Archive for the ‘Health Care’ Category.
[This is first in a series of comments I would like to post at Mother Jones, but I have been banned]
Liberal Kevin Drum is crowing that the ACA is "doing exactly what it was designed to do" in "successfully browbeating" and "threatening" young people to buy health insurance, a product that in most cases they don't want and can ill afford -- particularly since the rules of Obamacare risk-rating jack up the prices to young healthy people in order to subsidize the premiums of older, wealthier, more politically powerful people. Wow, the term "liberal" has sure come a long way, hasn't it? Those of us who still respect the dignity and autonomy of individuals, and by the way are horrified at the idea of having younger lower income people forced to subsidize older higher income people, would like our term "liberal" back.
I will say, though, that it is nice to see Progressives being more up-front about their authoritarianism.
After criticizing Obamacare at a party, another person said something like "well you can't criticize it without suggesting an alternative." This of course is total bullsh*t. The passage of a bad law to imperfectly achieve objectives with which I disagree does not obligate me to craft alternative legislation to achieve those objectives.
But I decided to take a swing at it anyway. Taking a step back, I said that I thought there were two overriding problems in health care that the government might address.
The first is a problem largely of the government's own creation, that incentives (non-tax-ability of health care benefits) and programs (e.g. Medicare) have been created for first dollar third-party payment of medical expenses. This growth of third-party payment has eliminated the incentives for consumers to shop and make tradeoffs for health care purchases, the very activities that impose price and quality discipline on most other markets.
The second problem that likely dominates everyone's fears is getting a bankrupting medical expense whose costs are multiples of one's income, and having that care be either uninsured or leading to cancellation of one's insurance or future years.
So my suggestion I made up on the spot (and I am a little fuzzy on the details as my friend had actually cracked open a bottle of Van Winkle bourbon for a few of us, my first taste of that magic elixir) was to scrap whatever we are doing now and have the government pay all medical expenses over 10% of one's income. Anything under that was the individual's responsibility, though some sort of tax-advantaged health savings account would be a logical adjunct program.
I obviously make policy better when I am drinking absurdly rare and expensive bourbons, because Megan McArdle (who knows a hell of a lot more than I about health care economics) has apparently been advocating something similar for quite a while
How would a similar program work for health care? The government would pick up 100 percent of the tab for health care over a certain percentage of adjusted gross income—the number would have to be negotiated through the political process, but I have suggested between 15 and 20 percent. There could be special treatment for people living at or near the poverty line, and for people who have medical bills that exceed the set percentage of their income for five years in a row, so that the poor and people with chronic illness are not disadvantaged by the system.
In exchange, we would get rid of the tax deduction for employer-sponsored health insurance, and all the other government health insurance programs, with the exception of the military’s system, which for obvious reasons does need to be run by the government. People would be free to insure the gap if they wanted, and such insurance would be relatively cheap, because the insurers would see their losses strictly limited. Or people could choose to save money in a tax-deductible health savings account to cover the eventual likelihood of a serious medical problem.
The missing piece here, as was in my plan, is I have no idea how much this would cost.
I just got the first year bill from my payroll company for the extra reporting we have to do each year vis a vis Obamacare: $7195.50 for 2015. Note that this adds absolutely no value -- this is not the cost of insurance or cost of any extra taxes sent to Uncle Sam. This is merely the cost to handle all the new paperwork required in the law.
I will repeat what I have said before -- the Republicans tend to focus narrowly on taxes and often tend to miss or downplay the regulatory issues, which I think actually loom larger in destroying economic growth.
I was skeptical in the extreme when President Obama and other PPACA supporters claimed so much savings would come from electronic medical records. While in theory good, portable records might prevent some accidents and streamline care in certain emergency situations where there might not be time to take a full history, my actual experience with these systems did not give me much confidence. And it just sounded like yet another politician's silver bullet (HMO's were another such bullet 20 years ago).
There is no point in trying to automate the diagnostic process with an expert system AND retain the 12-year-trained doctor in the room. It strikes me as one or the other. Perhaps these systems are close to working fine and doctors can see themselves getting automated out of a job and this type of job is their last-ditch attempt to stop them. Or perhaps the systems really suck and add a lot of extra time and cost. It will be interesting when this has a chance to be fully studied.
We generally use startup activity as a proxy for positive innovation and future increases in productivity and consumer value. But it is only a proxy - based on the theory that in a free economy new startups generally add new value or die. Startups per se are not inherently positive, especially when all they are doing is fixing the inefficiencies and mandates imposed by government regulation
I wrote about a new study suggesting that new federal regulation doesn't inhibit the creation of new startup companies in an industry. In fact, it might actually stimulate the creation of startups. This seems counterintuitive, but a reader with some experience in the education and health care sectors—which were influenced by NCLB and Obamacare, respectively—proposes an explanation for this:
Healthcare startups have absolutely exploded post-ACA....This was pretty well anticipated by venture capital; a bunch of Sand Hill firms started putting together ad-hoc health IT teams shortly after the ACA was passed, on the basic logic that anything that changed an industry as much as the ACA did would necessarily create a lot of startup opportunities.
Drum says, well this may be good or may be bad. Look, it HAS to be bad. All this investment and activity is going into trying to get back to even from productivity losses imposed by the government, or is being spent addressing government mandates for new services that the market did not want or value. This is a diversion of resources from new value-creation to fixing things, and as such is just the broken windows fallacy re-written in a new form.
