Affordable Health Insurance And The Individual Mandate

2015-06-25 09_54_46-Exemptions Screener _ HealthCare1.govMy biggest financial problem for 2016 is keeping my grandfathered health insurance plan and paying for it with pre-tax money. In 2014 and prior years my health insurance was affordable since it was completely paid for with money from a Health Reimbursement Account(HRA) set up by my employer. Health insurance for healthy people was affordable and the HRA allowed my employer to pay for my health insurance with pre-tax money. Like most health care decisions before the Affordable Care Act it was a no-brainer. Then we passed the Affordable Care Act and everything became complicated and more expensive. In 2015 HRA’s become an inadvertent casualty of the Affordable Care Act. The next casualty I suspect will be my grandfathered health insurance plan. So I have three options:

  1. Convince someone in government to allow me to keep my grandfathered health insurance for another year.
  2. Not carry any health insurance.
  3. Get health insurance from the exchange.

No one should be surprised that health insurance from the exchange is not affordable and the only happy customers are those getting subsidies. According to the Exemptions Screener, I should be paying no more than 8% of my income on health insurance. For a couple earning $63,721(400% of the federal poverty level) this is only $425 a month. Last November I looked up the lowest cost bronze plan and it was going to cost me $979 a month or $11,748 a year.  For a couple earning $63,721, health insurance would have taken 18.4% of their income. According to a couple like me would have to earn $146,850 a year before a health insurance policy from the exchange became “affordable”. Only the subsidized, wealthy, chronically ill, or naive would choose health insurance from the exchange.

With health insurance from the exchange costing $11,748 or more per year in 2016, self-insurance becomes a financially attractive option.  As a healthy family who has gone without health insurance in the past(1998-2008) and who is exempt from the individual mandate because I cannot purchase “affordable health coverage” from the exchange, the biggest financial risk is a hospitalization that costs more than $12,000. If you have the discipline to have a large enough emergency fund to cover future health costs then this is an attractive, financially efficient second choice. $12,000 per year will buy a lot of health care especially if you are a savvy buyer. If I could get a catastrophic care policy priced at 4% of my income this would be my number one choice since it would be the best of both worlds, encouraging both healthy living and saving for medical expenses.

My first choice is to keep my existing health insurance and to convince the government to reinstate HRA’s for companies with less than 50 employees. My health insurance plan is almost as affordable as the subsidized insurance from the exchanges. As a person who has not filed an insurance claim in the last 15 years, I am by definition the perfect health insurance customer. It is probably in the best interest of the insurance industry to do whatever it takes to keep me as a loyal customer. Although my employer gave me a $500 a month bonus this year to pay for my health insurance I would be financially better off if that money went into a HRA. Taxing a health care bonus is just plain stupid. Once again it is in the best interest of the insurance industry to bring back the HRA before I get comfortable going without health insurance.

Did Jonathon Gruber Advise The FCC Commissioner On How To Pass Net Neutrality?

As a long time IT guy I am embarrassed to say how much time I wasted trying to figure out what the FCC’s version of “Net Neutrality” means? It was as if the FCC was deliberately trying to make their reasons for increasing internet regulation as difficult to understand as possible. They seem to be using the same lack of transparency tactic Jonathon Gruber made famous. Whether you are lying about health care policies or Internet regulations, it looks like political suicide on the big stage. As both a retail and commercial Internet client I have no idea what problem they are trying to solve that would not be solved faster and better via the marketplace.

I think we can agree that the Internet is a fairly, robust free market. On the other hand health care is a heavily regulated market and the additional Affordable Care Act regulations did not make health care more efficient or result in better health care outcomes. So if the government cannot wring out increased health care efficiency in a heavily regulated market like health care, what do you think the chances of continued Internet improvements are when the government is converting a robust free market into a heavily regulated market. Is this change as potentially disruptive to the internet market as the federal government’s last technology flop,, was to the health care market? The government technology track record is pretty dismal. They violated practically every software development best practice known to man in developing and then acted surprised that the site did not work and ran over-budget. This Administration is not technologically savvy so it is way too early to risk killing our golden goose for nothing.

May be it is best to listen to the concerns expressed by FCC commissioner, Ajit Pai. Click on this link to view the Bloomberg interview.

Fixing The Affordable Care Act

One of the major problems I have with fixing the Affordable Care Act is that we are being led by a bunch of morons. Bob Laszewski said “about everybody believed about all of the states would establish their own exchanges” and what do most of the states do? We go from every state wants to set up an exchange to almost no state wants to set up their exchange. Doesn’t anyone see this as a major problem with making health care simpler, better, and more cost efficient? So these same folks have now focused their attention to preserving subsidies rather than making our health care system work better. Unfortunately preserving subsidies turned into an unnecessarily complex, cost shifting system that requires an unknown number of IRS minions to enforce. Okay, we screwed up. Now is the time to fix it before we turn our health care system into a VA system on steroids. What would it take to make state exchanges work? State exchanges would require a simpler system that minimized development and ongoing costs. Fortunately for us states have limited budgets so complicated systems that do not add value to the customer is not an option. Streamlining or replacing the subsidy system with a simpler cost shifting system that could be implemented in a state exchange without much difficulty would be the first priority. It sounds simple. Instead we seem to be locked into a complex national health exchange we did not want and will most likely fail.

