SUCK, else wise why wouldn't people be buying it?

If they want more people using Obamacare they will need more threats of violence. For example, the DMV is universally hated and yet people use it because there are no alternatives and they will go to jail if they don't.

Althouth a certain subset of people just drive their cars around unregistered and without driver's licenses...hmm, maybe those people are also abusing EMTALA and are the reason Emergency Departments give more 50% of their services away for free, which would explain why people who pay end up with bills for $50 advil. Who needs obamatrash when you can just walk into an ER and get it all.

Most swedish schools serve relatively nutrituos and definitly cheap food to every pupil. (100 % subsidized for everyone between 6 and 16 years old and for the definitive majority between 16-19 years old.)

The cost is according to the Swedish national agency for education 33,70 SEK per lunch (2013). There is a burger and pizza joint outside the highschool I´m working in. The cheapest option there is around 65 SEK (burger and fries). A standard lunch is around 90-95 SEK in my town, but that would be 80 SEK in many parts of Sweden and maybe a lot less in some (tax) crime ridden enclaves. Some of my pupils (15-16 year olds) eat there once a week, some more seldom. Nearly everyone of them eats at least 80% of of their lunch meals at school and at least 80 % of them eats 95% of their lunch meals at school.

School lunch paradox my ass. The paradox is why most americans apparently don´t value school meals enough to fix it.

Note that I´m not complaining, every talented young american who chooses work at Apple or Google or some other american firm with global reach instead of in the local school lunch businiess makes it even more affordable for us swedes to feed our children with nutritous school meals

So thanks for your puzzling valuesystem.

May your (exportable) tech sector continue to rule supreme! Go america!

Cheap lunches, yay, as Swedish students plummet down the PISA rankings so the once world-leading education system now sits below average in math, reading and science among the OECD.

Sweden generally will need a miracle to recover from the socialist experiment that began in the 70s.
http://www.iea.org.uk/publications/research/scandinavian-unexceptionalism-culture-markets-and-the-failure-of-third-way-soc

Well, PISA doesn´t rank school lunches yet and I´m the first to lament the falling standard of education in our schools. If you think that there migth be a strong correlation between societies willing and able to solve "the school lunch paradox" and free fall in PISA-rankings you migth learn something from our neighbours the finns.

The miracle you are asking for seem already to have happened, since the swedish economy since the folliest policies was reversed in the beginning of the 90`s have grown better then most of those PISA-producing OECD countries.

But if you feel that our shortcomings in educating our children is a compelling reason not to feed your own adequatly and instead go all in for producing software to our childrens smartphones, then by all means, who are my to argue?

"The cost is according to the Swedish national agency for education 33,70 SEK per lunch (2013)". I take it that that figure is arrived at by neglecting many of the costs that the nearest burger joint can't ignore? Or is Sweden unique in giving honest figures for costs in the government sector?

Undoubtly there are many costs, such as deadweigth losses associated with taxing, that is uncounted.

The cost reported are also to be viewed as marginal in the sense that they presuppose many features of the swedish state, like a working tax collection authority. If you tried to organise tax funded school lunches in some kind of hunter-gatherer society, you can definietly not use these numbers. If you on the other hand are trying to organize tax funded school lunches in for instance Norway of today, which in some kind of a bigger historical perspective is almost indistinguishable from Sweden of today but leaves the school lunches for every family self to organize, then those numbers are relevant.

But if you sincerly believe that it would be unique to report honest figures in the govermental sector, then I guess you and the society you live in actually have a real school lunch paradox. I can´t see how a society ridden with a government unable to produce reasonable honest figures of something so uncontroversial as feeding school children could outperform burger joints in costs and nutritional value. (To also combine those two with deliciousness is an other thing, where I have my future hopes tied to the exportable american agribusiness. Go go Monsanto!)

Try handling that and I garantee lots of entirely new options for dealing with problems together will open up!

" Norway of today, which in some kind of a bigger historical perspective is almost indistinguishable from Sweden of today but leaves the school lunches for every family self to organize, then those numbers are relevant."

What an inconvenience it must be for those Norwegian moms and dads to arrange, maybe without government help, the lunches of their own precious children.

We need this word "folliest."
Thanks, Markus

The economics is inconceivable that the school system is providing the same or better for for less cost.

Another thing discounted is that the school system has capital which has no expectation of a return - an extreme divorce from reality.

More bullshit about Sweden from a superior sounding socialist

I'd slit my wrists from the confirmity alone

Haha. You really found that weak spot of that school lunch program.

A government that tries to do everything, typically achieves nothing.

Chip, let me correct the factual error. It is a government run on a combination of folk wisdom and selective reading that typically achieves nothing.

33,70 SEK is $4 US. That is your subsidized price. My High School kid pays $3 for a similar meal, unsubsidized.

If, in the US, the alternative is $11, 90-95 SEK, many more kids would be choosing the school lunch.

Well Americans are fat and stoopid anyway! Charging more for food is a public good. No one should eat so much as an American.

Here come the jingoists.

It's not so much that the insurance sucks - it doesn't suck any worse than the insurance that was offered to private individuals before Obamacare - but that most people who are eligible for it don't think they'll need it. They are young and figure they're healthy, and that anything really pressing will be taken care of by the emergency system.

The penalty for not having insurance is a joke - all you have to do is lie on the tax form (no documentation is asked for) and you don't have to pay it.

all you have to do is lie on the tax form (no documentation is asked for)

This is true, but this is also true of many things on the tax forms, such as charitable deductions. You're supposed to have documentation in your records for what you claim but not always submit it all. The current tax system works on people being honest, perhaps because of being afraid of the low-probability audit. (Not an argument for making the system even more vulnerable to lying, though.)