The language he is using, of shaking things up, is a bit like that of chemistry. He seems to imagine that markets can reach and get stuck in local maxima, so that government action that shakes the system out of these maxima (like annealing in a metal) is positive in that it allows the system to progress to a better state over time even if the government's action initially makes things worse. I know of absolutely no evidence for this being true, and my strong suspicion given how many industries the government has trashed is that this is rare or non-existent. And impossible to spot, even if it did exist. Not to mention the fact it is a total joke to talk of health care as if it was some pristine untouched-by-government industry before Obamacare.
I have to say I told you so, but, from a reader, Staples threatens to fire anyone who works over 25 hours:
Part-time Staples workers are furious that they could be fired for working more than 25 hours a week.
The company implemented the policy to avoid paying benefits under the Affordable Care Act, reports Sapna Maheshwari at Buzzfeed. The healthcare law mandates that workers with more than 30 hours a week receive healthcare.
If Staples doesn't offer benefits, it could be fined $3,000 in penalties per person.
I can tell you from personal experience that $3000 is a staggering penalty. For a full time worker at $8 an hour, this is over 2 months pay -- 2 months pay extra the company has to pay but the worker never sees.
As I have written before, we have moved heaven and Earth to get every employee we can in our company converted to part-time. We had absolutely no alternative -- after seeking quotes from about 20 places, no one would offer our company any sort of health insurance plan at any price**. So no matter what we did, we were facing the $3000 penalty for each full-time workers, so all we could do to manage the situation was convert full-time workers to part-time.
** We have seasonal workers, which makes insuring us awkward and expensive because there are high administrative costs with people constantly going on and off the plan. We also have a very old work force. Obamacare prevents insurers from charging the much higher premiums to older people that our costs might justify -- it milks younger people with prices well above their cost to serve to pay for subsidizing older people. Insurers would be crazy to voluntarily add groups that are purely old people, they would lose their shirt. So they refuse to quote us.
Full-time employment in one fast-food survey drops over last several years from 50% of workers to less than 2%.
This is the conclusion I draw from my survey in December of 136 fast-food restaurants (franchisees) that employed close to 3,500 workers. Before 2014 about half the employees were “full time” as defined by ObamaCare; that is, they worked 30 hours or more a week. The potential cost to the employers of providing mandated health insurance to their full-time staff would have been about $7 million a year. But by the time the employers took advantage of all their legal options they were able to reduce their cost to less than 1% of that amount.
The first step was to make all hourly workers part time. That may seem easy to do, but in the fast-food business it’s not uncommon that employees fail to show up for work. Other employees are asked to work additional hours to prevent the restaurant from shutting down. By the end of 2014, 58 employees had crossed the line to full-time status and were eligible for mandated health insurance in 2015.
From Atlas Shrugged:
Dr. Ferris smiled. . . . . ."We've waited a long time to get something on you. You honest men are such a problem and such a headache. But we knew you'd slip sooner or later - and this is just what we wanted."
[Hank Reardon:] "You seem to be pleased about it."
"Don't I have good reason to be?"
"But, after all, I did break one of your laws."
"Well, what do you think they're for?"
Dr. Ferris did not notice the sudden look on Rearden's face, the look of a man hit by the first vision of that which he had sought to see. Dr. Ferris was past the stage of seeing; he was intent upon delivering the last blows to an animal caught in a trap.
"Did you really think that we want those laws to be observed?" said Dr. Ferris. "We want them broken. You'd better get it straight that it's not a bunch of boy scouts you're up against - then you'll know that this is not the age for beautiful gestures. We're after power and we mean it. You fellows were pikers, but we know the real trick, and you'd better get wise to it. There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What's there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted - and you create a nation of law-breakers - and then you cash in on guilt. Now, that's the system, Mr. Rearden, that's the game, and once you understand it, you'll be much easier to deal with."
Major U.S. corporations have broadly supported President Barack Obama's healthcare reform despite concerns over several of its elements, largely because it included provisions encouraging the wellness programs.
The programs aim to control healthcare costs by reducing smoking, obesity, hypertension and other risk factors that can lead to expensive illnesses. A bipartisan provision in the 2010 healthcare reform law allows employers to reward workers who participate and penalize those who don't.
But recent lawsuits filed by the administration's Equal Employment Opportunity Commission (EEOC), challenging the programs at Honeywell International and two smaller companies, have thrown the future of that part of Obamacare into doubt.
The lawsuits infuriated some large employers so much that they are considering aligning themselves with Obama's opponents, according to people familiar with the executives' thinking.
"The fact that the EEOC sued is shocking to our members," said Maria Ghazal, vice-president and counsel at the Business Roundtable, a group of chief executives of more than 200 large U.S. corporations. "They don't understand why a plan in compliance with the ACA (Affordable Care Act) is the target of a lawsuit," she said. "This is a major issue to our members."
At the exact same moment, one branch of the Administration is encouraging an activity that another branch is working to criminalize.
We received a letter from Blue Cross / Blue Shield of AZ saying we could keep our plan, but the cost goes from about $579 a month to $739 a month in January of 2015 (a 27.6% increase). Note that this is for a pretty high deductible health plan, something like $5000. We wrote to our broker to explore options. We got this response:
Crazy as this latest BC [Blue Cross] rate increase is it is a lot better than Obamacare. I ran the same plan under the Affordable Care Act with BC and the rate for 1/1/15 would be $963.70 a month and if you went to the $6300 deductible plan the rate would still be $914 a month. So I guess we are all lucky to be out of ACA until we are forced into it. Now there is one variable that could lower your cost and that is if your household income in 2015 will be under $92k you could go into the Marketplace for premium assistance from our wonderful Federal government. If it is going to be higher than that be grateful you are where you are!
