Category Archives: Obamacare

Reverse “Sticker Shock”—Why are Insurance Rates in the State Marketplaces Lower Than Expected? — Part I

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Even Forbes’ columnist Avik Roy is recanting.  Earlier this month he acknowledged that under Obamacare, many Americans who buy their own coverage in 2014 will find that insurance is significantly more affordable than it was in the past:  “Three states will see meaningful declines in rates: Colorado (34 percent), Ohio (30 percent), and New York (27 percent).”

Colorado, Ohio and New York are not unique. As states announce the prices that carriers will be charging in the online marketplaces (or “Exchanges”) where Americans who don’t have health benefits rate at work will be purchasing their own coverage, jaws are dropping. Rates are coming down, not only for those individuals, but for some small business owners who will be buying insurance for their employees in separate SHOP (Small Business Health Options Program) Exchanges.

What may be most surprising is that premiums will be lower, not only in liberal Blue states but in some Red states that are opposed to Obamacare.

What is making health insurance more affordable?

First, the majority of individuals shopping in the Exchanges will be eligible for government subsidies that will go a long way toward covering premiums. In the past I have written about how these tax credits will help young adults (18-34).  But older Americans also will benefit. Fully 30% of those who receive tax credits will be 35-54, and 12.5% will be 55 or older.  This is important because in the Exchanges, insurers  in every state except New York and Vermont will be allowed to charge a 60-year-old three times as much as they would charge a 20-year-old for exactly the same policy.  Without subsidies many would find insurance totally unaffordable.

The second reason premiums are significantly lower than expected is that as I have explained on null.com  in the state marketplaces insurers are forced to compete on price. All policies sold in the Exchanges must cover the same essential benefits, and follow other rules that will make the plans look very much alike. The only way for a carrier to distinguish himself from the crowd will be to charge less—or have a better network of providers. But the younger customers that carriers covet care far more about price than about the network.

Third, in many cases, state regulators have been clamping down. In Portland Oregon, for example, regulators forced insurers to cut their proposed rates by an average of nearly 10%. Three of the 12 insurance companies in that market had to lower their rates by more than 20% f

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Will “the Bros” Buy Insurance in 2014? If Your Son (or Boyfriend) is Uninsured, Please Send Him This Post

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Some young men say they never go to the doctor. Why, they ask, should they buy into Obamacare?

Obamacare saboteurs are urging them to boycott the state marketplaces  (a.k.a. the “Exchanges”) where people who don’t have health benefits at work will be able to buy their own insurance.

What reform’s opponent don’t tell them is that under Obamacare, a 25-year-old waiter who lives in North Los Angeles and earns $17,200 a year will be able to purchase coverage from one of the state’s highest-rated insurers, Kaiser Permanente, for just $33 a month.

How can this be? One word: “Subsidies.”

Next year some 11 million young adults (18-34) who are now either uninsured or buying their own (usually bare-bones) insurance will be able to purchase excellent coverage in the Exchanges. Since some 9 million of the 11 million earn less than $45,960 a year ($62,040 for a couple) they will be eligible for tax credits to help cover the premiums. Fully 96% of the youngest (21-27) will qualify for subsidies, says Linda Blumberg, a health policy analyst at the bipartisan Urban Institute.

Now that states have begun to announce the rates insurers will be charging in their marketplaces, we can move past speculation to discuss what young adults in particular cities actually will be paying, after applying those tax credits.

Fear-mongers should blush.

                             Why Bronze Plans Will Be Popular

The example of a 25-year-old waiter in North L.A. buying coverage for just $33 a month assumes that he purchases Kaiser Permanente’s “Bronze plan.

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The “Secretary of Explaining Stuff” Will Begin Promoting Obamacare

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Bill Clinton has agreed to help the Obama administration explain health care reform to the American people. Giving the amount of misinformation polluting our airwaves, the former president could be a huge help.

Clinton is a master of talking to the public one-on-one (“Now listen to me here, this is important”), rattling off facts without losing his audience, explaining what’s fair and what isn’t (“and I think you think so too”), sounding for all the world like Jimmy Stewart playing a country lawyer,

As White House aide Dan Pfeiffer pointed out on Twitter while the welcoming the former president to the team, Clinton is “the Secretary of Explaining Stuff.”

Think about it: the majority of uninsured 18-34 year olds are minorities. (I will be explaining why in my next post.)  These are the generally healthy young adults we need in the Exchanges in order to keep premiums down. Who do you think they will listen to: John Boehner, Avik Roy, Douglas Holtz-Eakin or Bill Clinton?

