Getting Obamacare straight
Last night I was reading this piece about Obamacare as a redistribution of wealth, and it occurred to me that even fairly decent articles about Obamacare seem to get some basic facts wrong.
I’m not saying I’m the world’s greatest expert on the details of Obamacare. But I have put in my hours. Wish I’d kept count, but my guess is that I’ve clocked way over a hundred so far. I shudder to even think of the grand total, and I’ve not completely mastered the subject yet, if ever.
But the upshot is that I’d like to take this opportunity to correct what I see as a few common misconceptions, and I welcome any additions or criticisms from the readers here. Please read this article first to get an idea of what I’m referring to. Here are the general corrections I’d like to add to it, for those of you who’d like to know some details (number 3 is most important, I think):
(1) The author is right about the incomes and the differential premium prices for the different incomes. But he forgets to mention that poorer people can also get big subsidies on their co-pays and the deductibles, too (if they choose a silver plan, that is), so that their monetary advantages don’t just involve the premium payments, but can involve a reduction on the entire kit and kaboodle of their out-of-pocket contributions, slowing it down to a mere trickle.
(2) Those percentages the author gives—60% for bronze (40% contribution from the patient), 70% for silver (30% contribution from the patient)—are correct, but they’re not explained correctly by him. First of all, those are just averages; the real patient contributions could differ a great deal depending on how much health care a person actually uses in a year. What’s more, he says that those are the percentages people pay after they have paid the deductible, which is wrong. Those patient contribution percentages actually include what the person pays for the deductible, too.
(3) The author is right about the differential prices for premiums depending on income, but he’s wrong about the details of the redistribution part. The money that the richer people pay to buy health insurance does not go to directly subsidize the premiums of the poor people. The money that the richer people pay for premiums goes to the insurance companies, and the insurance companies get exactly the same amount for premiums for the poor people–it’s just that the insurance companies get it mostly from the government instead of from the poor person him/herself (or from richer people’s premiums). The insurance company makes the same on rich and poor people. So where does the government get the money for the subsidies, if not from the richer people’s premiums? From a whole bunch of new taxes, for example on those making over $250K, on medical devices, etc. (see the list here), some of which are borne by the rich and some by the middle class.
So there is an income redistribution, it’s just not as direct as the author makes it seem. It needed to be hidden to preserve the fiction that Obamacare would not wreak any hardship on most of us, only on the very very wealthy.
Excellent choice for an article to give some learned comments on.
This will deeply affect the middle class and won’t really do much to help the poor. The poor that had no insurance prior to Obamacare are not going to somehow now be able to afford even partial premiums on top of a high deductable. The masses being signed up on medicaid will definately be tax payer supported. The new Harvard study showing a 40% increase in new medicaid patients using the ER over the uninsured will increase tax payer funding of the law. The risk corridors will have tax payers bailing out insurance companies for any losses during the first 3 years. This law is a nightmare.
Dear poor people,
You’re welcome.
Your friend,
$outhpaw
OT: Robert Gates’ book is coming out Jan 14th. Blurbs at PJM and Instapundit reveal a few unflattering comments about Obama, Clinton, and Biden (I think the last was from a link at one of the other sites). Anyway, it is starting. The book can be preordered (also on Kindle) now from Amazon. Order via Neo’s link.
ObamaCare’s indirect income redistribution is part of a much wider and larger spectrum of tactics;
Congress Is Looting Federal Worker, Military Retirement Funds “More money is now owed by the federal government to these two funds than what is owed to China.”
The Feds Want Your Retirement Accounts
Quietly, behind the scenes, the groundwork is being laid for federal government confiscation of tax-deferred retirement accounts such as IRAs.