As predicted in advance, Obamacare and the exchange are not about saving money. The only people who are saving money are those getting taxpayer subsidies in the exchange.
One of the least reported issues related to health care cost inflation is the existence of artificial government restrictions on health care supply, often called "certificates of need".
The COPN [certificate of public need] law is supply-side Obamacare: top-down, command-and-control restrictions on which providers can offer which services. A certificate of public need is, essentially, a government permission slip. Without one, a Virginia doctor can’t put an MRI machine in his clinic. A hospital can’t build a new wing. A hospital company can’t add a satellite campus. And so on.
Getting such permission slips is a long and costly process. The owner of a Northern Virginia radiology practice, for example, spent five years and $175,000 asking permission to buy a new MRI machine. The state said no.
One reason the process takes so long is that competitors often fight such requests. When Bon Secours proposed the St. Francis Medical Center in Chesterfield, rival chain HCA fought it vigorously, arguing there was insufficient demand. The hospital was approved and enjoys a robust business. You’d think state regulators would laugh off competitors’ arguments, but sometimes they’re actually taken seriously. When a Richmond radiology practice wanted to move—not add, but move—a radiation device to its Hanover offices, the state said no in part because Virginia Commonwealth University’s Massey Cancer Center worried the project “could take some of their business.”
This is cronyism and protection of incumbent competitors, pure and simple. It is often justified by the economically-ignorant as reducing costs because it reduces expenditures on expensive machinery. But in what industry can you think of does restricting supply ever reduce costs?
In any other industry, the proper response to that would be: So what? If Kroger sets up across the street from Food Lion, we consider that good for consumers: They have more choice. And if they migrate from Food Lion to Kroger, that’s not a bad thing. It means they’re getting more utility for their grocery dollar.
Studies of the COPN system around the country have confirmed what seems intuitively obvious. A joint examination by the Justice Department and the Federal Trade Commission found that COPN regulations hurt competition, fail to contain costs, and “can actually lead to price increases.” Restricting supply raises prices? Imagine that.
As of next year, my company is required to offer health care plans to our full-time employees or else pay a penalty. Unfortunately, after an extensive market search, no one will sell me such a policy -- not even the government health care exchange for small businesses.
Let's take a step back. Business owners have had the rules pounded into us over the last few years, but many of you may not be familiar with the details. The detail rules are here, as "simplified" as much as possible by the NFIB, but don't read them unless you have to or your head will explode. The simple way to think of it is that there are two penalties out there:
- The "A" penalty is for companies that do not offer any sort of health plan, no matter how crappy, to their full-time employees. The A penalty in this case is $2,000 per full-time employee, with the first 30** free (so with 60 FT employees and no health plan, the penalty is (60-30) x $2,000 = $60,000 a year.
- The "B" penalty is for companies that avoid the "A" penalty. If a health plan is offered, but is not affordable (ie the employee monthly share of premiums is higher than a government-set floor) then the company gets penalized $3,000 for every full-time employee who both goes into an exchange and gets a plan with a government-subsidized premium. There is a cap on the "B" penalty that it can be no higher than if the "A" penalty was applied to the whole company.
We have always pretty much assumed we were going to get the B penalty. For minimum wage workers, the floor contribution is something like $9o a month, so the company share over a year for a typical employee of ours would be way over $3000. Also, since over half of our full-time employees are on Medicare and another portion of them are on some sort of retirement plan from a corporation, we don't expect that many to go into the exchange anyway. So we plan to just pay the penalty.
But we had expected to avoid the A penalty by offering some sort of policy to our employees. When experts present this stuff, they act like only the dumbest of the dumb companies would ever be saddled with the A penalty. After all, the company does not even have to pay anything for the policy, they just have to offer something.
But it turns out that all the things that protect us from the B penalty make us almost un-insurable. First and foremost, insurers have a minimum participation rate they demand. They are not going to go through all the overhead costs of setting you up on their plan if no one is going to sign up. In the Government Small Business Health Care Exchange (SHOP), that minimum participation rate is around 70%. No WAY we can meet that, since over half or our employees are on Medicare and would thus not sign up for anything. The fact that the average age of our workforce is in the 60's, maybe even the 70's, just makes things worse. Obamacare gives insurers only limited ability to price for higher risk, so they lose money on older people. That means they are going to avoid like the plague signing up any group like ours that is all older people.
So, as a result, I am required by law, under harsh financial penalties, to purchase a product that is not available to me. Had President Obama required that I buy 2 pounds of rocks from Mars, the result would not have been any more unfair.
By the way, I have for a couple of years now been discussing my efforts to convert all our full-time employees to part-time. I have gotten a lot of grief for that in the comments. But do you see why now? The Administration is levying a penalty on me that I cannot avoid. That penalty is calculated as a multiple of the number of full-time workers I employ. The only way I can reduce the penalty is to reduce the number of full-time employees.
It is a sorry state of affairs to have to see my greatest business achievement of the last year was to get my number of full-time employees in a workforce of over 350 people down to just 42. This year, we will work to get it under 30. If we can do that, we will avoid all penalties entirely without having to mess with the health insurance marketplace.
** As a transition measure, the first 80 are free in 2015, which means my company will avoid penalties in 2015 no matter what but not in 2016 unless we can get our full-time employee count down further.
Postscript: One of the oddball and confusing parts of the law is that the word "full-time" has multiple meanings. This year, companies with more than 100 full time equivalents (FTE) are subject to the mandate. Because of this, at cocktail parties, I have people walk up to me all the time saying the law does/doesn't apply to me based on a factoid they heard about minimum workforce sizes. I have 350 total employees of whom 42 are full time. Some say that puts me over 100 (the 350) and some say that puts me under the 100 (the 42). It turns out that neither are relevant in determining if I am under or over 100, it is a third calculation that matters. We do have more than 100 FTE, but we have less than 80 full-time employees that triggers the penalties in 2015. Go figure.