Since he left office in January 2001, Clinton’s popularity has soared. Last year, a Gallup poll revealed that about 70 percent of Americans view the former president favorably  with young adult among his biggest fans.

 

 

Is Obamacare “Medicaid for the Middle Class?” –A Muddled Argument

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Yet another catchy phrase, “Medicaid for the middle class,” is popping up in conservative propaganda.  What are Obamacare’s opponents trying to say?

Those who have latched onto this catchphrase make two very different arguments. The arguments actually contradict each other, but they have one thing in common: Both are untrue.

#1 ) Obamacare isn’t good enough because the coverage families will receive in the exchanges will limit them to a tiny network of providers.

Originally, conservatives claimed that Obamacare would be too expensive. Americans who tried to buy insurance in the exchanges would experience “Sticker Shock!”  Now that states have begun to announce premiums, it’s becoming apparent that this isn’t true.

So conservatives have regrouped. In an about-face, they are acknowledging that some plans offered in the exchanges may be affordable, but this, they say, is because insurers are limiting their networks to providers who will accept lower fees.

Reform’s critics insinuate that “narrow networks” will exclude top-notch doctors and hospitals. The Citizens’ Council on Health Freedom (CCHF) calls exchange coverage “second-tier Medicaid for the middle class.”

Nevertheless, CHCF says, “Many people are expected to choose narrow-network plans that offer a limited choice of doctors, clinics and hospitals … because the cost will be less.”

Note that, while grousing about “limited choice,” CHCF predicts that patients will “choose” narrow networks.

When you’re fibbing, it’s easy to begin contradicting yourself. The truth is that people who have not been able to afford insurance in the past are far more interested in price than they are in the size of the network.

Moreover, many Baby Boomers already have embraced HMOs: they charge less when a patient stays “in network,” and the best focus on keeping patients healthy. I

In fact, when Consumer Reports published NCQA ratings of quality and customer satisfaction HMOs out-ranked other insurers.

“Narrow” Doesn’t Necessarily Mean “Not As Good”

Everything turns on who is included, who is left out – and why.

In the exchanges, insurers will be competing on price. As a result, carriers are pushing back against providers that over-charge – including brand-name hospitals that demand far more for very simple procedures.

The push-back could help rein in health care inflation: “As narrow networks continue to exclude high-priced, academic hospitals … we expect they will consider re-pricing,” says Jenny Kerr, Market Analyst at HealthLeaders-InterStudy.

Both insurers and “employers are sending a message that they are no longer willing to pay for hospitals that charge higher rates for routine services to cover costs of their teaching and research missions,” Kerr adds.

 For example, employers (in this case the city of Los Angeles)   as well as exchange insurers are rejecting LA’s pricey Cedars-Sinai Medical Center. Cedars-Sinai boasts a reputation as “hospital to the stars.”

Among the nation’s 50 top-grossing non-profit hospitals, it ranks third.  But this does not necessarily mean that it provides superior care. In 2012 when the Joint Commission released its list of the Top Performers on Key Quality Measures, Cedars-Sinai did not make the cut.
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Health Wonk Review: Health Insurance in China over the Past 50 Years; A Review of The Autistic Brain; Stay Calm, Obamacare is On Track

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The newest edition of HealthWonk Review, a round-up of some of the very best recent healthcare posts, is now online.
Colorado Health Insurance Insider’s Louise Norris hosts this mid-summer edition of the review. She offers summaries of intriguing posts, along with evenhanded, insightful commentary. Both will help you decide which posts you want to read.
Many of her reviews whetted my interest. But here I want to call attention to just two entries covering topics that we don’t often read about on Healthcare blogs, as well a reassuring sane post summing up what Washington insiders say about the state of Obamacare. It will be a bumpy ride, but it’s heading into the station.