Obama’s Plan to Snatch Your Savings
“The left has had its eye on retirement savings for years, but so far takeover attempts have been rebuffed. One egregious attempt was the proposal, following the 2010 financial crisis, to “safeguard” retirement savings by requiring that they be rolled over into Treasury bonds. Had this legislation succeeded, it would have appropriated all or part of the retirement savings of millions of Americans. The funds would have been used to finance further expansion of government. In return, savers would have received a promissory note from the federal government similar that issued by the Social Security Trust Fund.”
Burn Down the Suburbs?
Not exactly, but Obama is already working to get rid of them.
“Obama is a longtime supporter of “regionalism,” the idea that the suburbs should be folded into the cities, merging schools, housing, transportation, and above all taxation. To this end, the president has already put programs in place designed to push the country toward a sweeping social transformation in a possible second term. The goal: income equalization via a massive redistribution of suburban tax money to the cities.”
Census: State and Local Income, Sales, Motor Fuel, Motor Vehicle, and Alcoholic Beverage Taxes Hit All-Time Highs “according to data released today by the Census Bureau… in no quarter of any year since the Census Bureau first started tracking state and local tax revenues in 1962 have Americans paid more in each of these categories of state and local taxes then they did in the quarter that ran from April through June of 2013.”
Feds Seize Family Grocery Store’s Entire Bank Account
“Can the government use civil forfeiture to take your money when you have done nothing wrong–and then pocket the proceeds? The IRS thinks so.”
Civil Forfeiture Laws
“Under civil forfeiture [laws] police and prosecutors can seize your car and other property (bank accounts, homes) sell it and use the proceeds to fund agency budgets-all without so much as charging you with a crime.”
IRS Launches New Global Program to Target ‘High Wealth Individuals’ “Through our new global high wealth operating unit we are taking a unified look at the entire web of business and economic entities controlled by high wealth individuals so we can better assess the risk such arrangements pose to tax compliance,” IRS Commissioner Douglas Shulman
IMF paper warns of ‘savings tax’ and mass write-offs as West’s debt hits 200-year high
“Much of the Western world will require defaults, a savings tax and higher inflation to clear the way for recovery as debt levels reach a 200-year high, according to a new report by the International Monetary Fund.”
expat,
The stories that Drudge links to feature a series of quotes from the book. Gates slams Obama and then highly praises him, slams Hillary and then highly praises her. Evidently he hates Biden, who comes across as a real political snake.
Nothing derogatory about any high up military like Mullen, who is as political an Admiral as ever wore the uniform. Personally, I never had much use for Gates, he’s the anti-Rumsfeld of SecDefs. NO principles that he’ll unhesitatingly defend.
Personally, I’ll take a bullheaded but forthright Rumsfeld over a go along, to get along type like Gates, any day.
Tagging onto GB’s 5:48 pm post…. the ruling class is getting desperate. Bread and circuses will hold back the tide for only so long. The debt clock runs ever faster, unfunded liabilities are reaching the stratosphere, and all DC can do is pillage and burn down the Constitution and the economy. This will not end well.
Geoffrey,
I’m not saying that Gates is perfect, but still his comments about Hillary’s and Obama’s opposing the surge for political reasons are damning.
Geoffrey Britain –
I’ve been reading for a couple of years similar articles about proposals/plans/hopes to rob IRAs. I guess that’s another winning “income inequality” topic for the Thief in Chief to exploit because a minority of us have them. Meaning it’s unfair.
But my money is on means testing before they rob the IRAS – if you have an IRA and or 401-K, you get to spend it all before you collect the gobs of money you paid into social security, because “you don’t need it”. By the way, Mittens was in favor of means testing too, and I can’t see “moderate, centrist” Republicans like Boner, Rove, and his minions fighting that too hard if there’s enough public sentiment to screw people.
They nominated Romney who articulated that stance in the last election, and I would guess they’re not uncomfortable hosing those of us with savings, if it keeps a few of them in power.
It sure would be nice if they also voted for means testing on themselves – to forego their generous pensions until their own savings are depleted, but I know the ruling class better than that. I just wonder when the rest of Americans are going to wake up and recognize what kind of people they’ve put into office.