I am pretty freaking cynical about the political process, so it takes something pretty bad to catch my attention. This attitude by Obamacare architect Jonathon Gruber, which is likely shared by most of the Administration, simply makes me sick:
An architect of the federal healthcare law said last year that a "lack of transparency" and the "stupidity of the American voter" helped Congress approve ObamaCare.
In a clip unearthed Sunday, Massachusetts Institute of Technology Professor Jonathan Gruber appears on a panel and discusses how the reform earned enough votes to pass.
He suggested that many lawmakers and voters didn't know what was in the law or how its financing worked, and that this helped it win approval.
"Lack of transparency is a huge political advantage,” Gruber said. "And basically, call it the stupidity of the American voter or whatever, but basically that was really, really critical for the thing to pass."
Gruber made the comment while discussing how the law was "written in a tortured way" to avoid a bad score from the Congressional Budget Office. He suggested that voters would have rejected ObamaCare if the penalties for going without health insurance were interpreted as taxes, either by budget analysts or the public.
"If CBO scored the [individual] mandate as taxes, the bill dies," Gruber said.
"If you had a law that made it explicit that healthy people are going to pay in and sick people are going to get subsidies, it would not have passed," he added.
By the way, Jonathon Gruber was the one in 2012 who said over and over that the limitation of subsidies to state-run exchanges was not a drafting error, but was an intentional feature meant to give incentives to states to create exchanges. Now that it is clear that incentive did not do its job, and a case is in front of the Supreme Court attempting to enforce the plain language of the law, Gruber is now saying that he mispoke (over and over again) in 2012 and it was a typo. Given the fact that he has now admitted he would gladly lie (and has) to the public to defend Obamacare, how much should we believe his current claims?
Things like Obamacare cannot be discussed, it seems, in anything but a political context. So if you don't like Obamacare, everything that happens has to be bad. But I actually think this is good news, and goes against my fears in advance of Obamacare. I had been worried that Obamacare would just increase the trends of more and more health care spending being by third-party payers. And my guess is that this is happening, when you consider how many people have gone from paying cash to having a policy, either a regular policy or expanded Medicaid.
A report out today puts numbers behind what hit many workers when they signed up for health insurance during open enrollment last year: deductible shock.
Premiums for employer-paid insurance are up 3% this year, but deductibles are up nearly 50% since 2009, the report by the Kaiser Family Foundation shows.
The average deductible this year is $1,217, up from $826 five years ago, Nearly 20% of workers overall have to pay at least $2,000 before their insurance kicks in, while workers at firms with 199 or fewer employees are feeling the pain of out-of-pocket costs even more: A third of these employees at small companies pay at least $2,000 deductibles.
“Skin-in-the-game insurance” is becoming the norm,says Kaiser Family Foundation CEO Drew Altman, referring to the higher percentage of health care costs employees have to share.
Honestly, this is good news, sort of. I don't like the coercion and lack of choice, but the main problem with health care is that the person receiving the benefits is not the person paying the bills, which means there is no incentive to shop or make care tradeoffs. Higher deductibles mean more people are going to be actively shopping and caring what health services cost, and that is a good thing for prices and health care inflation.
Remember the whole VA thing? It has mostly been forgotten, though we will all remember it again, or more accurately get to experience it ourselves, once the Democrats manage to get single payer passed.
People talk about government employees being motivated by "public service" but in fact very few government agencies have any tangible performance metrics linked to public service, and when they do (as in the case of the VA wait times) they just game them. At the end of the day, nothing enforces fidelity to the public good like competition and consumer choice, two things no government agency allows.
I will admit that government employees in agencies may have some interest in public welfare, but in the hierarchy of needs, the following three things dominate above any concerns for the public:
- Keeping the agency in existence
- Maintaining employment levels, and if that is achieved, increasing employment levels
- Getting more budget
But look at the VA response in this context:
- The agency remains in existence and most proposals to privatize certain parts were beaten back
- No one was fired and employment levels remain the same
- The agency was rewarded with a big bump in its budget
The VA won! Whereas a private company with that kind of negative publicity about how customers were treated would have as a minimum seen a huge revenue and market share loss, and might have faced bankruptcy, the VA was given more money.
On the free market, in short, the consumer is king, and any business firm that wants to make profits and avoid losses tries its best to serve the consumer as efficiently and at as low a cost as possible. In a government operation, in contrast, everything changes. Inherent in all government operation is a grave and fatal split between service and payment, between the providing of a service and the payment for receiving it. The government bureau does not get its income as does the private firm, from serving the consumer well or from consumer purchases of its products exceeding its costs of operation. No, the government bureau acquires its income from mulcting the long-suffering taxpayer. Its operations therefore become inefficient, and costs zoom, since government bureaus need not worry about losses or bankruptcy; they can make up their losses by additional extractions from the public till. Furthermore, the consumer, instead of being courted and wooed for his favor, becomes a mere annoyance to the government someone who is "wasting" the government's scarce resources. In government operations, the consumer is treated like an unwelcome intruder, an interference in the quiet enjoyment by the bureaucrat of his steady income.
Washington’s response to the menace of school bake sales illustrates progressivism’s ratchet: The federal government subsidizes school lunches, so it must control the lunches’ contents, which validates regulation of what it calls “competitive foods,” such as vending machine snacks. Hence the need to close the bake sale loophole, through which sugary cupcakes might sneak: Foods sold at fundraising bake sales must, with some exceptions, conform to federal standards.