The same thing is itself a problem with the "IRS computes your taxes for you" scheme. For people who might be tempted to lie on their taxes, it's basically an invitation to do so by letting them know what income the IRS knows about. Unless, certainly, the system works by having people still be liable for any mistakes or by overestimating taxes, in which case many people would still be served by getting tax help as they do know.

perhaps?

It's not only the possibility of an audit, it's also the possibility of fines, liens, jail time, etc.,etc.

The word to describe this is "coercion", not "voluntary".

Also part of the reason why cash is still popular.

Yep, they don't think they'll need it, and don't care that it's mandatory.

I blame the soft-sell marketing campaign. The whole "Get Covered" pitch implied it was optional, like giving to the United Way. And spotlighting people with chronic, expensive medical problems as "Obamacare success stories" glossed over the actuarial reality that you'll probably pay far more in premiums than you'll receive in benefits.

It would be much more effective (if politically unwise) to give folks the blunt message, "Get health insurance. It's the law. On your 1040 we'll be asking for your policy number and we'll come after you if you lie."

This "soft sell marketing" combined with Larry Siegel's "penalty for not having insurance is a joke" seem to me to be a huge cause of trouble for a lot of government programs, especially in California.

Politicians, especially California's ruling party, lack the courage of their convictions.

They campaign on creating a new happy regime of beneficial regulation for the masses, but then fight only for the government financed benefits and forget about the regulation.

Actually, it *does* suck for people making too much to qualify for subsidies. Compared to what was available on the open market before, the provider networks are narrower and the costs are higher, due to several factors including the mandated coverage and the 3:1 age band limits. In fact, Obamacare was intentionally designed to be a sucky deal for young healthy people in order to subsidize the older and sicker.

What was available on the open market before was called insurance was but in fact they were merely temporary payment assistance programs.

Obamacare supporter detected.

There were a wide variety of plans available previous to ACA. In fact, more plans than are offered post-ACA, obviously, since ACA has made some plans illegal.

Did you figure that one out all by yourself? Who says flyover hicks are dumb as rocks?

> Who needs obamatrash when you can just walk into an ER and get it all.

On a related point, I always wondered why "Conservatives" were against "death panels." Having a rule-setting panel to decide what treatments are covered and what isn't is the only way to make this sustainable.

I'm not against a socialized safety net. Let's say a $8,000-$10,000 yearly deductible, and choose some standard hospital protocols for various treatments, and only current FDA approved drugs, etc. No special coverage for pregnancy, birth control, etc, below the deductible. And don't treat obese people for obesity related illnesses. _That_ would be sustainable at a reasonable cost.

The conservatives are not against the death panels. Now that it's the government's job of making sure health care is sustainable, as opposed to, say, Aetna's, we MUST have death panels. All countries with socialized health care have them. The decision to have a given drug offered in pharmacies or a given procedure available in a hospital is made by some bureaucrat in the department of Free Health Care in Cuba, UK, or Canada, just like it is the decision to have or not have private hospitals - it came on the side of "not have" in Cuba and Canada. So, once you have Obamacare, you MUST have death panels.

The problem with death panels, however, is that they are a one-size-fits-all kind of solution. If the panel decided treatment X is not approved for disease Y, nobody with disease Y, no matter how rich or how desperate, can get treatment X. The other problem with death panels is that they will not stop at banning treatment X. Their job is to make health care sustainable when health care decisions are taken by the very same people who are running AMTRAK. Remember Secretary Sebelius and her "let's give free condoms to employees of Catholic institutions?" insanity? To stop that largesse out of government's money and to cover inherent incompetency and waste in the US federal government - we are not talking about Swedish government here - the death panels will have to ban more and more.

So, while the conservatives are not against death panels per se, they are against Obamacare, because Obamacare necessarily implies death panels.

"Having a rule-setting panel to decide what treatments are covered and what isn’t is the only way to make this sustainable."

Medicare does it and it seems to work fine.

And, of course, progressives are blaming "McDonalds" for the fact that their kids are fat. (It's not the reason--poor parenting is. I'm 5'10 and 160# at age 52, and I eat at McDonalds several times a week.)

You're also insufferably smug, so you've got that going for you.

P.S. Progressives don't blame McDonald's for the fact that kids are fat.

http://www.huffingtonpost.com/michael-f-jacobson/mcdonalds-anniversary_b_849299.html

That took about 10 seconds. If I had a minute I could probably find several more. FWIW, progressives do blame McDonalds, and its industry in general, for the fact that kids are fat. It's hard to say for certain what the cause of insufferable smugness is.

If you don't understand that whole-population insurance is more effective & cheaper then I'm also unsurprised that you believe that a McDonalds is nuitritious. Ad hoc healthcare can never be more than a sticking plaster & I'd have thought that that was so self-evident that you'd have noticed.

I wonder how much worse this is making the MTR problem. The larger the subsidies get, the less sense it makes to work at lower incomes.

It doesn't make sense to get an education or work at all. Look how much graduate school costs.

Perhaps the biggest problem at the lower income with the PPACA is the increased marriage penalty. The subsidies are based on the poverty level for the tax unit (rather than household, so a non-married couple living together each use the one person poverty level separately). The poverty level is set taking into account that living together has shared expenses, so for one person the poverty level is ~$11k, whereas for two people it's ~$15k. The problem is that the poverty level is based on household, but the subsidies use tax unit. (Also, it's not clear that we want to discourage living together to share expenses.)