Parker,
I don’t see the ruling class as desperate at all. They’ll ride the Ponzi pony as long as possible and then retire, buy up bargains during a truly depressed global economy and come out of this smelling like roses. Once you jettison all orality and humanity, anything is possible. And, there is always the safety valve of martial law.
expat,
I would never demand perfection from anyone and God knows Rumsfeld was far from perfect and too stubborn to learn from his own mistakes. Gates’ revelations are damaging but it’s one man’s word against theirs, so I suspect the revelation won’t have ‘legs’.
southpaw,
Thieves will be thieves and lawless, unethical men can only continue in office if the public allows the state of affairs to continue.
“Our destruction, should it come at all, will be from another quarter; from the inattention of the people to the concerns of their government.” – Senator Daniel Webster
“Now more than ever before, the people are responsible for the character of their Congress. If that body be ignorant, reckless and corrupt, it is because the people tolerate ignorance, recklessness and corruption.” – Pres. James Garfield
“Political ideas that have dominated the public mind for decades cannot be refuted through rational arguments. They must run their course in life and cannot collapse otherwise than in great catastrophe…” Ludwig von Mises
Another type of redistribution is from young and healthy to older and sicker. The young will be overpaying which is one reason why you have an individual mandate. People don’t voluntarily over pay for things.
I find it a waste of effort and time to delve too deeply into the details of Obamacare. I am not a wannabe policy wonk, and I do not want to fix or see fixed any part of it.
Once one know the broad outlines of the law, the history of its enactment and by whom enacted, one need not delve further. One must oppose. Period.
“I don’t see the ruling class as desperate at all. They’ll ride the Ponzi pony as long as possible and then retire, buy up bargains during a truly depressed global economy and come out of this smelling like roses. Once you jettison all orality and humanity, anything is possible. And, there is always the safety valve of martial law.”
I beg to differ, they are desperate. That is why they are searching for a bandaid to temporarily forestall the inevitable. When it takes a wheelbarrow of cash to buy a loaf of bread and before your servant gets to the bakery the price is 2 wheelbarrows of cash, there will be no roses or safety valves. It will all be up for grabs. This is the fault line of their belief that they are somehow special and protected. The servants & bodyguards will be far more concerned with protecting their families than protecting the elitists. And, they have created a nation filled with free stuff zombies who will turn upon them at the drop of an obamaphone devoid of minutes. DHS is going to need more ammo just to mow down the zombie hordes, let alone deal with the rest of us who will be bidding our time and looking for chinks in the armor.
There is nothing new under the sun. Deja vu’ tout recommencer. The species never learns from the past and thus it must be repeated over and over again. It is like today: http://tinyurl.com/8ws5d4j
90=Something weeks of the Dole…errrr… Unemployment Checks…and it ain’t enough?? Oh, yes, I forgot: It’s a huge boost to the economy. Ahh-AAhhh-Aaahhhhhhh HORSES**T!!
‘Scuse me.
I can’t see the maladministration EVER seizing 401-Ks — explicitly — when Financial Repression is giving every last one a haircut of 7% per annum — compounded.
Why kill the golden goose?
As for the downside: look at Cyprus.
Another angle is that such a gambit would DESTROY valuations — of the very assets that the 1% of 1% hold in their own portfolios.
So the 401-K story is for the proles. It’ll never happen.
No, Financial Repression is THE ticket — and TPTB are going to keep on punching it.
…
Neo…
You’ve finally answered my puzzlement!
So, 0-care is going to force all of society to pay up for a full platter of services — for a mechanism that is already tapped out on the ability to supply said services. (!)
This epic boner reminds me of the emperor-candidate who promised the ENTIRE Roman Army that he’d double their wages, overnight, after they put him on top.
But, since the Roman society was ALREADY totally tapped out supporting a bloated standing army; in very short order the economy imploded.