So if school lunch programs are a platform for so much micro-regulation, how much regulation do you think the government takeover of healthcare will justify? If government is paying most of the health care bills, then any activity that might affect your health is then logically subject to government regulation, if for no other reason than to protect against additional costs. Motorcycle helmet laws have been justified for years on this logic that helmetless riders impose additional costs on government health programs. Well, if that works for motorcycling, why shouldn't government be heavily regulating skiing? Or for that matter, why should it allow people to drive cars at all? Perhaps we should have to get government approval before every car trip to make sure it is not "frivolous" and creating future health care costs through accident risk.
Or how about that most costly-to-health-care activity of all: sex. Sex spreads expensive diseases. It can lead to expensive procedures like abortion. And of course it can lead to costly pregnancies and, worst of all, new lives that have to be maintained for another 80 years by the government health care system. If funding school lunch programs leads logically to banning cupcake sales at schools, why won't Obamacare lead logically to micro-regulation of our every activity?
A lot of discussion has gone into the costs of the employer mandate.
These costs certainly were potentially high for my company. If we had to provide health care for all of our employees, it would cost us an annual sum between 3 and 4 times our annual profit. As many of your know, my company runs public parks and campgrounds. Already, we have struggled to get government authorities to approve fee increases driven by local minimum wage increases. Most of these authorities have already told us that they would not allow fee increases in most cases to offset the costs of the PPACA employer mandate. So we have spent a lot of time converting between 90 and 95% of our employees to part-time, so the mandate would not apply to them. I have gotten a lot of grief for my heartlessness on this in the comments, but I have zero idea what else I could have done short of simply shutting down the business.
Yesterday I was in an information session about the employer mandate and saw that the other shoe had dropped for companies -- the reporting requirement. Despite the fact that the employer mandate was supposed to kick in almost 9 months ago, until recently the government had still not released the reporting requirements for companies vis a vis the mandate. Well, apparently the draft reporting requirements was released a few weeks ago. I may be missing something, but the key requirement for companies like mine is that every employee must receive a new form in January called an IRS 1095-C, which is parallel to the W-2 we all get to report income.
I know that many of you have probably been puzzled as to what some of those boxes mean on the W-2. Well, you are going to love the 1095C
Everyone is scratching their heads, wondering what this means. For someone like me who has seasonal and part time workers, this form is a nightmare, and I have no idea how we are going to do this. Just to give you a flavor, here are the code choices for line 14:
1A. Qualified Offer: Minimum Essential Coverage providing Minimum Value offered to full-time
employee with employee contribution for self-only coverage equal to or less than 9.5% mainland
single federal poverty line and Minimum Essential Coverage offered to spouse and
1B. Minimum Essential Coverage providing Minimum Value offered to employee only.
1C. Minimum Essential Coverage providing Minimum Value offered to employee and at least Minimum Essential Coverage offered to dependent(s) (not spouse).
1D. Minimum Essential Coverage providing Minimum Value offered to employee and at least Minimum Essential Coverage offered to spouse (not dependent(s)).
1E. Minimum Essential Coverage providing Minimum Value offered to employee and at least Minimum Essential Coverage offered to dependent(s) and spouse.
1F. Minimum Essential Coverage not providing Minimum Value offered to employee, or employee and spouse or dependent(s), or employee, spouse and dependents.
1G. Offer of coverage to employee who was not a full-time employee for any month of the calendar year and who enrolled in self-insured coverage for one or more months of the calendar year.
1H. No offer of coverage (employee not offered any health coverage or employee offered coverage not providing Minimum Essential Coverage).
1I. Qualified Offer Transition Relief 2015: Employee (and spouse or dependents) received no offer of coverage, or received an offer of coverage that is not a Qualified Offer, or received a Qualified Offer for less than all 12 Months.
Completing lines 14-16 will require an integration of our payroll provider with our health insurance information that I have no idea how we are going to pull off.
In Halbig, the DC Circuit argued that the plain language of the PPACA should rule, and that subsidies should only apply to customers in state-run exchanges. I am going to leave the legal stuff out of this post, and say that I think from a political point of view, Obamacare proponents made a mistake not sticking with the actual language in the bill. The IRS was initially ready to deny subsidies to the Federal exchanges until Administration officials had them reverse themselves. When the Obama Administration via the IRS changed the incipient IRS rule to allow subsidies to customers in Federal exchanges, I believe it panicked. It saw states opting out and worried about the subsidies not applying to a large number of Americans on day 1, and that lowered participation rates would be used to mark the program as a failure.
But I think this was playing the short game. In the long game, the Obama Administration would have gone along with just allowing subsidies to state-run exchanges. Arizona, you don't want to build an exchange? Fine, tell your people why they are not getting the fat subsidies others in California and New York are getting. Living in Arizona, I have watched this redder than red state initially put its foot down and refuse to participate in the Medicaid expansion, and then slowly see that resolve weaken under political pressure. "Governor Brewer, why exactly did you turn down Federal Medicaid payments for AZ citizens? Why are Arizonans paying taxes for Medicaid patients in New Jersey but not getting the benefit here?"
Don't get me wrong, I would like to see Obamacare go away, but I think Obama would be standing in much better shape right now had he limited subsidies to state exchanges because
- The disastrous Federal exchange roll-out would not have been nearly so disastrous without the pressure of subsidies and the data integration subsidy checks require. Also, less people would have likely enrolled, reducing loads on the system
- Instead of the main story being about general dissatisfaction with Obamacare, there would at least be a competing story of rising political pressure in certain states that initially opted out to join the program and build an exchange. It would certainly give Democrats in red and purple states a positive message to run on in 2014.