Since the subsidies are on a sliding scale and vanish at 400% of the poverty level, two people who together make $60-80k can run into situations where both would be eligible for subsidies if unmarried but not eligible if married. This can be the difference in $8-10k of premium subsidies per year.

Now that the Supreme Court has made same-sex marriage the law of the land, I'm sure some ground will be made up from all those that will now need to file jointly and enjoy the same marriage penalty as traditional married couples.

Maybe those refusing to enrol are smart enough to know that Obama is a Kenyan Muslim doing Satan's bidding?

Come now. There's no chance that he's Kenyan.

Apparently the whole birther controversy was started by the Clinton campaign as an attack on Obama (Ted Cruz enlightened Katie Couric about this, much to her surprise). You could understand how rumors like this could gain traction, given that Obama's literary agent had presented him as having been born in Kenya. Of course, the agent later described this as a "fact checking error".

Remember kids, the whole birther controversy had nothing to do with conservative republicans.

Talk about being Trumped.

Fortunately we all know agents don't advocate for their clients, so her claim that Obama (unlike everyone else at the time) wasn't responsible for the content of his bio page is absolutely credible, not a smidgen of doubt, period.

Honestly, the guy would have been better off just admitting he hyped his origins a little to sell his book, it would have been understandable. Lying about it just makes him look more crooked.

One of the problems here is that there is no adjustment of income for underreporting, so they are overestimating the number of people eligible for the program significantly.

Bizarre. Do you have reasoning to believe people who unreport income are abstaining from signing up?

No, I am simply saying that the denominator is over counted in each of their income groupings. As a result, they underestimate enrollment percentages. Has nothing to do with differential behavior. It's simply sloppy accounting.

The main problem of healthcare is that the cost of healthcare is very high. Lots of reasons for this.
(IMHO mostly caused by bad legislation.)

And so Obamacare also requires health insurance companies to provide insurance coverage to sick people
with pre-existing conditions. This is like forcing companies to sell car insurance to people whose car
has just been in an accident. ( there maybe a better analogy for this.) Basically this law will
conscript, or recruit by force, healthy individuals to buy health insurance that helps pay for unhealthy
people.

Personally I think they want to create a UK NHS style healthcare system ie "Universal health-care coverage".
My personal experience with the NHS is that it is a bureaucratized system that restricts access to
specialists and surgeries. It has lead "post code lotteries" of shortages and delays of months or years.
This is especially the case for the grievously ill and for innovative procedures or technologies needed.
Some of the worst affected are the elderly.

The global perception of the UK NHS is that every one gets the same treatment. This is not true at all
there are NHS, semi-private and fully private treatments each with their own level of treatment.

People on the whole are not stupid and do tend to look/shop a round especially when they are making a
big decision/purchase. Many local hospital plans offer more for less and people are putting together their
own coverage out of different types of cover.

Don't copy the NHS. By all means learn from France, Singapore, Iceland, Switzerland, wherever.

Inertia is likely a better descriptive than unpopular. Poor people without health insurance are accustomed to going to the hospital when sick, not to the doctor's office, and hospitals are still there and ERs are still full of poor people with minor to serious health conditions. That treatment at the hospital isn't "free" matters little to someone with nothing. By comparison, health insurance, even subsidized health insurance purchased through Obamacare, isn't "free", and doesn't provide any better access to the ER. Indeed, poor people suffer disproportionately from chronic conditions, such as diabetes, which means every year they must bear the deductible applicable to insurance purchased through Obamacare. Of course, one could look at these "flaws" in Obamacare and try to fix them, or one could rejoice that Obamacare is a failure.

Another option is possibly believing that the system of poor people getting care at the ER may yet actually be cheaper than a "fixed" Obamacare, if the subsidies to people and insurance companies have to be massively increased to make it work. Surely there's a point at which the subsidies could actually be larger than the cost of all the ER care reduced.

The penalties to the working and lower middle class are set to increase, though, so perhaps that will address the problem by hurting them rather than increasing the subsidies.

"Inertia is likely a better descriptive than unpopular."

Nope. The poor people without insurance who qualified for subsidies *have* signed up. It's the people who don't qualify who are staying away.

" poor people suffer disproportionately from chronic conditions, such as diabetes,"

How does that work? Is a small bank balance indicative of high blood sugar? Do the biological processes of the human body somehow take note of missed mortgage payments and cancelled cable TV contracts? Does lack of an American Express card mean symptoms of hypertension?

The correlation between poverty and poor health is pretty well established. Are you seriously challenging that?

Worrying about things like whether or not you'll be able to make rent, and if you do, whether or not you'll be able to eat twice a day for the next month cause stress. Poor people are subject to a whole bunch of things that tend to cause stress and the continual release of stress hormones.

Continual exposure to stress hormones lead to all sorts of chronic illnesses.

Therefore, poor people tend to suffer from relatively high levels of chronic illness.

At least, that's the chain of causality that I've seen related to this issue.

Unpoor people don't have stress? Tell it to someone investing his own money in mining stocks. What are stress hormones? By the way, don't people PAY to get into amusement parks and stress themselves on roller coasters? Or go through similar agony at their favorite team's baseball game? For many years stress was blamed for ulcers but we know now that bacteria was the culprit. And if stress did cause ulcers, wouldn't that have been the chronic illness of the poor? It wasn't though, was it?

