Reverse “Sticker Shock” Part 2 –Subsidies Mean Enormous Saving for Older Americans

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In the past I have written about how government tax credits will help young adults (18-34) who must buy their own coverage because they don’t have access to “affordable, comprehensive” employer-sponsored coverage.

But older Americans forced to purchase their own insurance will save even more. Precisely because a 50-year-old’s premiums may be three times higher than a 20-year-old’s, his subsidies will be larger.

Subsidies are designed to fill the gap between the percentage of your income that you are expected to contribute toward the cost of a premium (with the government assuming that if you earn more, you can spend more on health insurance) and the actual rates that insurers in your market charge for a benchmark Silver plan..

Families USA estimates that while the majority of 18-34 year olds shopping in the Exchanges will qualify for help from the government, fully  30% of the those who receive tax credits  will be 35 to 54, and 12.5% will be 55 or older.

Note that younger Americans will not be subsidizing these tax credits  for their elders. Under the Affordable Care Act subsidies are funded by device-makers, drug-makers, hospitals—plus taxpayers earning over $200,000—and couples earning over $250,000) Very few twenty-somethings are that fortunate. A New KFF Report Offers Eye-Opening Final Numbers on Premiums and Subsidies for 40 –Year Olds and 60-Year-Olds in 17 States

In  August the Kaiser Family Foundation  (KFF) published an “Early Look at Premiums” in California, Colorado, Connecticut, DC, Indianapolis, Maryland, Maine, Montana, Nebraska, New Mexico, New York, Ohio, Oregon, Rhode Island, South Dakota, Virginia, Vermont and the state of Washington.

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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 You Be Eligible for A Government Subsidy When You Buy Health Insurance in 2014? Check out Your “Modified Adjusted Gross Income” (MAGI) –You May Be Pleasantly Surprised

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Before writing this post, I had no idea how to calculate my “Modified Adjusted Gross Income” (MAGI). But I did know that this is the number the IRS will use when deciding whether people purchasing their own insurance in their state’s online marketplace (a.k.a. Exchange) will qualify for a tax credit to help them cover their premiums.

This piqued my interest.

The first thing you need to know is that there are different definitions of Modified Adjusted Gross Income (MAGI) for different situations. The  the Affordable Care Act has its own definition to be used when determining whether someone is eligible government subsidies (premium tax credits) when purchasing  his own insurance in the state Exchanges. 

When calculating your MAGI, you can subtract certain items from your adjusted gross income including: student loan interest, certain moving expenses,, some self-employment expenses, and any alimony that you pay.

As a result, an individual grossing $50,000 (or a family of four with income of $98,000)  might well discover that after they deduct these items from, their MAGI falls under the cut-off for subsidies ($45,960 for an individual, $62,040 for a couple,  $78,120, for a family of three, $94, 200 for a family of four)

This is why, even if think you earn a few thousand too much to qualify for government help, you should ask whoever prepares your taxes about your MAGI.

Kiplinger’s  Kimberly Lankford, suggests other ways to lower your MAGI by “selling losing stocks or boosting business expenses to offset self-employment income.”  But, she warns, “Be careful with moves that could boost that your MAGI and make it more difficult to qualify for the subsidy — such as converting a traditional IRA to a Roth.”  .

Clearly MAGI is a tricky number. The good news is that you don’t have to do the arithmetic yourself. Your Exchange will do it for you when you apply. j(Ultimately, the IRS does the calculation).

Unnecessary Surgery? The Story of a Health Care Provider Who Finds Himself in the Hospital, Scheduled For an Operation He Doesn’t Want

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“The doctor was adamant: ‘This is America, not Sweden,’ he told me. ‘We operate.’”

Below, a physicians assistant (PA) recounts what happened when he was diagnosed with appendicitis.

Andrew T. Gray knew that he could not afford surgery.  Ironically, he had just taken a new job as a PA but had not yet filled out all of the paperwork for insurance.  Moreover, he had read about a randomized controlled trial done in Sweden suggesting that over 70% of patients did just as well taking antibiotics rather than going under the knife.