With our new prosthetic memory, called the Internet, it should be easy to go back and look at past predictions and see how well those predictions played out. Heck, sports talk radio hosts do it all the time, comparing their beginning of season predictions with what actually happened. But no one ever seems to hold the government or politicians similarly accountable.
Here is one I found by accident. In July of 2011, Kevin Drum quotes this prediction from the CMS (Center for Medicare and Medicaid Services, a government agency).
In 2014, the Affordable Care Act will greatly expand access to insurance coverage, mainly through Medicaid and new state health insurance exchanges which will facilitate the purchase of insurance. The result will be an estimated 22.9 million newly insured people.
As the law's initial enrollment period closes, at least 9.5 million previously uninsured people have gained coverage. Some have done so through marketplaces created by the law, some through other private insurance and others through Medicaid, which has expanded under the law in about half the states.
The tally draws from a review of state and federal enrollment reports, surveys and interviews with insurance executives and government officials nationwide.
....Republican critics of the law have suggested that the cancellations last fall have led to a net reduction in coverage. That is not supported by survey data or insurance companies, many of which report they have retained the vast majority of their 2013 customers by renewing old policies, which is permitted in about half the states, or by moving customers to new plans.
This is presented as a great victory, but in fact it is nearly 60% below expectations of less than two years earlier. We don't know the final number. Drum, who should be expected to be on the optimistic end of projections, has upped his estimate to 11-13 million, but this is still barely half what was expected. The disastrous Obamacare exchange rollout did one thing at least -- it hammered expectations so low that even a 50% miss is considered a great victory.
One of the great dangers of historical analysis is applying our modern standards and ex post facto knowledge to analysis of historical decisions. For example, I see modern students all the time assume that the Protestant Reformation was about secularization, because that is how we think about religious reform and the tide of trends that were to follow a century or two later. But tell John Calvin's Geneva it was about secularization and they would have looked at you like you were nuts (If they didn't burn you). Ditto we bring our horror for nuclear arms developed in the Cold War and apply it to decision-makers in WWII dropping the bomb on Hiroshima. I don't think there is anything harder in historical analysis than shedding our knowledge and attitudes and putting ourselves in the relevant time.
Believe it or not, it does not take 300 or even 50 years for these problems to manifest themselves. They can occur in just four. Take the recent Halbig case, one of a series of split decisions on the PPACA and whether IRS rules to allow government subsidies of health care policies in Federal exchanges are consistent with that law.
The case, Halbig v. Burwell, involved the availability of subsidies on federally operated insurance marketplaces. The language of the Affordable Care Act plainly says that subsidies are only available on exchanges established by states. The plaintiff argued this meant that, well, subsidies could only be available on exchanges established by states. Since he lives in a state with a federally operated exchange, his exchange was illegally handing out subsidies.
The government argued that this was ridiculous; when you consider the law in its totality, it said, the federal government obviously never meant to exclude federally operated exchanges from the subsidy pool, because that would gut the whole law. The appeals court disagreed with the government, 2-1. Somewhere in the neighborhood of 5 million people may lose their subsidies as a result.
This result isn’t entirely shocking. As Jonathan Adler, one of the architects of the legal strategy behind Halbig, noted today on a conference call, the government was unable to come up with any contemporaneous congressional statements that supported its view of congressional intent, and the statutory language is pretty clear. Members of Congress have subsequently stated that this wasn’t their intent, but my understanding is that courts are specifically barred from considering post-facto statements about intent.
We look at what we know NOW, which is that Federal health care exchanges operate in 37 states, and that the Federal exchange serves more customers than all the other state exchanges combined. So, with this knowledge, we declare that Congress could not possibly meant to have denied subsidies to more than half the system.
But this is an ex-post-facto, fallacious argument. The key is "what did Congress expect in 2010 when the law was passed", and it was pretty clear that Congress expected all the states to form exchanges. In fact, the provision of subsidies only in state exchanges was the carrot Congress built in to encourage states to form exchanges. (Since Congress could not actually mandate states form exchanges, it has to use such financial carrots and stick. Congress does this all the time, all the way back to seat belt and 55MPH speed limit mandates that were forced on states at the threat of losing state highway funds. The Medicaid program has worked this way with states for years -- and the Obamacare Medicare changes follow exactly this template of Feds asking states to do something and providing incentives for them to do so in the form of Federal subsidies). Don't think of the issue as "not providing subsidies in federal exchanges." That is not how Congress would have stated it at the time. Think of it as "subsidies are not provided if the state does not build an exchange". This was not a bug, it was a feature. Drafters intended this as an incentive for creating exchanges. That they never imagined so many would not create exchanges does not change this fact.
It was not really until 2012 that anyone even took seriously the idea that states might not set up exchanges. Even as late as December 2012, the list was only 17 states, not 37. And note from the linked article the dissenting states' logic -- they were refusing to form an exchange because it was thought that the Feds could not set one up in time. Why? Because the Congress and the Feds had not planned on the Federal exchanges serving very many people. It had never been the expectation or intent.
If, in 2010, on the day after Obamacare had passed, one had run around and said "subsidies don't apply in states that do not form exchanges" the likely reaction would not have been "WHAT?!" but "Duh." No one at the time would have thought that would "gut the whole law."
