[personal profile] drscott
Some really good reporting from WaPo on why the Federal exchange was such an expensive failure here. I haven't written much about it because the press is now on the case and digging into the story.

Administration spinmeisters are trying to plug the leaks when real people report their premiums have increased for less coverage. One of the half-truths is that all the cancelled policies were "junk insurance" - which certainly exists; this is insurance with very low premiums that covers very little, though it may at least get you the negotiated insurance discount at providers. But many people who carefully researched their plans and had excellent insurance covering their needs, often with high deductibles but no limits, are also finding their policies cancelled, with new plans costing 50-100% more with even higher deductibles. The Administration is sending out its spokespeople to call these people liars and stupid for not understanding how much better the new policies are, a winning strategy if you want to really make some of the smartest and most influential people angry.

The situation is especially grim since millions of people who are losing their policies 12/31/13 are going to have to find replacements in less than two months. Many will be unable to act that fast, given the broken exchanges, and many will find the new policies unaffordable and hold off hoping for something better. This means it is now more likely than not that more people will be uninsured as 2014 dawns than before the law was implemented.

Behind all this is elitist central planning bureaucrats who designed a system that can provide subsidized preventative care ("prepaid care") as well as true insurance (against unlikely and expensive medical events) to the unhealthy and poorer underinsured. The cost is partly subsidized by a large number of new taxes, which hit everyone but are most noticeable for the wealthy; and partly subsidized by increases in premiums for everyone who is unsubsidized. Many people just above the subsidy cutoff of 400% of the poverty line will be paying 40-100% more in premiums for less coverage, which is so out of line for their budgets that many of them will have to go without insurance in this new order. This is the "cross subsidy" - forced new revenue to the insurance companies to pay for community rating and must-issue.

Another misleading spin point is that only 4% of the population is effected. The Administration hopes people will buy this new lie, but by delaying employer provisions for a year they hope you won't realize that a wave of changes, cancellations, and price increases will arrive next year for the supposedly unaffected 85% of the population covered by employer plans. Since they lied to get it enacted, why would anyone believe their fallback lies? Those who are involved in HR discussions know the truth.

I have no doubt that most of the politicians supporting the ACA were told it would work well and ultimately save money. It takes awhile for those who declared their support to admit they were wrong and start to work with critics to fashion a better plan - which might look like Switzerland's, which includes compulsory catastrophic insurance for everyone at a low price (subsidized for the very poor), with an accompanying book of medicaid-like reimbursements for those who don't have additional insurance. Democrats need to eat crow and start rewriting the ACA, quickly, or the outcome will be ugly.

Date: 2013-11-04 04:08 am (UTC)
From: [identity profile] mrdreamjeans.livejournal.com
I am now enrolled in my company's insurance. Aetna is raising premiums 6% in January and blaming it on the Affordable Health Care Act. It's what's happening all around. The companies are raising premiums as they always do just because they can. I don't agree with your final paragraph. I don't blame the government. I blame the health care companies who don't want to see reform succeed.

Date: 2013-11-04 05:18 am (UTC)
From: [identity profile] billeyler.livejournal.com
We live, we die. We have between 60 and 80 years to do stuff in between.
Edited Date: 2013-11-04 05:19 am (UTC)

Date: 2013-11-05 05:59 am (UTC)
From: [identity profile] dr-scott.livejournal.com
Health and longevity is closely related to individual habits - eat unprocessed foods with plenty of protein and good fats, limit sweets and grains, exercise, and stay out of trouble, and your chances of a long, healthy life improve. There's some percentage of death and disease which is simply random - that heart valve defect, that cosmic ray that turns a cell cancerous - and some percent due to your environment, which to some extent is under your control.

Insurance is supposed to be about the accident or mischance that might require treatment beyond what you can afford. It isn't unreasonable for people with habits that correlate to future medical expenses to pay more - smokers, gluttons, hang-gliders (heh) thereby get a signal that their habits cost more than just health. But the real problems with the current system have been for those who get a condition then lose their insurance for some reason; while efforts have been made to require companies to issue new policies to anyone who has been continuously insured, those regulations still put those people in a different risk pool with much higher rates - most likely actuarily justifiable, but it seems unfair. The insurance company that loses such a customer has avoided a large drain on their resources, and probably some way of transferring that surplus to the new insurance company would smooth out those bumps. If you get cancer, then, you'd get a large check to cover part of your future treatment if you agreed to move to a new insurance plan...

But people get all wrapped up in medical care and insurance, when the best way to live is to avoid using any of it by living well.

Date: 2013-11-04 05:50 am (UTC)
From: [identity profile] dorisduke.livejournal.com
My current insurance is being deleted. It has a high deductible of ten grand but that was fine with me and paid 95 percent after that. What is being offered now at the cheapest is 500 bucks more a month and could go up to 1700 bucks more a month depending on which one I choose. I am not too pleased at this point in time.

Date: 2013-11-05 06:07 am (UTC)
From: [identity profile] dr-scott.livejournal.com
I hear rumors that companies are offering gap insurance (6 months to a year) which can be cheaper (not ACA compliant). I am expecting a lot of new policies sold off-exchange that might have better terms or networks (but they may be just as expensive.) One could get a gap policy and then shop carefully as the situation resolves next year.