His popularity with his boys collapsed when the ‘check bounced.’ (And you thought that a woman scorned was brutal.)
What’s weird: a gusher is supposedly to go into the Insurance Cartel — yet — at the same moment — the Medical-Pharma Cartel is supposed to be subjected to wage and price controls — that is: all pricing is to be structured upon a multiplier of existing Medicaid / Medicare norms… just because those figures are in the Federal experience databases.
The upshot: few are signing on for the insurance — and few are signing on to deliver healthcare.
And, significant elements of society are losing their coverage entirely: the US Territories [no exchanges], (!) [Oops, Pelosi’s mistake.] independent professionals, [CPAs, Attorneys, consultants, agents, brokers, free lancers, … you name it… they’re howling] even the landlord set. (!)
If there was any positive news… Barry would have it on his teleprompter…. Silence.
The fact is that the website is of the essence. It was, and is, critical as a node to get all of the relevant statistics together (the better for black-hat data thieves) and then send them on to participating members of the Insurance Cartel.
[ Note the lack of start-ups jumping into this evil brew. The price rises quoted ought to be attracting new entrants from the Moon.]
NOTHING can work towards their conception (Hillary-care on steroids) until Healthcare.gov runs like a dream.
Healthcare.gov doesn’t even have enough bandwith to handle the requisite data flows within the time period required by the code-clock / RAM buffer.
Indeed, it needs a massively parallel architecture. I never hear tell of such a thing.
I think you made a mistake. The Obamacare plans have premiums, copays and deductibles. If they work like any other health insurance plan (Big If!), the customer first pays the premium; then, up to the deductible, all expenses are paid by the customer; once the deductible has been met, the Plan will pay X% of the cost of each service. The customer will pay the balance until they hit the annual out of pocket maximum.
At least that’s how most plans work
AIB:
But what you’re describing is not the way those percentage figures the article was quoting work. Those percentage figures from the article concern the TOTAL patient contribution, counting the deductible, etc. Those percentages are called actuarial values, which is a different thing from what you’re talking about.
See this [emphasis mine]:
Hi Neo. Hope you can answer this: If a plan ends up paying say 80% of the patient’s medical bill, leaving the plan-holder to pay 20%, is that 20% of the “real” bill or is the 20% based on the discounted price the provider gives to insurance companies (i.e., the so-called reimbursement rate)?
Also, while I get your point about the actuarial value being the basis of the bronze/silver/platinum percentage schemes, in practice, wouldn’t the percentages completely depend on the amount of the plan-holder’s actual medical bills? If one’s med bills for the year are less than the deductible, then the person pays 100%, don’t they? Actuarial value seemingly must be based on what an actuary estimates the person’s actual bills will add up to at the end of the policy year.
Conrad:
I’ll give it a try.
If it’s called a “co-pay” it’s usually just a set fee, period. But for some plans (some bronze plans, for example), the rates the patient must pay are set as percentages, and I’m pretty sure,those would be percentages of the negotiated rate, if the doctor or hospital is in-network.
Out-of-network doctors/hospitals are a whole different kettle of fish, which I assume you’re not talking about in your question—but in an out-of-network situation some plans offer no reimbursement at all. For others that do provide some reimbursement (for example, 50% of the set rate) there’s something called “balance billing,” which means they can charge you not only for that remaining 50% of the set rate, but for what they think they should get above that.
To answer your second question—yes, it does depend. That’s why I wrote in my post that these actuarial value figures “are just averages; the real patient contributions could differ a great deal depending on how much health care a person actually uses in a year.”
However, not every single bill is paid out-of-pocket till you reach the deductible. You really have to read the fine print in the plan. Some of the lower level plans allow you some doctor visits first. For example, if you look at Bronze plans in California they allow 1 free preventive care visit a year (I think this is generally true in other states as well) and the first three primary care doctor visits a year have a $60 copay even before you meet the deductible. So your out-of-pocket payment for the first three primary care visits would be limited to $60 each (and they wouldn’t count towards the deductible, either, although they do count towards the out-of-pocket maximum per year).