Postscript: By the way, note how dangerous both the arguments are that opponents of Halbig are using
- The implementation of these IRS regulations are so big and so far along that it would be disruptive to make them illegal. This means that the Administration is claiming to have the power to do anything it wants as long as it does it faster than the courts can work and makes sure the program in question affects lots of people
- The courts should give almost unlimited deference to Administration interpretations of law. This means, in effect, that the Administration rather than the Courts are the preferred and default interpreter of law. Does this make a lick of sense? Why have a judiciary at all?
I don't think anyone would say:
- Help! I have been denied access to housing because my employer won't pay my mortgage
- Help! I have been denied access to clothing because my employer won't pay my Nordstrom bill
- Help! I have been denied access to leisure because my employer won't pay my resort bill
- Help! I have been denied access to child care because my employer won't pay my nanny
- Help! I have been denied access to food because my employer won't pay my grocery bill
Yet half the country seems to be saying
- Help! I have been denied access to birth control because my employer won't pay for it
A few thoughts
- This is one of those "bad policy conflicts with bad policy" decisions that I have trouble getting excited about. The government should not be mandating tiny details of health insurance policies. On the flip side, personal religious beliefs should not trump the rule of law (example: the fact someone has a religion that says it is legal to beat his wife should not create an exception allowing spouse abuse).
- That being said, the case only seems legally difficult if one completely ignores the existence of the 1993 RFRA, which most on the Left seem to want to ignore.
- I have zero patience with the facile argument that corporations have no individual rights. Corporations are just assemblies of people. Our right to assembly should not cause us to lose our other rights. If I have freedom of speech as an individual, I don't give it up when I create a corporation.
- I am even more exhausted with the argument that opposing government subsidies of an activity is the same as opposing the activity itself. Though half the readers who see this post will assume that I am anti-abortion or anti-contraception, which I am not. (Update: This seems to be a prevalent argument today, though -- see here)
- The most ignored fact of this case in my mind is the absolute insanity of the government mandating that regular, predictable purchases be covered in an insurance policy. Intelligent health insurance policies should no more cover routine contraception than home insurance policies should cover the cost of light bulb replacements. Sure, I have no problem if some private person wanted such a policy and a private company offered one -- but mandating this craziness is just amazingly bad policy.
- If you really want to help women and reduce their net cost of contraception, stop requiring a prescription for certain contraceptives, like birth control pills.
This is a re-post of an article I wrote in 2012. I am re-posting it to demonstrate that recent stories about doctor shortages and wait times are absolutely inevitable results of government interventions in the health care economy.
My son is in Freshman econ 101, and so I have been posting him some supply and demand curve examples. Here is one for health care. The question at hand: Does government regulation including Obamacare increase access to health care? Certainly it increases access to health care insurance, but does it increase access to actual doctors? We will look at three major interventions.
The first and oldest is the imposition of strong, time-consuming, and costly professional licensing requirements for doctors. At this point we are not arguing whether this is a good or bad thing, just portraying its inevitable effects on the supply and demand for doctors.
I don't think this requires much discussion. For any given price for doctor services, the quantity of doctor hours available is certainly going to increase as the barriers to entry to the profession are raised.
The second intervention is actually a set of interventions, the range of interventions that have encouraged single-payer low-deductible health insurance and have provided subsidies for this insurance. These interventions include historic tax preferences for employer-paid employee health insurance, Medicare, Medicaid, the subsidies in Obamacare as well as the rules in Obamacare that discourage high-deductible policies and require that everyone buy insurance rather than pay as they go. The result is a shift in the demand curve to the right, along with a shift to a more vertical demand curve (meaning people are more price-insensitive, since a third-party is paying).
The result is a substantial rise in prices, as we have seen over the last 30 years as health care prices have risen far faster than inflation
As the government pays more and more of the health care bills, this price rise leads to unsustainably high spending levels, so the government institutes price controls. Medicare has price controls (the famous "doc fix" is related to these) and Obamacare promises many more. This leads to huge doctor shortages, queues, waiting lists, etc. Exactly what we see in other state-run health care systems. The graph below posits a price cap that forces prices back to the free market rate.
So, is this better access to health care?
I know that Obamacare proponents claim that top-down government operation is going to reap all kinds of savings, thus shifting the supply curve to the right. Since this has pretty much never happened in the whole history of government operations, I discount the claim. When pressed for specifics, the ideas typically boil down to price or demand controls. Price controls we discussed. Demand controls are of the sort like "you can't get a transplant if you are over 70" or "we won't approve cancer treatments that only promise a year more life."
Most of these do not affect the chart above, since it is for doctor services and most of these cost control ideas are usually doctor intensive - more doctor time to have fewer tests, operations, drugs. But even if we expanded the viewpoint to be for all health care, it is yet to be demonstrated that the American public will even accept these restrictions. The very first one out of the box, a proposal to have fewer mamographies for women under a certain age, was abandoned in a firestorm of opposition from women's groups. In all likelihood, there will be some mish-mash of demand restrictions, determined less by science and by who (users and providers) have the best lobbying organizations.
Update: Pondering on this, it may be that professional licensing also makes the supply curve steeper. It depends on how doctors think about sunk cost.
VA Scandal Proves My Contention: The Only Government Health Care Cost Reduction Ideas are Rationing and Price Controls
I feel like I was way ahead of the pack on May 1 reminding everyone that the Left until recently held up the VA as a model for government health care. I pointed to articles by Kevin Drum and Phil Longman in 2007, but since then others have highlighted articles by Paul Krugman and Ezra Klein that made the same point. Klein said:
If you ordered America's different health systems worst-functioning to best, it would look like this: individual insurance market, employer-based insurance market, Medicare, Veterans Health Administration.