My own observation, having closely watched the original Obamacare Congressional debate, is that this issue never came up because about everybody believed about all of the states would establish their own exchange. I think it is fair to say about everyone also believed a few states would not establish their own exchanges. Smaller states, for example, might opt out because they just didn’t have the scale needed to make the program work. I don’t recall a single member of Congress, Republican or Democrat, who believed that if this happened those states would lose their subsidies.

Can We Start Talking About Gutting The Affordable Care Act?

Until the Progressives are willing to perform a seppuku on the Affordable Care Act, health care reform will be stuck on stupid. I hate to be brutally honest but there is not much left to gut when you look at all of parts of the Affordable Care Act that have been delayed. Since the Democrats wrote the bill by themselves, they own the Affordable Care Act problems and gutting the bill is preferable over a long prolonged death.  When the smarter half of the Democratic party drew that imaginary line in the sand, they were of the opinion that health care reform cannot not succeed unless we get a majority of the states to set up health exchanges. For both political and governing reasons this form of co-operative federalism depends on states being willing  participants. Without a majority of the states participating via state exchanges the backup plan of a federal exchange would transform the law  into a plain old federal power grab built on the shifting sands of administrative law rulings. This smarter half probably viewed the federal exchange scenario as a recipe for political and governmental disaster and extremely hazardous to their re-election. Unfortunately they were proven right. The roll-out was a grim reminder that our federal bureaucrats are not as competent as we thought and if you want to create a really big problem, the first step is to make it a federal program. The problem we are faced with now is that we are ignoring our past mistakes. Ms. Greenhouse in her article, “By Any Means Necessary”, seems to think that we can safely ignore the legal problems and the lack of political consensus. In a way she is advocating the idea that laws do not matter if it impedes the society’s greater goal, health care reform. This is what I call the “even a blind squirrel finds a nut once in a while” management style or otherwise known as management by accident. This is the evil twin of the more successful management style employed by businesses called management by objective. The management by accident approach is based on the hope that if we have enough people stumbling around trying to fix things they think might be wrong then we will eventually fix all of the Affordable Care problems regardless of how badly the law was written or administered. All we need is money, people, and lots of patience with government failures. This might be an acceptable solution in the federal bureaucratic universe but it reminds me why the roll-out was such a miserable failure and why my insurance premium continues to go up despite promises otherwise. It should be amusing to see who gets the blame if the number of uninsured returns to historical norms this Fall. This is the Progressive’s proudest Affordable Care Act achievement.  Will we be reminded once again that the Affordable Care Act was a health reform in name only? If this is the Progressive idea of health care reform then would someone  “wake me when it’s over.”

The Federal Health Insurance Exchange Is A Lousy Tool To Fix These Health Care Problems

I was reading John Graham’s post, What is To Be Done with Health Insurance Exchanges, Post-Obamacare?, and could not resist saying the federal health insurance exchange is a lousy tool to fix these health care problems. Here are my reasons.

1. The cost of health care for people with high cost, pre-existing conditions is being spread across a fairly small group of people buying their health insurance via the exchanges. If health care for people with pre-existing conditions is society’s responsibility than the cost should be spread over a much larger group of people. Until we solve the problem with paying for pre-existing condition health care in a more equitable manner, health insurance exchanges will be plagued with high risk premiums and are likely to fail.

2. Health exchanges in general are a lousy way to subsidize health insurance for people earning less than 400% FPL if you want to control health care costs. This is the same problem faced by expanding Medicaid. The Oregon Medicaid experiment leads us to speculate that this group of people will consume more health care services without an improvement in health care outcomes. A health insurance credit is probably a step in the right direction of simplifying the subsidy system while providing subsidies and cost control incentives.

3. With the market distortions from pre-existing conditions and subsidies and overall incompetence in the roll-out, it is hard to imagine health insurance exchanges as an adequate substitute for the fair, unbiased health insurance market place we expected in 2013. As a person who has purchased health insurance from in the past, I have to assign blame for the overall incompetence of to politics. The ACA made purchasing health insurance unnecessarily complicated. When you combine the public’s unfavorable view of the federal health exchange with its history of being a political football, this would be a good time to look at a replacement that involves less federal government and political partisanship. The original ACA plan relied on state exchanges and we should go back there in a modified form. My personal favorite idea is to simplify the enrollment process and replace the federal exchange with state exchanges run in cooperation with insurance companies and insurance marketers. and other companies like them already had the infrastructure in place. You can call this the Halbig solution with adults in the room. If we cannot get rid of the amateurs in the federal government we should at least minimize their damage.

Things That Make Me Go Hmm… Are Health Exchanges Medicaid For The Middle Class?

I have been thinking about this HHS quote I saw on a Zane Benefits blog post today. It got me to thinking. Are health exchanges sustainable if only 13% are paying the full price for health insurance? If health exchanges are not sustainable without government subsidies then they begin to look like Medicaid for the middle class. Does this mean that we are gradually turning our health care system into one modeled after Medicaid? I want the old health care system! It was not only cheaper but it provided me with better health care options than this new, improved one.

According to the U.S. Department of Health & Human Services (HHS), 87 percent who purchased health plans through in 2014 qualified for premium tax credits, with the tax credit covering 76 percent of the premium cost.