If poor are chronically ill, then a huge proportion of the entire African continent must be really sick, but they're not. And they don't even have a colossal medical establishment like first world countries. Same goes for Mexico. It turns out that Mexican immigrants to the US, who come to move out of poverty, are healthier than Americans that are much more affluent. Watch them run up and down ladders putting the shingles on Nortena roofs.

In the United States, food stamps and possibly WIC provide more than enough money for food in areas which don't have baked-in costs for convenience and entertainment, e.g. large cities.

Very bad health can make it hard to work. Things like smoking, eating too much, drinking too much alcohol, using too much recreational drugs and being less intelligent that average and so making mistakes can all cause poverty and bad health.

Surprisingly, people don't want to buy products whose main purpose is to get them to subsidize someone else. If we want to subsidize the poor and those with pre-existing conditions, we should just do so with transparent cash transfers funded by taxes. That allows us to make the political judgement as to who should pay and receive the subsidies and what amount is appropriate. It's not necessary to overhaul the entire health insurance system to implement subsidies; writing checks is sufficient. Jonathan Gruber's and the other Obamacare architects' idea of deliberately obscuring and lying about the purpose of Obamacare [http://www.washingtonpost.com/opinions/marc-thiessen-thanks-to-jonathan-gruber-for-revealing-obamacare-deception/2014/11/17/356514b2-6e72-11e4-893f-86bd390a3340_story.html] turned out to not be such a good idea.

Considering how easy it is to discover the problems with Obamacare, how is it that Republicans have not been able to come up with [I don't men op ed's] any solutions? And exactly who was deceived about Obamacare? Those who voted for it or those those who voted against it?

Why would anyone expect this monstrosity to work? Would you fly in an airliner designed the way Obamacare was? The recent Supreme Court decision upholding the subsidies illustrates a fundamental problem with the law: its designers assumed that they could induce the states to set up exchanges by withholding the subsidies. They miscalculated, but the SC bailed them out. What happens when the SC is not there to correct the structural defects? I know - single payer! That will make it all right.

The government passes a law to "solve" a perceived problem. The mere passage of the law is assumed to have done the trick. The actual results are considered irrelevant.

The Politician's Syllogism: Something must be done. This is something. Therefore, we must do this.

I'm on Obamacare but I'm an unemployed ZMP worker and a loyal MR reader. Maybe I'm representative of the 40%.

I was in the 40% but now I'm in the 60%, because Unity never cashed my first check, then canceled on me before the second was due. Now I'm stuck paying the penalty because open enrollment is done.

I'm not clear on what he means by "eligible for Obamacare". It appears that the only qualification he is using is an individual's income level. The chart itself indicates that the percentage is of individuals eligible for Obamacare that are enrolled in an exchange plan. It seems to me that the greater your income, and the closer you are to 400% of the poverty level, the more likely you are employed in a job that offers a health insurance plan and does not require you to shop on the exchanges. By that definition you are still income eligible for Obamacare but you would not be selecting an exchange plan. Are these people included in the statistic. A more precise match measure would be the percentage of individuals eligible for Obamacare but not eligible for any other non-exchange plan that actually purchase a plan. The individuals that are eligible for an employer plan and make more money, or arguably going to be statistically healthier than those purchasing the exchange plans. Insurance companies are still going to meet the requirements for the risk for under the circumstances.

40% is pretty good actually. 'Coercion' here is a rather silly term. Are you 'coerced' into buying car insurance? Yes if you're caught driving without it you can lose your license, have your car impounded. Are you coerced into buying renters insurance? Nope, if your apartment gets robbed you lose your stuff if you don't have renters insurance but otherwise that's it.

What percentage of people who could buy renters insurance get it? Probably less than 40% even though it is a lot cheaper than health insurance. What percentage of people driving cars have insurance? Probably over 90%.

The penalty for not having coverage is slightly worse than not having renters insurance, but much less than not having auto insurance (about $900 against your tax refund, essentially a slightly higher income tax rate). So given that why would you expect rates to be much greater than 40%?

IMO I would concentrate additional resources on making Medicaid better, R&D and efforts to use evidence based medicine to drive down costs rather than upping the incentives to tempt those who have incomes into buying insurance.

40% is pretty good actually? Don't look now, but the penalties are rising to the greater of 2.5% of income and $2,085 in 2016 (less than 18 months away!). Not coercive at all, just suggestions. Obama is just asking those who don't have health insurance to pay a little more.

Coercion is a really silly term here. Yes, it describes it perfectly, but consider the other ways that you are coerced.

In Los Angeles, it is quite possible to avoid having your car impounded even if you are found by the police to lack a drivers license.

This article describes the political environment which has resulted in this state of affairs: http://articles.latimes.com/2011/mar/12/local/la-me-lapd-tow-20110312

I would not be surprised to see the same sort of political dynamic at work on the ACA once a different president replaces Obama.

"quite possible to avoid having your car impounded"

Yes, it is also quite possible to get caught with hard drugs and not get arrested and charged. The police don't arrest everyone they catch. That doesn't change the fact that being subject to losing your car at any moment when driving around without insurance isn't a powerful incentive that 'coerces' many to buy auto insurance. If the law let you 'opt out' of auto insurance by, say, paying a few hundred dollars extra each year to register your uninsured car I suspect there would be many who would do that.

Try looking at that data by states with their own exchange and the ones without exchanges and you get a different story. Most of the uninsured are in states without their own exchanges.