A History of China’s Health Care System

Norris reports that on :“The Healthcare Economist,  Jason Shafrin, brings us a great summary of health insurance in China over the past half century. Until the end of the 1970s, there were three main health insurance systems in China that covered nearly everyone.
“But the wheels started to come off after that; by 1998 almost half of the urban population had no health insurance, and by 2003, 95% of the rural population in China was uninsured. “
Shafrin explains that a shift to “fee for service” health care seems to have exacerbated the problem: “Some have claimed that the stark increases in health-care are due to provider profit-seeking behavior in China’s fee-for-service system. . .
“This price structure that was originally intended to cross-subsidize the delivery of basic interventions creates perverse incentives for providers to supply sophisticated care wherever possible, by shifting demand from low-margin basic services to high-margin high-tech diagnostic services and drugs.”
Does this sound familiar?
The good news is that China, like the U.S., has set out to reform its enormous health care system.For details, see Shafrin’s post. .
As Norris observes: “While plenty of progress has been made there is still a long way to go.”
She could have been talking about either country.
Norris also spotlights Jared Rhoads’ review of The Autistic Brain by Temple Grandin. “If you’re interested in autism,” Norris writes, “Jared’s summary [suggests] that this book is a good place to start learning more. I’m adding it to my list of books to read, so thanks for the tip Jared!”
Here’s just a snippet from Rhoads’ review: “Gradin and coauthor Richard Panek trace some of the clinical history of the condition, explain what can and cannot be gained from techniques like neuroimaging, and share what they believe are some good child-rearing strategies for parents with autistic children. . . .
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Under Obamacare, Will You Receive a Subsidy to Help You Buy Your Own Insurance? We Now Have Real Numbers That Will Let You Calculate How Much You Will Receive

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Note to Readers: A longer version of this post appeared yesterday on HealthInsurance.org.

Up until now, when Obamacare’s supporters and reform’s opponents squabbled over what insurance will cost in 2014, they had to rely on estimates and national averages. But now we have real numbers.

Eleven states have announced the rates that insurers will be charging in their Exchanges-marketplaces where individuals who don’t have employer-sponsored coverage can shop for their own insurance.

Subsidies Will Be Based On the Cost Of A Silver Plan Where You Live,

Middle-income as well as low-income people buying coverage in the Exchanges will be eligible for government subsidies that will come in the form of tax credits. Anyone earning between 100 and 400 percent of the federal poverty level (FPL) (now $11,490 to $45,960 for a single person, and up to $126, 360 for a family of six) will qualify.

Most people who are forced to buy their own insurance earn less than 400% of FPL. More affluent Americans usually work  for companies that offer comprehensive coverage.

The graph below shows average Silver plan rates in the eleven states that have disclosed premiums. (Note that these are only state averages. Premiums vary widely within a state: In some cities and counties silver plan rates will be much lower, even before you apply the subsidy.

Silver plan premiums

It’s worth noting that in these 11 states the least expensive Silver Plan costs 18% less than the non-partisan Congressional Budget Office projected last year. 
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Boehner Asks: “Why A Break for Businesses Only?”

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 That House Speaker John Boehner would ask this question shows either:

a)    how little he understands about the Affordable Care Act; OR

b)    how committed he is to making sure that the American public  does not understand the purpose of health care reform.

I would pick “b”.

Republicans are now suggesting that if the employer mandate (requiring that businesses offer benefits to their workers or pay a penalty) is being postponed until 2015, the Obama administration should postpone the individual mandate as well.

“Is it fair for the president of the United States to give American businesses an exemption from his health care law’s mandates without giving the same exemption to the rest of America?” Boehner asks.

What he ignores, of course is that under the Affordable Care Act, .middle-income as well as low-income citizens would receive generous tax credits to help them purchase insurance. Not long ago, I wrote about those subsidies, and a new “subsidy calculator” that will let an individual estimate how large his subsidy would be).

More than 26 million Americans will be eligible for these tax credits next year–though most dont know it. And by attempting to delay the individual mandate, the GOP is trying to make sure that they don’t find out.

       The Individual Mandate and the Employer Mandate Are Not Connected

Meanwhile Boehner pretends that the two mandates are somehow connected, In fact, they have nothing to do with each other. 

 The individual mandate exists because, under Obamacare, insurers are required to cover people suffering from pre-existing conditions. Aetna will no longer be able to shun the sick, nor will it be able to slap them with sky-high premiums.

This part of the law is extremely popular. Most Americans understand that any one of us could be diagnosed with cancer tomorrow. The goal of the law is to protect all of us against the vicissitudes of fate by ensuring that we have access to affordable insurance.

But if there were no individual mandate requiring that we all purchase insurance (or pay a penalty), a great many people would wait until they became ill, and only then buy insurance.As a result the insurance pool would be filled with folks who need expensive care, and everyone’s premiums would spiral.

If we want to insist that insurers cover the sick, we also must insist that everyone join the insurance pool. We all share in the risk of becoming sick, and so all must share in the cost. Ultimately, insurance is all about “pooling the risk.”

(Those who believe that they shouldn’t have to join the pool because they are young or  because they don’t smoke, exercise regularly and generally “take care of themselves” are ignoring the most basic fact about the human condition:  “all flesh is grass”. )

The requirement that insurers must cover a 30-year-old suffering from MS cannot be separated from the individual mandate. We cannot have one without the other. The architects of health care reform understood the connection

By contrast, the employer mandate has little to do with the individual mandate. The phrases sound alike, that’s about it. The individual mandate and the employer mandate do not depend on each other.