It’s very complex and the benefits vary plan by plan. But in general you’re allowed some doctor visits in the lower plans (Bronze, Silver) before you meet your deductible, and in the higher plans there are a lot of copays that start right away and are not subject to any deductibles (but go towards your out-of-pocket maximum). Gold and Platinum plans in California have no deductibles, as far as I can see.
I haven’t researched other states, but I think it works similarly in general. The rates are different, the networks are different, the companies are different, and some details are different, but I would guess the basic structure is the same.
If you’re really lucky, which is the thing to be, all of your premiums go to help the unlucky, which is how health insurance is supposed to work. Actuarial value presumes the insured maxes out his medical expenses each year. The actual actuarial value for somebody who doesn’t need any health care in a given year is what?
The issue is that most plans pre-ACA were lots better in actuarial value.
Thanks, Neo. I guess all of this helps explain why there are so many different varieties of plans and not just a single, standard bronze plan, silver plan, etc. It sounds like the metal categories are intended to serve simply as a means of categorizing plans according to how generous it’s designed to be, not as a way of describing coverage.
It’s sort of similar to how a three-star rating tells you that a restaurant is ok but doesn’t tell you whether it’s a steakhouse or a pizza joint.
Actuarial value of the Silver plans is 70%. This means that the cohort’s total medical costs will be 70% covered by the insurer and 30% covered by the policy holders. What this means for individuals, however, is different. If you have a Silver plan but you have a cancer treatment that costs $100,000 in 2014, your costs will be covered by the insurer at a rate close to 95% if the out-of-pocket cap is $5,000, for example. However, if all you had during 2014 was a pregnancy that had a bill of $5,000, you might end up paying 70-80% of the cost while the insurer picks up the rest (depends on the policy).
I know a number of lefties that were actually shocked when they ran the numbers for Bronze and Silver plans- they really thought a Bronze plan picked up 60% of everyone’s healthcare costs (why they believed that, I don’t know- poor math skills is my guess).
Conrad:
Actually, it’s my impression that the Bronze level plans in different states look fairly similar to each other on the surface (as do the Silver in each state and between states, etc. etc.). But the all-important differences (doctor and hospital networks, whether there’s reimbursement for out-of-network, how local the facilities and doctors must be to be in-network, for example) are mostly hidden. You can look some of it up online, but you have to be savvy and patient, and you have to know enough about insurance to know to even look for it in the first place.
Most people don’t even know basics like the difference between EPO and PPO. And even knowing that only gets you so far.
Richard Aubrey:
If you don’t use ANY health care in a given year, “actuarial value” would have no meaning. You could say it was 100% in that case (the plan pays 100% of your contribution—but your contribution was zero). Or you could say it was zero (the plan pays none of your contribution, because your contribution was zero).
However, you are paying premiums. So in terms of the actual money you are getting from the company vs. what money they’re getting from you, it’s obviously completely lopsided and they win out. That’s true of course of insurance in general, which is the gamble you take when you buy it. You are buying peace of mind, in case something bad happens. With health insurance, though, insurance has morphed from being that sort of thing to being at least in part a prepaid health plan (except for catastrophic insurance, which follows the traditional insurance structure more closely).
I do not uunderstand laziness. This health plan is an obamination no matter how well I intentioned people are.
The percentage of people employed is lower than any time in the last 43 years and CONTINUES to drop and I pin it on obamacare.
I would never start a business today and I had one for 6 years previously. My business only earned about $900,000 during that 6 year period but the costs put me in the $80k per year area. The corporate taxes and health insurance costs and tye double social see security and double Medicare. Everyone wants to put fiscal responsibility on business but not government. You can’t have 50% of income earners paying no income tax and everyone else having to shoulder the burden.