By "states with their own exchange", do you mean "states with their own exchange" or "states with either their own exchange or without their own exchange"? :)

Not sure where you are looking up uninsured, but it does appear that the state exchanges are doing better in covering the eligible group than those using the Federal exchange. There are a few large states under the Federal exchange which are well below the 40% average (NY, CO, MN).

Have you tried navigating the Healthcare Marketplace? I imagine most have not as it is a bureaucratic nightmare. My employer reimburses us for insurance, so we've always had to enroll in our own. After my coverage was dropped as non-ACA compliant, I got thrown into the Marketplace. Without going into detail I wonder how many started to search for insurance but then stopped due to frustration

Are your employer reimbursements taxable or non-taxable? If non-taxable, I wonder why more employers don't do that. A big win for reforming our health insurance system would be if employers could give you a fixed, non-taxable allowance for buying insurance, and whatever you didn't spend you could keep as cash.

The IRS has ruled that any reimbursements must be taxable. Otherwise the reimbursement itself is treated as a medical plan, and by definition it will fail to meet the various requirements for minimum coverage, etc. See: http://www.kushnerco.com/resources/blog/no-pre-tax-or-post-tax-reimbursement-of-individual-health-insurance-premiums/

What would the uptake be of employer-sponsored coverage if all workers could choose cash in lieu of coverage? Probably better than 40%, but a lot more people would opt-out without getting coverage elsewhere.

Medicaid costs nothing and allows for enrollment at any time of the year. Despite this, only approximately 70% of adults eligible for Medicaid are actually enrolled. There is a large group of people who place absolutely no value on health coverage. Members of this group will not sign up for coverage if it requires them to do anything at all.

Members of this group will not sign up for coverage if it requires them to do anything at all.

The important question is how society, or more specifically, white men, is/are reasonable for these peoples' actions? Is society preventing these people from becoming enlightened, left-leaning persons? Obviously.

In bygone, more sensible times, people put something away for future emergencies. It was called "savings". If the kid's appendix need to be removed, the procedure was paid for out of those savings. However, the US corporatist-capitalist machine was appalled that these "savings" weren't available for them to build condos and financial towers of Babel, as well as reward CEOs with 9 figure bonuses. So, insurance is needed. Instead of saving for a rainy or painful day, that money is "invested" or churned in the financial mixer that even astute investors don't really understand. A regular payment for insurance means that what were once savings are now available to finance projects that would never have been started at all. Savings, as understood by the post-neandertalians that once made up most of the US population, are required to finance born-to-fail businesses or subsidize successful ones. That's what's needed for the consumer culture to purchase jet skis, HD TVs, tickets to Rolling Stones concerts and NBA games, trips to Disneyland and I-Phone Xs. Health care has to be paid for by the general population, not the sick individual.

Maybe the massive misrepresentations & lies and outright encouragements to break the law has something to do with it? Just guessing ...

As one of those eligible to buy a policy, and at a full subsidy, I can tell you that the main reason they aren't popular is that the policies have no real monetary value unless you are a significant user of medical services and products year in and year out. The penalty is easy to dodge, and isn't even high enough to make purchase financially sensible for healthy person. I suspect that as the people who have bought the policies start trying to access more of the services, they are going to find that even their heavily subsidized premiums seem like a bit of a waste considering how high the deductibles and co-pays are.

Yancey,

I'm curious, are you simply betting you will remain healthy for the time being or do you consider yourself 'judgement proof' (bad credit, no assets) so you don't really care if you rack up tens of thousands of dollars in medical costs? You claim the policies have no monetary value but if you can get a full subsidy then the cost to you is minimal. If someone offered me a million dollar insurance policy against my house being destroyed by a UFO for free I'd take it.

My assets are essentially untouchable, but, yes I could rack up thousands and pay it if I had to. And, the policies aren't free, even at full subsidy. Now, if I were eligible for Medicaid, I might take it.

OK so you could pay thousands in medical expenses if you had too but would you? You said you are untouchable so is your plan to just stiff them? If you plan to pay either because that is the honorable thing to do (or because many health care providers are smart enough to ask for deposits upfront before providing non-emergency services) then what is your thinking? If you have major expenses your going to pay a lot. Do you not care or are you taking a calculated risk?

Boonton,

There is a significant error in your analogy. Insurance obtained on the Obamacare exchanges is not quite free, even when it is heavily subsidized and the cost of the mandatory program is still very high compared to the value received. Would you still purchase UFO insurance if it cost 5% of your gross income?

No but using the figure of $2085 or 2.5% of income for the penalty (whichever is higher), I'm not sure how you can get to a plan that is both heavily subsidized AND exceeds 5% of my gross income.

"cost of the mandatory program is still very high compared to the value received "

This isn't really possible...unless insurance companies are making obscene profits which they typically aren't. Simplistically, all insurance consists of is basically taking a group of people (say 100) and splitting their medical bills evenly (plus a bit more to cover the costs of running the thing plus some profit). Since you can't really know ahead of time whether your medical costs will be above or below the average, you can't really claim the premium is high compared to the value received. That is if you mean what you paid in a particular year exceeded the amount of medical care you got. I pay my home insurance every year and I've yet to see my house burn down. That fact alone doesn't tell me I'm not getting proper value for what I've paid.

Boonton,

Yes, the "tax/penalty" is lower than the cost of participation at every level. In fact, that's one of the reasons why the program makes no financial sense for the poor and middle class. Try doing the math. The subsidies are designed so that no one pays more than 10% of their income for Obamacare insurance but many will pay 5% or more (some, at higher incomes, will pay less).