If some employers decide that they will wait until 2015 before offering comprehensive, affordable health benefits, their employees will be eligible for subsidies to help them purchase their own coverage.  Postponing the employer mandate in no way affects their ability to obtain coverage at a cost they can afford. Alternatively, if an individual decides not to purchase insurance, next year, he will be asked to pay a penalty of just $95.

This is what Fox News calls “a hefty fine.”

 

The Employer Mandate is Postponed: What Does This Mean For Obamacare? Is Ezra Klein Right–Should the Employer Mandate Be Repealed?

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The administration has announced that employers with more than 50 employees will not be required to offer insurance to their employees until 2015.

Originally, reform legislation said that these employers would have to offer affordable, comprehensive insurance next year—or face penalties of $2,000 to $3,000 per worker

                              Proof that Obamacare is Not Working?

Without missing a beat, Republicans have stepped forward to say that the delay is evidence that Obamacare is faililng.

What they apparently doesn’t know (or doesn’t want you to realize) is that a delay in  the employer mandate will affect only a fraction of employers, and very few employees

First, the majority of large companies already offer health insurance that includes the benefits that the Affordable Care Act labels “essential.” (The only exceptions tend to be large restaurant and retail chains)

The mandate will have the biggest impact on small companies that today, may offer insurance, but often don’t provide “comprehensive” coverage. The postponement means that these firms will have another year to think about whether they want to expand coverage—or pay a penalty,

But their employees will not be hurt by the delay.  If either a restaurant chain or a small firm doesn’t offer benefits next year, both full-time and part-time workers be able to buy their own coverage in the Individual Exchanges where the majority will be eligible for generous tax credits. The coverage available the Exchanges will be just as good as the insurance their employers will be required to offer in 2015.

As former White House health policy adviser Zeke Emanuel pointed out today on MSNBC’s “Morning Joe”:  “The delay of implementation of the employer mandate will impact a limited number of companies. I actually don’t think this is that big a deal,” .

Emanuel went on to point out that the “the provision only applies to employers who have 50 or more employees. He estimated that there are ibkt  200,000 total employers in the U.S. [who would be] impacted and that “94 percent already offer health insurance” to employees.

Emanuel’s estimate may be high: “You’ve got 5.7 million firms in the U.S.,” says Wharton’s Mark Duggan, who served as the top health economist at White House’s Council of Economic Advisers from 2009 to 2010. “Only 210,000 have more than 50 employees. So 96 percent of firms aren’t affected.

“Then if you look among those firms with 50 or more employees, something on the order of 95 percent offer health insurance. So it’s basically 10,000 or so employers who have more than 50 employees and don’t offer coverage. Those companies probably employ around one percent of American workers.”

 To Judge the Success of Obamacare , Don’t Over-React to Day by  Day Headlines

Emanuel  also urged taking a long-term view of what the Affordable Care Act is going to accomplish, saying: “We need to look for 2020 rather than moment to moment for changes in the system.”

I couldn’t agree more. Reforming U.S. healthcare is an enormous undertaking. As I have said in the past, it will be a process, not an event. Along the way, there will be glitches. Each time, reform’s opponents will jump up and down, insisting that the End is Nigh. Obamacare is dead.  We must  ignore them—take the long view, and forge ahead.

I am hopeful that by 2020  reform’s goals will be realized. Even then, we will continue to modify and improve reform legislation over a period of years, just as we have revised Medicare.

The notion that we must “rush” to implement every aspect the ACA is misguided. When attempting to enforce the employer mandate, an emphasis on “speed” could lead to the “train wreck” that Republicans predict. 

What is crucial is that the “Patient Proteciton and Affordable Care Act” protects as many  Americans as possible, as soon as possible, while making medical care affordable by giving those who must buy their own insurance the subsidies they need. In 2014, this will be happening.

In the meantime, we already have begun to rein in health care costs, slowing healthcare inflation from 7% or 8% a year to roughly 3%. This is only a start, but a very good start.                               

                         How Will the Delay Effect the Mid-Term Election?

Predictably, some conservatives are crowing that the delay represents a “huge set back” for Obamacare. “The Obama administration has undermined its sole claim to greatness and delivered a blow to Democrats on the ballot in 2014,” writes Washington Post conservative columnist Jennifer Rubin. /

 In truth, this is far from a major setback for reform. Apparently Rubin doesn’t realize how few employers will be affected, and perhaps she doesn’t understand that without the employer mandate, even if these employers don’t offer benfits, the majority of their workers will be eligible for tax credits in the Indivudal Exchanges,

As for the effect on candidates running in 2014, even Fox News recogizes that Republicans, not Democrats are most likely to be hurt. 