Date: 2013-11-05 02:53 pm (UTC)
From: [identity profile] pklexton.livejournal.com
Under the pre-ACA system my premiums went up 20% a year virtually every year for the last 10 years. Rick's insurance is more than our mortgage, as someone over 60 with pre existing conditions in the individual market. Something needed to be done. Clearly it is flawed. There is lots of spin and lies on both sides. It would be wonderful if some on the GOP side actually engaged constructively to fix it. They have an opportunity to convince me that they have a positive contribution to make. I am not holding my breath.

Date: 2013-11-05 07:06 pm (UTC)
From: [identity profile] dr-scott.livejournal.com
People trying to keep or gain political advantage will be all over this because it is waking up millions of voters who don't want to be bothered, who were anaesthetized to the dangers to them personally of the proposed changes by the President's assurances that for them, nothing would change and they'd *save* money! I'm doing economic and moral analysis, not trying to gain power for myself...

The old system had two main flaws: medical services cost far more than was affordable, and a minority could not get access to good medical care because they could not afford insurance coverage. The moral claim made by the reformers is that the sad cases of people not getting care, which actually were usually about people denying themselves care, since care was always available, but costly and with bankruptcy as the downside in extremis. The voters are sympathetic to calls for assistance for the truly needy, but voter interest in lower costs for *themselves* has always been even stronger.

The new system does nothing to restrain costs or growth in administrative overhead. By giving the existing medical-industrial complex additional revenues, it will increase total spending and cost of medical care. It has been politically impossible to apply antitrust and deregulation to the medical complex, and the government already funds 50% of medical revenues, which has bureaucratized procedures and payment systems to make them even more resistant to productivity improvements.

You're a friend so don't take the following as a slam - but you bring up your own case, so let's take a look...

In your case, Rick benefits financially from the ACA. But it is morally questionable whether he *needed* assistance, since even though his insurance costs were high, it's not clear they were greatly out of line compared to the medical care expenses he will be generating. He was insured and not poverty-stricken by the costs, so he cannot be counted as a truly needy person being denied care because of his income. At some point the cost might have grown to be too high to pay, but it had not happened yet. Your complaint about your insurance costs increasing will not be addressed by the ACA, and it is likely your own bill will rise faster than before to subsidize others. Are there preventative services, substance abuse, or other coverages you don't already have but would use? You personally will be in the "paying more" group and will likely see higher premiums, copays, and deductibles as a result. But your family saves money which can be invested or spent, keeping the economy humming! But wait...

I'll hazard a guess that Rick's premiums are dropping by $8,000 a year. Where is that subsidy coming from?

- Roughly, $1,000 comes from cuts to Medicare Advantage that are even now causing doctors to be dropped from insurer networks; some old ladies in their 80s are just now being informed they'll have to give up their doctors and find new ones. This is just unnecessary pain.

- Assuming younger people sign up for insurance that costs 3x the actuarial costs of services they will get (dubious), $1,000 comes from a young person who has to cut $100/month out of a tight budget for rent and food, whose already-marginal finances suffer further as more regulations have decreased his ability to find a good-paying job. This slows the economy a bit more.

- One high-income professional pays an additional $2,000 in taxes on investment income and salary earnings. This woman barely notices, so this is relatively successful redistribution; though of course she has less to invest and so the economy takes another tiny hit.

- And the worst of it is, the rest of the $4,000 comes from a two families earning $85,000 in the Bay Area with two kids and a tight budget whose premiums have gone from $4,000 a year to $6,000, but it is actually worse than that because their deductibles and copays are much higher. These people are barely middle class and their disposable income is minimal; higher premiums mean either dropping insurance or giving up something important. The economy gets a little bit weaker. And these people have a greater moral claim on their own money than Rick has, and they should not be paying for Rick's insurance.
Edited Date: 2013-11-06 05:14 am (UTC)

Date: 2013-11-05 07:08 pm (UTC)
From: [identity profile] dr-scott.livejournal.com
... contd

There are, it turns out, far more big losers than big winners. Those people were lied to and they are angry; anger means political turmoil. We can't just repeal the ACA because insurance plans have already been disrupted. The best course now is to modify - keep some provisions but reduce the social-do-gooder's laundry list of preventative care and other coverages added on in the fantasy that everyone should pay for everyone else's expenses regardless of their habits or sacrifices. Bring down the cost of the minimal decent care package to something almost everyone can afford, and subsidize only those who would otherwise not receive necessary care.

I'll post an anonymized version of this on Facebook since I seem to be a reporter now...

Date: 2013-11-05 10:40 pm (UTC)
From: [identity profile] pklexton.livejournal.com
Please don't post our story on Facebook, even anonymized.

Date: 2013-11-05 11:12 pm (UTC)
From: [identity profile] pklexton.livejournal.com
Too late. Oh well.

Actually Rick probably qualifies for a free policy under medicaid, but we're not going to go that far. I like to think my support for this has nothing to do with self-interest but maybe I'm just deluding myself.

Date: 2013-11-06 05:14 am (UTC)
From: [identity profile] dr-scott.livejournal.com
Medicaid has serious problems with acceptance and doctor quality. Because reimbursements are less than Medicare's, most successful doctors won't take new Medicaid patients (which makes me wonder what will happen as it expands a lot without a corresponding increase in doctors that take it.) Much better (if one is in that range of income) to pay a little for the ACA plan.

Date: 2013-11-07 03:10 am (UTC)
From: [identity profile] tdjohnsn.livejournal.com
We're so lucky to have insurance through Ron's employer. We are right on the edge financially and if we we were forced onto the exchanges we would have to choose between health insurance and I don't even know what. We can't run our budget any tighter.



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