Insurance companies are not making obscene profits but the costs of the program for (healthy) poor and middle class grossly exceeds the value received. This is not a contradiction and you can tell "the value received", regardless of individual health outcomes during a particular year, by comparing costs to the status quo ante individual health insurance plans. The "missing" value which is confusing you is captured by those who (are not insured through work) but are wealthy or upper middle class (or otherwise have significant assets to protect) and are either sick or are older-but-not-old-enough-for-medicare. That segment of the population makes out like bandits.

I'd say the conclusion is that people don't really bother unless they have a very strong motivation to do so.

Consider Tax Free Savings Accounts in Canada, around since 2009 they basically allow you to declare a decent chunk of your bank account to be tax free. There's really no reason not to use one, and the fact 44% of people who use it have it maxed out suggests that it's generally useful. However only about 1/3 Canadians actually have one:
http://www.cbc.ca/news/business/taxes/tax-free-savings-accounts-are-flexible-convenient-but-underused-1.1183347

So the Canadian government creates a vehicle for people to simply skip out on a portion of their taxes and gets ~30 uptake, the ACA getting such high uptake for something people have to pay for is comparatively good.

And it is hilarious how all the supporters here fail to address Laszewski's main point. Instead they focus on how 40% is really really good. LOL!!

Some possibilities:

1. The fact that enrollments drop off by income would seem to contradict Tyler's claim the ACA is less about healthcare reform and more about 'wealth preservation'. Obviously the more wealth you have the more reason you have to fear medical expenses so the more you would value having any type of insurance.

2. What exactly is the base here? Is a person considered eligeable if they can buy insurance from the exchange or if they are currently without insurance? At higher incomes, people are more likely to be offered decent insurance from their employers. While they can technically decline and opt for an exchange plan, that usually isn't a better deal for them both in terms of quality of insurance and taxes for both employer and employee.

3. If healthy people ditch the exchange, opting instead to pay the penalty but sicker people go for the coverage an interesting dynamic might start. Yes exchange plans will cost more (both in premiums and subsidies) but the money coming in from people paying penalities goes up...and since the penalty is 1% of income the more higher income people who ditch plans the more the revenue generated by Obamacare.

Something else to remember, before you start talking about 'death spirals' the fact is Obamacare is unlikely to have any impact on the actual number of sick and healthy people. If sick people crowd the exchange plans that means the people outside the exchange plans will be more healthy. What do higher income people do if they aren't covered with an exchange plan or work plan? Probably look into buying a plan that doesn't qualify as full coverage. These plans would be exempt from the ACA rules (i.e. they can screen for pre-existing conditions, no preventative care etc.). They are likely to be catastrophic plans that only are useful if you suddenly find yourself with huge medical expenses. Since this pool will be healthier, these plans can charge lower premiums.

Herein lies what I think is the real genius of Obamacare, it can evolve as needed. What I just sketched out is essentially the Republican alternative. Sick people go into plans with gov't subsidies while healthy people buy whatever plan they want with their own money. Liberals might have wanted something more like guaranteed universal coverage but the ACA could work just as well with this as a result. Unlike most other health care ideas, where the outcome is predetermined, the ACA is more like an operating system. If an operating system is good, then two computers running the same operating system can look very different as they are changed to accomodate their users' tastes and activities.

Boonton,

1. No. The most plausible explanation for the inverse relationship between income and Obamacare participation is that, in general, poor people are relatively unsophisticated as to financial matters. Those with higher income have actually done the math. But even if this were not true, Obamacare is health insurance and health insurance is all about wealth protection. The product simply has no other purpose.

2. The article clearly states that this is a measurement of the percentage of Obamacare eligible people buying insurance through Obamacare exchanges at each income level. What don't you understand?

3. Very high income people without insurance will certainly purchase insurance through the exchanges or otherwise. As to the middle class and poor, however, the "tax-penalty" can only be collected by the IRS from the taxpayer's tax return. It is not difficult for intelligent people to arrange it so that no extra money is paid to the IRS to be returned. Indeed, this is what we already do for other reasons.

You are in denial. Republicans have no reason to do anything to save Obamacare from the inevitable death spiral. If they do anything at all, they will simply make Obamacare optional by eliminating the mandates. That will kill it and everyone knows that will kill it. Even advocates agree that will kill it. If Obamacare is so popular, if it is a benefit to its beneficiaries, why would making it voluntary result in the program's death?

1. I suspect the inverse relationship is due to the fact that the poorest were the most likely to lack insurance and have the highest motivation.

I think it's hardly established that Obamacare is in a death spiral, and a loss of Obamacare means a lot of people go back to being uninsured, I'm not sure the Republicans want to risk being blamed for that.

As for eliminating the mandates it kills Obamacare because without the mandates either people with pre-existing conditions can't get coverage or healthy people have a huge financial motive not to get insurance until they have a serious condition. That's nothing to do with Obamacare being unpopular, it's making a market explicitly designed to fail.

Aaron L,

Your suspicion is unfounded. The percentages above are participation levels for the Obamacare eligible in each group. Even if you are correct that the lower income groups had more uninsured people in the group (quite plausible), what is being measured is the percentage of participants in each group not the total number eligible in each group.

Obamacare is not in a death spiral now because participating insurers are essentially "reinsured" and otherwise subsidized by the Federal taxpayers for one more year. Obamacare will enter its death spiral next year when the subsidies to insurers stop. How can Republicans be blamed for the failure of Obamacare? None of them voted for it. If a program fails because of poor design, how is it the fault of people who maintained throughout the debate that the program was badly designed and that this exact thing was inevitably going to happen?