Gray’s story originally appeared in pulse- voices from the heart of medicine,  a free online magazine that publishes riveting stories and poems written by health care providers as well as patients. All of the them are true, and both the writing and the editing is superb. If you’re  not familiar with pulse, see this post where I describe how pulse was boron, quote reviews, and link to some of my favorite stories.

I urge everyone to consider subscribing to pulse’s free weekly e-mails.   You will receive a story or poem at the end of each week that will brighten your Fridays.

At the end of Gray’s story, I have added a note on research done not only in Sweden, but in the UK, comparing the results when doctors recommend antibiotics before scheduling surgery for patients diagnosed with appendicitis.

Saving My Appendix

By Andrew T. Gray

How did this happen to me? I wondered, looking at him across the ER exam room. How could I, a healthcare provider, not have insurance?

I had woken up that morning with a mildly upset stomach. Nonetheless, I’d gone to my job (begun only six weeks earlier) as a physician assistant at a Beverly Hills HIV clinic. I’d seen patients until lunchtime, then attended a research meeting. The subject was a study of irritable bowel syndrome.

“I need to be in this study,” I joked to a coworker. “My IBS is acting up.”

I don’t have IBS, but I was indeed having crampy stomach pain. I continued to see patients until 3 pm, when the pain became steady: on a ten-point scale, I gave it a six. I left work early.

As I exited the building, my first thought was Freedom! I can get home early, relax, maybe take a nap…

Crawling into bed, however, I realized that my pain had coalesced in the right lower quadrant of my abdomen. Could it be appendicitis?

Panic flooded me. After six weeks at my new job, I now qualified for health insurance, but I’d neglected to fill out the necessary paperwork.

Only an hour after leaving the clinic, I returned. Almost hysterically, I completed and faxed in the insurance forms.
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Fighting Fire with Fire—What is the Point of a Limited Attack on Syria?

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I can’t help but wonder what President Obama hopes to accomplish.

Are we taking military action simply to “send a message”?   If so why not use words rather than weapons?

Obama can be a powerful orator. Why not take to the bully pulpit and explain, to the world, the horrors of what is happening in Syria? .

A few days ago, New York Times columnist Charles M . Blow asked a provocative question: “Is America’s moral leadership in the world carved out by the tip of its sword?”

Wouldn’t it be better to demonstrate our “moral leadership” in some other, wiser way?  Can anyone point to an instance where a limited military action brought an end to violence?

Over at the Guardian Michael Cohen insists that we must attack in order to “enforce global norms”—in this case, the rule that the use of chemical weapons is simply beyond the pale. http://www.theguardian.com/commentisfree/2013/aug/29/liberal-case-for-striking-syria  Cohen claims the taboo dates back to World War I.

Has he forgotten about our use of Napalm in Vietnam?  Is he simply too young to remember the photo of a 9-year-old girl, wailing “too hot, too hot,” as she runs down the road, “naked after blobs of sticky napalm melted through her clothes and layers of skin like jellied lava.” http://news.yahoo.com/ap-napalm-girl-photo-vietnam-war-turns-40-210339788.html

Writing for the Atlantic, James Fallows quotes budget-policy expert, Mike Lofgren: “The US has in the recent past violated international norms on aggressive war, torture, rendition of POWs, assassination, use of chemical weapons (phosphorous, napalm, etc.), land mines, ad infinitum.” http://www.theatlantic.com/politics/archive/2013/09/your-labor-day-syria-reader-part-1-stevenson-and-lofgren/279254/
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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.

 

 

George W. Bush’s Recent Stent Surgery—Two Perspectives

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Last week, when former President George W. Bush underwent stent surgery, the procedure was declared a great success.  What is surprising is that not everyone in the mainstream media applauded.  

From Bloomberg News “Former President George W. Bush’s decision to allow doctors to use a stent to clear a blocked heart artery, performed absent symptoms, is reviving a national debate on the best way to treat early cardiac concerns.

“The discussions have been ongoing since 2007, when the trial known as Courage first found that less costly drug therapy averted heart attacks, hospitalizations and deaths just as well as stents in patients with chest pain. The results were confirmed two years later in a second large trial.