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If You Buy Your Own Insurance in the Exchanges, Will You Receive a Government Subsidy? How Much Will it Be for Couple, or a Family of Five?

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ACA tax credits

 

 

 

 

 

 

Source:

No doubt you have read that if you are single, and earn less than 400% of the Federal Poverty threshhold (roughly $46,000 for an individual or $94,200 for a family of four) you will be eligible for a tax credit to help you cover the cost of insurance premiums.

But most of us don’t fit into one of those two categories. What if you are a couple, or a family of three? What happens if you have four kids?.

As the table above reveals, if a couple has  four children  and earns less  than $126,360 (400% of the FPL), they will be elibigle for the tax credits. Note: these credits are available only if you are self-employed, unemployed, or work for a company that does not offer affordable, comprehensive insurance. “Affordable” is defined as individual coverage that costs less than  9.5% of your income.

The credits are designed to make sure that no one who purchases their own insurance is forced to spend more than 9.5% of their income on health care. For instance, according to the Kaiser Family Foundation’s (KFF’s) new subsidy calculator, coverage for a 35-year-old couple with three children might cost $13,101./(This is an estimate; actual premiums will vary depending on where you live. Healthcare is much more expensive in some states than in others. ) If the parents earned roughly $100,000 a year, they would be asked to pay $9,500 toward their insurance and would receive a tax credit of $3,626.

This assumes that they purchase a “silver plan” which pays for an average of 70% of covered benefits. The family would owe the other 30% in  the form co-pays and deductibles. But keep in mind that preventive care is free, there are no co-pays and the deductible does not apply.

Assuming they need care other than preventive care, total out-of-pocket spending would be capped at $12,750, even if the entire family wound up in a car accident, three of them were hospitalized, and two needed surgery.

If they preferred, the family could purchase a less expensive Bronze plan which would pay for 60% of covered benefits. Their co-pays and deductible would be higher, but once again, preventive care would be free, total cost sharing still would be capped at $12,700, and the premium for a Bronze plan would be lower: KFF estimates that a family of five earning $100,00 would still receive a subsidy of $3,626 and their share of the premium would be just $7,253.

Why is the Government Subsidizing Households That Earn more than $125,000?

 If people choose to have four children, that certainly is their business. But why should I help pay for their healthcare?

The answer is two-fold:

First, people don’t necessarily choose to have 4 children –or more. Some couples are surprised (not to mention overwhelmed) when they disccover that they are having twins or triplets. 

Secondly as a society, we care about children. We don’t want any child to go without needed care.

But there also is a pragmatic reason for supporting large families. If those children don’t receive preventive care such as dental checks as well as  timely treatments when they are sick, down the road, we as a society will pay the price. The health of the population will play a major role in determining how productive we, as a nation, are.  

 

 

 

 

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Obamacare: In 2014 Will Workers Be Able to Afford the Health Benefits Their Employers Offer?

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Recently AP floated a story that spread like a virus. Within a day it was picked up by Yahoo!,  the Wall Street Cheat Sheet, and the Washington Post  where it was headlined “Affordability Glitch.”

Thanks to a “wrinkle” in the law, the story warns, Obamacare may hurt many of the people it is supposed to help, by making “health insurance unaffordable for . . . workers employed by restaurants, retail stores, hotels, and small businesses.”  The law is explicit, AP explains: “companies that employ 50 or more workers must offer ‘affordable’ coverage to those working more than 30 hours per week — or face fines. ‘Affordable’ health insurance, as defined by the legislation, means that premiums can cost no more than 9.5 percent of an employee’s income. . . .    . . . For low-wage workers, many of whom live paycheck to paycheck and earn barely enough to cover basic necessities 9.5% represents a lot of money.”  

True, but the fact that the law says premiums can equal 9.5% of income doesn’t means that employer-sponsored insurance will cost 9.5% of a worker’s pay.

Nevertheless, Yahoo! conjures up a hypothetical employee who will be left out in the cold: “Take, for example, a restaurant worker who makes $21,000 per year. A premium that costs 9.5 percent of this income would run $1,995 for the whole year, or $166.25 per month.  How could this employee possibly shell out nearly $2,000 a year for insurance?”  

He will have to turn down his employer’s offer, and then the government will demand that he pay a penalty because he didn’t buy insurance!
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