Yes, as with all similar programs, Obamacare is based on a "rob Peter to pay Paul" system. If you give Peter an opportunity to avoid the program, he will. Without money from Peter, Paul doesn't get any benefit from the program. In this case, however, the Peters are many and relatively poor. The Pauls are few and relatively rich. It seems to me that should bother "progressives", I don't understand why it doesn't.

bmcburney,

You misunderstand my suspicion.

My claim was not that the lower income groups had a higher percentage because there were more of them.

My claim was the lower income groups had a much more critical need for Obamacare, so they were much more likely to sign up. There were also likely greater recruitment efforts and network effects in play.

As for the rest a death spiral is possible but hardly inevitable nor even likely, my understanding is the subsidies come from general revenues, not other plans, so those plans should be competitive with plans outside the exchanges. As for the redistributive nature in general (which you characterize as 'robbing') you seem to be assuming that the current degree and style wealth split is somehow just or natural and redistribution is unjust on those groups, but this is an extremely dubious assumption.

As for the Republican blame, many of the features came at Republican insistence so they can't blame lack of authorship. As well Republicans have consistently refused to allow flaws to be fixed since the flaws make it easier to campaign against. So if the law fails I would say the party who has been trying to kill it, often through disingenuous means, does share most of the blame.

bmcburney

#1 I'm not clear why you think the low usage among higher income is because lower income people are 'unsophisticated as to financial matters'. In reality health insurance is about access and wealth protection. Aside from ER care, most healthcare providers will not see a person unless he has coverage. A self-paying person will be shut out of many facilities and providers unless he has enough cash to pay up front.

#2 Then this metric is stupid. People with higher income often have the opportunity to get coverage from work. Since getting coverage from work has tax benefits (for both employer and employee), higher income jobs almost always find it is easier to add to pay by providing better insurance. The graph then is totally useless unless you tell me it is measuring how many people who don't have insurance at all are signing up for Obamacare exchange plans.

#2.1 From what I understand, you have to have what is defined as 'full coverage' to avoid the mandate penalty. Exchange plans meet that as does most employer provided coverage. But you can also go to an insurance company directly and buy a plan that meets the definition of full coverage. It would be interesting to know if the graph is including people that do that or not.

#3 Data doesn't seem to be proving you out. The initial data provided about average cost per patient in the plans is not that different from the entire population...in fact it is less. That would be a lack of evidence so far of a growing 'death spiral' in exchange plans where they get swamped by the sick while the healthy just pay the penalty...(although you didn't respond to my observation that this is essentially the Republican vision. The sick are put in money losing 'risk pools' with the taxpayer coughing up the difference needed to get the insurance companies to cover them. If the exchange plans end up full of the sick, the non-exchange plans will be full of the healthy. So just use the mandate penalty as a tax to fund the sick and there you go).

Boonton,

1. I am happy to see that you now agree that health insurance is at least partly about wealth protection. This shows that, no matter how much you may resist the process, your education is possible. In fact, health insurance is entirely about wealth protection. Although individual healthcare providers may demand proof of insurance before accepting a new patient, in the United States health care is generally available to all, regardless of insurance or the ability to pay. Obamacare did not generally increase access to health care. Indeed, most Obamacare programs severely limit the providers and facilities which are available to Obamacare insureds. Hence, if you like your doctor, you actually can't keep your doctor (unless you happen to get lucky).

2. The metric is not stupid. The graph shows participation rates for Obamacare eligible income groups. People who receive insurance from work are not "Obamacare eligible." If you receive insurance from work, you can't participate on the exchanges. See how this works?

2.1. You are misinformed. Obamacare has effectively made all new individual plans illegal except those sold on the exchanges. Although you are allowed to continue to participate in non-compliant (non-exchange) plans if you were enrolled in such a plan prior to Obamacare, you cannot get a non-compliant plan as a new customer. All individual plans which are able to sell to new customers are on the exchanges.

3. You don't know what your talking about. Average cost per patient doesn't matter, especially at this stage. Once the subsidies to insurers are withdrawn, premiums will increase rapidly. In fact, despite the subsidies to insurers premia are already increasing at a stunning rate for insurers with significant market share. Moreover, as people learn more about the way the program works, they will abandon it and pay the "tax/penalty" because the costs of non-compliance are nominal for anyone who correctly manages their withholding and/or tax payments. Since the "tax/penalty" is less than the cost of the premia, the death spiral is inevitable.

Aaron,

I think I understood your suspicion.

You are probably right that poorer people, since they have less financial sophistication, were more susceptable to "outreach" efforts on behalf of Obamacare. Initially, you may also be correct that network effects operate in favor of Obamacare for poorer people because they and their support groups tend to have more trust in Government, Democrats and "poverty" organizations which supported Obamacare. However, the poor and middle class have relatively fewer assets and, therefore, they have LESS need for Obamacare. Eventually, that will become more obvious and the network effects will bite Obamacare in the ass. Hard.

You are evidently confused. The subsidies which are relevant to the "death spiral" discussion are the reinsurance and related subsidies paid directly to insurers when the loss ratios for Obamacare programs exceed expections. These subsidies will stop after this year (unless the law changes).

Perhaps you should re-read my comments regarding Peter and Paul. It's the haves, not the have nots, that are obtaining the benefits of Obamacare. Although the poor apparently receive subsidies, they cannot use the product at all unless they have assets to protect which, generally speaking, they do not. Thus, although the poor pay less than "market" rates for the program, they can't obtain ANY benefits from it. Only the relatively wealthy can benefit because only they have assets to protect. Thus, the relatively poor are paying subsidies to benefit the relatively rich. I admit that I do think this is unjust. I don't understand the argument for thinking otherwise.