Neoneocon – Thanks for the clarification. However, quoting from your referenced article on wealth redistribution aspects of O’care, “As a resident of San Francisco, you can also choose from among four separate Silver plans, which each pay 70% of your medical costs (after a $2,000 annual deductible) and have an average monthly premium of $614.” There we have premiums and deductibles.
Re the “actuarial values”, it appears that these were actuarially-based estimates of what coverages should be. Quoting from the “Focus on Health Reform”, The percentage a plan pays for any given enrollee will generally be different from the actuarial value dependinng upon the health care services used.
So, the actuarial values were used for paln design, not for actual cost sharing
baklava…
“The percentage of people employed is lower than any time in the last 43 years and CONTINUES to drop and I pin it on obamacare.”
Wrong target.
The PRIMARY drivers of chronic decreases in the percentage of the working population are two-fold:
1) The digital revolution. It’s doing to the non-farm economy what industrialization did to the farmers.
Even programming digital logic now takes ever fewer talents. Take a peak at Python and Java.
As for the assembly line: PLCs have drastically altered that linear landscape. They even permit assembly lines to flip from one product to another in trivially short amounts of time.
Labor content is even being squeezed out of humble construction. The building trades are now using pre-fabricated (shop built) assemblies en masse. This reduces crew sizes something remarkable — and speeds up the date of completion, too.
2) ZIRP is killing off Angel investing. The VAST bulk of small businesses are launched with either general credit (cards) or Angel money.(Relatives — older folks, generally)
Absolutely no oldster wants to crush his asset base to fund even his own son’s start-up. Instead, the preference is to commit a hunk of excess cash flow.
With ZIRP, no-one has ANY excess cash flow. This puts those with assets in a twist. Who can dare to fund a new small business when even feeding 0-care is a crunch?
Nobody!
The collapse in new business formation has dire impacts:
a) New jobs come almost exclusively from small firms, who also hire not-college graduates. (The Big Boys lay such personnel off, on the whole… Capital for labor…)
b) Wage growth is impossible without innovation and competition for human talent, skill and effort.
c) So, careers don’t even get started on time. Should the economy pick up, corporate America is going to entirely bypass that cohort that missed its boat during this Greatest Depression. They’ll exclusively hire straight from the graduating classes. This has been observed with each and every harsh downturn in the economy. This reality is why twenty-somethings hide in academia. Staying at home is terminal for the aspirant graduate.
d) With no labor market pressure, Black and Mexican Americans will find that the market is shut down — for them. They are, straight up, not competitive with Asians and Caucasians. This sad, chronic, state of affairs is driven by language skills — nutty ticks like not wanting to sound White.
No small employer can afford to play cultural-political games since the typical crew size is less than seven people. If you can’t get along with everybody, you can’t fit in. This means that prospects with inculcated racial/feminist grievances scare employers stiff: they are lawsuits on two legs.
I once had to fire a gal, thirty-five years old. She was enraged! She ranted that she’d sue me for age discrimination. I told her that I had eight employees — something that her attorney is sure to want to know. (!)
So, I get a nasty phone call next Wednesday. Her prospective attorney — threw her out of his office! (For wasting his time.)
A) With less than ten employees, my firm was exempt.
B) Having been hired on Monday and fired on Friday; she didn’t even establish that she cut the mustard.
(She was canned for one particular tick, above all her other faults; she persistently talked — right on top of me, her boss — the fellow that’d hired her! To repeat, every time I opened my mouth, she’d start talking. Once I stopped, she’d stop. This is an amazing tick to witness. It’s the kind of antic normal to evil siblings — with absolutely graces. As for social skills, what does it say when you can’t remember who is doing the hiring and firing… establishes all of the pay scales… signs all the checks?)
(Ah, the memories… new hires that stayed home to surf instead of showing up, as scheduled, for work on Monday… Genuine puzzlement… such is youth.)