I realize that the gift came a little early for Christmas but for all of the fans of small government the thought is appreciated. It has been practically impossible to convince the majority of the people that big government can be a big part of the problem until we saw the stumbling, bumbling failures surrounding the rollout of www.healthcare.gov. The Affordable Care Act supporters did something to the American people that the Tea Party could never accomplish. They convinced the American people that when it comes to health care reform, if you want a really big scandal you need a federal program! This week a Pew poll confirmed that “seventy-two percent of Americans say big government is a greater threat to the U. S. in the future than is big business or big labor, a record high in the nearly 50-year history of this question”. When I started working in 1976 only 38% of Americans viewed big government as a greater threat to the future of the U. S. With health care expenditures in the United States at about 18 percent of GDP, is this an indicator that we are winning the race to the bottom and we need to stop doing health care the way we have done if for the last fifty years. When you combine the allegations of mismanagement and lying with the thought that we are asking the IRS to force individuals and businesses to buy health insurance, part of the problem can now be laid at the feet of big government and federal programs. It is very easy to dismiss the Affordable Care Act as more of the same with more subsidies rather than an attempt at health care reform. It was a missed opportunity for big government to demonstrate that they can improve health care better than local or state governments. As the people who purchase health insurance in the individual market have found out, you should be very worried when someone says we are from the government and we are here to help!

My health insurance plan’s grandfather status expires in 2014. Before the end of 2014 I will have to choose a new plan and since I can take advantage of the subsidy available from the exchange I will either purchase the new policy from the exchange or go without health insurance. Since I recently went without health insurance for nearly ten years both options are reasonable financial options for my family. For the past five years I worked for a small business who offered a $6,000 per year HRA to their employees. I used $4,700 of this money to purchase a silverish-bronze plan health insurance plan with $3,000 deductible and a $5,000 out of pocket cost. Since I had $1,300 still left in the HRA to cover miscellaneous health care costs my net financial liability was approximately $1,700. As a healthy family my out of pocket costs from 2008 to 2013 has been zero. Naturally I would like to duplicate this strategy in 2015.

When I look at the current premium costs available through the exchange I am confronted with this premium versus deductible versus out of pocket cost dilemma. Here are my choices using 2014 premium rates to guide me.

1. I can achieve the same results with the lowest cost bronze plan(Healthspan HMO) with a $6,350 deductible. I will still have $1,300 for miscellaneous out of pocket costs which may be pretty handy with a narrow network HMO. I view this insurance as catastrophic care coverage or a slightly improved version of Medicaid. In fact several insurance companies participating in the exchanges specialized in serving the Medicaid market. To achieve the same piece of mind I had in 2013 I will have to save an additional $4,650 and put that into an emergency fund to cover the larger deductible. The good news is that the first $1,300 is already covered.

2. To achieve the same results with a silver plan(Anthem PPO cbey) I will have to shell out an $124 per month in addition to the company contribution because the silver plan is more expensive. Since there will be no excess funds left in the HRA and the insurance deductible is $5,000, I will have to save an additional $3,300 to achieve the same piece of mind.

When I look at the out of pocket costs and the network restrictions both the bronze and silver plan are inferior to my 2013 plan but better than going without insurance. If the subsidy disappears or if health insurance premiums significantly increase then the going without health insurance plan becomes the better financial alternative. If I have to choose a new plan and I do not have problems with a narrow network HMO then it makes more financial sense for me to trade down to bronze plan than to trade up to the silver plan. Regardless of which plan I choose I will have to increase my savings to cover the additional uncovered risk the Affordable Care Act has brought to the table.

The Affordable Care Act and I have never gotten along. As a healthy person who purchases their health insurance in the individual market, I had a target on my back. For the Affordable Care Act supporters there is something evil about healthy people that needs to be suppressed. I don’t understand their quixotic logic but wishing it would go away is not helping. So I reluctantly assumed the position of designated whipping boy in their quest for health care reform. I was told to overlook my plight and remember that my sacrifice will usher in a whole new era of health insurance for for the uninsured and chronically ill. My inner cynic said that it seemed more of power grab than a genuine concern for the good of others. It reminded me of this line out of the novel, 1984.

“The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power, pure power.”