Paul Krugman said
Well, I know about a health care system that has been highly successful in containing costs, yet provides excellent care. And the story of this system's success provides a helpful corrective to anti-government ideology. For the government doesn't just pay the bills in this system -- it runs the hospitals and clinics.
No, I'm not talking about some faraway country. The system in question is our very own Veterans Health Administration, whose success story is one of the best-kept secrets in the American policy debate.
Supposedly, the reason for this success according to Drum and Longman was that ever-popular Lefty magic bullets, electronic medical records and preventative care. On medical records:
"Since its technology-driven transformation in the 1990s...the VA has emerged as the world leader in electronic medical records — and thus in the development of the evidence-based medicine these records make possible." Hospitals that joined Longman's "Vista network" (his name for the VA-like franchise he proposes) would have to install the VA's electronic medical record software and would "also have to shed acute care beds and specialists and invest in more outpatient clinics." By doing this they'd provide better care than any current private network and do it at a lower cost.
On preventative care:
How is a supposedly sclerotic government agency with 198,000 employees from five separate unions outperforming the best the private market has to offer? In a word: incentives. Uniquely among U.S. health care providers, the VA has a near-lifetime relationship with its patients. This, in turn, gives it an institutional interest in preventing its patients from getting sick and in managing their long-term chronic illnesses effectively. If the VA doesn't get its pre-diabetic patients to eat right, exercise, and control their blood sugar, for example, it's on the hook down the road for the cost of their dialysis, amputations, blindness, and even possible long-term nursing home costs....The VA model is that rarest of health care beasts: one with a perfect alignment of interest between patients and providers.
Neither of these have ever proven in real life to actually lower costs in anything but tiny pilot programs, and there is a lot of reason to believe that while preventative care can improve health outcomes, it tends to increase costs.
I have said for years that at the end of the day, the only ideas government planners have for cost control are rationing (which leads to queuing) and cost controls on things it buys from private markets, like doctor time (which leads to shortages and more queuing). This is why every health care system that offers free care to all comers, whether it be socialist systems in other countries or the VA or even an urban emergency room, has long queues.
In fact, the situation, as I think we will find at the VA, is worse. Not only is the old pie being allocated differently (shifting from price-sensitivity to queue tolerance) but the pie of available supply is likely getting smaller as resources are consumed by government red tape and price controls drive suppliers out of the market. The next stories will be about the staggering waste of money on red tape in the VA system, and the stories after that will be about a few VA users jumping the queue because of political connections.
This stuff is so inevitable that it was all addressed years ago in my three part series of Obamacare. In that series, the issues were not failing exchanges and the mess we have seen so far, but the issues we are more likely to see over the long term. The VA is merely a preview, but we shouldn't have needed a preview because we could have looked at countries like England. Of course, if the media had any desire to honestly tell these socialized medical stories we would not get fawning profiles of the horrendous system in Cuba.
My Forbes series:
- part 1: Information issues when one tries to replace prices with command and control
- part 2: Incentives issues in government management of health care
- part 3: Rent-seeking and special favors for the connected in health care
Reminder: Until Very Recently, The Left Was Touting the VA as a Great Model for Government Run Health Care for All
As regular readers may know, Phil Longman thinks the VA model of healthcare is the best around. In the October issue of the Monthly, he takes his admiration to another level, suggesting that the best way to provide healthcare to the 45 million uninsured in America is via — what? I guess you'd call it a franchised version of the VA. Basically, the federal government would offer struggling municipal hospitals a trade: if you adopt the VA's management guidelines, the government will pay you to care for all those uninsured folks currently jamming up your emergency rooms and driving you bankrupt. Deal?
The supposed reason is that great panacea, electronic medical records, cited by the Left as the solution to all woes as often as the Right mentions the Laffer Curve.
"Since its technology-driven transformation in the 1990s...the VA has emerged as the world leader in electronic medical records — and thus in the development of the evidence-based medicine these records make possible." Hospitals that joined Longman's "Vista network" (his name for the VA-like franchise he proposes) would have to install the VA's electronic medical record software and would "also have to shed acute care beds and specialists and invest in more outpatient clinics." By doing this they'd provide better care than any current private network and do it at a lower cost.
Since that time, the Left has mostly stopped talking about the VA as a miracle solution, because it is becoming clear that the VA cuts costs the same way every state health care agency cuts costs -- by restricting capacity, leading to huge waiting times, and rationing care. The scandal here in the AZ VA is just the latest
The chairman of the House Committee on Veterans Affairs said Wednesday that dozens of VA hospital patients in Phoenix may have died while awaiting medical care.
Rep. Jeff Miller, R-Fla., said staff investigators also have evidence that the Phoenix VA Health Care System keeps two sets of records to conceal prolonged waits that patients must endure for doctor appointments and treatment.
"It appears as though there could be as many as 40 veterans whose deaths could be related to delays in care," Miller announced to a stunned audience during a committee hearing Wednesday.
Supporters of government health care like t o waive their arms about magic bullets, but the only strategy that has ever reduced costs in government health care systems is rationing and queuing (which is also a form of rationing). Resources are always scarce, but the question is whether we want our health care rationed by government beauracrats or by ourselves. The latter can only happen if we get away from first dollar and single payer medicine and find a way to get real, transparent price signals (which is the way every other service in this country is managed).
"In Britain, even though they're already paying for the National Health Service, six million Brits—two-thirds of citizens earning more than $78,700—now buy private health insurance. Meanwhile, more than 50,000 travel out of the U.K. annually, spending more than $250 million, to receive treatment more readily than they can at home."
Which is the exact same way we run our education system -- everyone has to pay for a basic crappy level of the government monopoly product, and then if you can afford it you pay again to get a better private product.