“The debate has centered on both the cost of stenting, which can run as high as $50,000 at some hospitals, and its side effects, which can include excess bleeding, blood clots and, rarely, death. Opponents say the overuse of procedures like stenting for unproven benefit has helped keep U.S. medical care on pace to surpass $3.1 trillion next year, according to the U.S. Centers for Medicare and Medicaid Services.

“’This is really American medicine at its worst,’” said Steven Nissen, head of cardiology at the Cleveland Clinic in Ohio  . . .  ‘It’s one of the reasons we spend so much on health care and we don’t get a lot for it. In this circumstance, the stent doesn’t prolong life, it doesn’t prevent heart attacks and it’s hard to make a patient who has no symptoms feel better’” . . .

“’Stents are lifesaving when patients are in the midst of a heart attack’ added Chet Rihal, an interventional cardiologist at the Mayo Clinic in Rochester, Minnesota . . . ‘They allow immediate and sustained blood flow that help a patient recover. For those who aren’t suffering a heart attack, the benefits are less clear   . . . While stents may be used in patients with clear chest pain, there’s no evidence that they prevent future heart attacks.’  A review of eight studies published last year in JAMA Internal Medicine also found no differences.

“Two large-scale clinical trials completed within the last seven years have shown that drug therapy works just as well as stents in preventing cardiac complications. (The three major U.S. heart associations changed their guidelines in 2011 in an effort to reduce excess treatment.  )

[This is important. The major U.S. heart associations have absolutely no vested interest in recommending fewer procedures. When they say “Do Less,” everyone should listen–mm. ]

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A New IOM Report Reveals Why Medicare Costs So Much (Hint–It’s Not Just the Prices)

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George W.  Bush is 67. Chances are Medicare paid for the stent operation that I describe in the post above.  For years, medical researchers have been telling us that this procedure will provide no lasting benefit for a patient who fits Bush’s medical profile.   Nevertheless, in some hospitals, and in some parts of the country, stenting has become as commonplace as tonsillectomies were in the 1950s.

Location matters. Last month, a new report from the Institute of Medicine confirmed what Dartmouth’s researchers have been telling us for more than three decades: health care spending varies  across regions. More recently, as Dartmouth’s investigators have drilled down into othe data,, they have shown that even within a region, Medicare spends far more per beneficiary in some hospitals than in others.

In a recent Bloomberg column, former CBO director Peter Orszag notes that “Because this variation doesn’t appear to be reliably correlated with differences in quality, the value [that we are getting for our health care dollars] seems to be much higher in some settings than in others.” He asks the logical question: “What is causing this and what might we do about it?”

Some health care analysts claim that as a nation, we spend far more on health care than any other developed country because we over-pay for everything—from statins to surgery. (A landmark article that appeared in Health Affairs in 2003 put it this way “It’s the Prices Stupid!” )

Others put more emphasis on overtreatment. Up to one-third of Medicare dollars are squandered, physicians like Dartmouth’s  Dr.  Elliott Fisher, Boston surgeon Atul Gawade and former Medicare director Dr. Don Berwick argue.  As Fisher puts it, “hospital stays in the U.S. may not be as long as in some other countries, but more happens to you while you’re there.” (Note: the authors of “It’s the Price’s Stupid” also point out that care in the U.S. is “more intensive.”)

I agree that both theories are true: We have managed to devise a health care system where we both over-pay AND are over-treated. The  Institute of Medicine report that came out at the end of July supports this thesis.

              The Difference between Medicare and Commercial Insurers

The IOM report reveals that both Medicare and commercial insurers are spending about 40 percent more per patient in some areas and in some hospitals than in others. “This has persisted over decades;” Orszag observes.  “Regions that spent the most in 1992 tended to remain big spenders in 2010.”

But, he adds, “There is one important difference between Medicare and commercial insurance, the Institute found, and that is in the causes of spending variation. With commercial insurance, spending is higher in some areas because of markups — that is, the difference between the charge for a service and the cost of providing that service.

“Seventy percent of the variation in commercial spending was attributed to differences in markups, which in turn probably reflect local differences in market power among hospitals and other providers relative to insurance companies and beneficiaries.”

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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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