There is no factual basis whatsoever for your assertion that some elements of the program as passed by Congress were added at the insistance of Republicans. You flat out made that up. Every single Republican in Congress voted against the program. There was a "Louisiana Purchase" and a "Cornhusker Kickback" for Democratic Senators but not one single Republican was ALLOWED to participate in drafting the program. Probably, Reid and Pelosi could have easily gotten a dozen Republican or so votes in both chambers if they wanted to, they didn't. They wanted all the credit for themselves. Be careful what you wish for.

There are many grounds, hundreds of them, on which one could properly criticize the modern Republican Party. This mess is not one of them. Republicans did not oppose this horror show "disingenuously", they opposed it openly and vigorously based on exactly the "flaws" which are now destroying the program. The reason Democrats have been unable to "fix" the flaws is not that Republicans are unwilling to address them. Far from it. Republicans are only too eager. The Democrats are afraid to open the program up for a real debate because they fear what will happen if efforts to "fix" the program are made which are outside of their control. That fear is justified. There are many flaws to fix.

bmcburney

1. I pointed out initially that the wealthy should have higher rates of participation since they, duh, have more wealth to protect.

2. No, you can turn down your workplace insurance and opt to buy from the exchanges.

2.1 Err no, non-exchange plans are not illegal. (see http://www.healthpocket.com/obamacare/off-exchange-health-plans#.VZc0SPlViko)

3. speculative since the health plans have not experienced cost per patient differences out of line with pre-Obama and other types of health insurance.

This is mostly about cost. It may be subsidized, but that doesn't make it cheap, and it is very difficult to add a large new expense to a largely fixed budget. There is some underestimation since it doesn't take into account legal status, and there is some political opposition as well.

That would seem to be inconsistent with the chart showing a drop off as income goes up. If it isn't cheap you'd expect lower income people to be less inclined to buy the insurance versus higher income.

In reality I suspect the problem is that 'eligible' includes people who can get coverage from their spouse or through their work. While technically they have a right to buy from the exchange if they want too, such coverage is usually more affordable. So all that's being measured here is the unsurprising fact that better income people tend to be offered better insurance options from their work. That's not really a problem of Obamacare. The goal is to expand coverage, not get everyone in the nation to be covered by the exchanges. The exchanges are simply one way to get coverage. And actually only a small minority of the population was ever expected to use the exchanges to begin with.

1) Subsidies shrink as incomes increase and deductible supports go away, too. Thus, people are left with high-deductible plans that aren't that cheap. A key thing to keep in mind is that many people assumed they would get public sector employee style health insurance...you know, 5 dollar co-pays. Instead they get high deductible plans where you pay $80 to see a doctor and are on the hook for thousands before the insurers pays anything. This does not feel affordable, but instead feels expensive. It also does not help that the premiums are higher than they need to be because they had to be larded up to cover all manner of wish list items.

2) Guaranteed issue and weak rules regarding sign up periods. The fact is that with open enrollment for 3 months out of the year, and then a million exceptions to this rule, you could gamble on waiting until you got cancer to seek treatment. Worst case scenario, have your boss fire you or move to another state. These are all "qualifying events" as are missing some electricity payments - not difficult to set up. Expect more people to learn how to game these things. (Keep in mind there are now a multitude of NGO's on the taxpayer teat ala Acorn who have excellent staff who know all of these rules are are glad to help you figure them out.) For everything else, there are still cheap clinics and the ER.

3) IRS makes it easy to avoid the penalty. I'd like to know how Switzerland handles this issue.

Of these factors, I'd say #1 is important, but #3 is as well, because a lot of people are so lazy they can't even sign up for Medicaid until they get sick. (I don't blame them, really.)

#2 will grow in importance. I think many progressives underestimate how savvy some of the supposed underclass really is.

With a disabled adult child to care for, my wife is unable to hold a full time (i.e. insurance offering) job. I need insurance to cover the family. My job offers me minimal insurance for myself, but family coverage would cost almost half my salary. Yet because MY job offers ME coverage, no one else in my family is eligible for subsidy. Each year gets worse. Oh, the dropping of the deductible to $6000 a person is nice, but the actual usefulness of our policy declined while cost went up 45% this year. So, no, I'm not cheering ACA.

>Why is Obamacare still unpopular?

Gee, I dunno. It hasn't changed in the slightest. I can't imagine why it's "still" unpopular.

And what's up with degenerative bone disease? Why is that still unpopular?

1. propaganda issued by the GOP on behalf of various corporate entities.
2. Human beings run off of propaganda

I've spoken to my old coworkers , still unemployed a few months after being laid off in mass who have not signed up for obamacare. It's in the Bible Belt and there are still a lot of people who would rather risk everything than be associated with the President. It's probably hard to fathom for this readership, but their are many millions of people who see him as a literal pawn of satan or antichrist.
The rainbow lights did nothing to dissuade this notion. This admin has a knack
for spiking the ball in the end zone.

I know a young guy who earns a middle class income who claimed that he could not afford the premiums and opted to pay the penalty. He could of course easily afford the premiums, it was price shock that got him. The exchange premiums where much higher than what he was paying before PPACA. The difference was greater than the penalty. I assume that it is the 3 to 1 and pre-existing condition rules that made such a big change.

Comments for this post are closed