Still I was comforted by those conservative principles expressed by the President and other Affordable Care Act supporters that said I could keep my insurance and doctor if I wanted to. I even took the President up on his offer to look for a better health insurance plan offered in the exchanges. Surely the supporters would carry over enough of the old system to avoid an unnecessary introduction to Murphy’s Law. At the very least, they would offer a more affordable insurance option through the exchange. I looked, analyzed the plans, and finally decided  that for the President and the Affordable Care Act supporters, words are cheap! It was just a means to the end. I was happier when I thought I was the only Affordable Care Act loser and am disheartened to see that they seem to have gone out of their way to piss off people. So let me identify my first five losers you may not be aware of. I am keeping number 6 for another day.

1. The subsidies for the individual market come from that odd political threesome of Medicare Advantage “overpayments”, a tax on medical devices, and extending Medicare tax on incomes up to $250,000. So let me see if I understand this. We are taking money away from Medicare to subsidize insurance for the young in the hope that if enough young people sign up we will have enough money to subsidize those folks who have pre-existing conditions who are predominately elderly. If that is not weird enough for you, the only bipartisan agreement in health care debate is to revoke the tax on medical devices since it will likely increase health care costs. The only sustainable part of this plan that does not increase health care costs elsewhere is to increase the Medicare tax on the wealthy. It may be gallows humor but it sure looks like the politicians are gleefully looking forward to a massive to a passive, aggressive experience.
2. I was surprised to find that even with a subsidy I had to choose a HMO plan with a pretty narrow hospital network that I am not familiar with or pay a lot more money for a PPO that covers my network. As Ezekiel Emmanuel might say, “You can keep your PPO if you willing to pay more money”.  Is my preferred hospital network a loser? What made them a villain?
3. I was surprised and humbled to find that the insured but chronically ill people can be losers, too. I never expected that the Affordable Care Act would screw the chronically ill! If the doctor or hospital you are using is not part of the exchange insurance plans, you are going to have to change. In other cases the doctor and hospitals are covered but at a much higher cost.
4. As Emmanuel and Gruber will readily admit, it was part of the Affordable Care Act plan that a lot of insurance plans would be canceled and replaced with insurance plans that covered the “Essential Benefits”. The first phase was to cancel the health insurance available via the individual market. I suspect that the people with canceled plans are in shock. Since they are forced to be Early Adopters of www.healthcare.gov and pay higher insurance costs, they are responding with a very typical passive, aggressive response. A typical response by these designated losers is that the Affordable Care Act was supposed to screw “other people”, not them. At least they had showed the individual responsibility to purchase their own health insurance without a government subsidy. The second phase is going to get a lot more dicey since many of the grandfathered individual and group plans will be canceled in 2014. I doubt our politicians want to go to town meetings with a large group of people who have just found out that they are Affordable Care Act losers.
5. I am still puzzled how does one replace Medicaid with a subsidized health insurance plan? I have a relative who is struggling with getting her life back together again after multiple bouts with unemployment. If she goes to www.healthcare.gov she will be automagically enrolled in Medicaid if she tells the truth about her income. If she knows the Medicaid income limits and purposely lies about her income, she can get a subsidized plan. I was curious what she might do since I believe that she is a good prospect to purchase and maintain health insurance. In her transition from part-time to full time employment this would be a nice personal goal. It certainly would enhance her self-esteem if there was a path for her to start paying for health insurance that did not require lying. I realize that the Affordable Care Act plan was to automagically enroll people in Medicaid if they have insufficient income. This fulfills a quest by Affordable Care Act supporters to reduce the number of people without health insurance but it creates a new problem.  How do we encourage people to transition people from Medicaid to subsidized health insurance to normal health insurance? Between these two quests which is the greater good or can we do both? Is this a case where life imitates art and “you can check out anytime you like, but you can never leave”?

Image courtesy of Wikipedia.

One of my biggest regrets about the Affordable Care Act is that it really does not improve health care. The Affordable Care Act made some changes to the way we pay for health insurance but we are still stuck with the inconvenient truth that health insurance does not heal people. Hospitals, pharmaceutical, and medical device companies do not heal people either. If we distill health care down to its bare essentials, it is the health care professionals who heal people and I remain unconvinced their job got easier or more effective with the Affordable Care Act.  It might seem obvious but if we are going to improve health care and reform the cost structure then it would make sense that we should focus on the health care professional/patient relationship. The Affordable Care Act took a different tack and seems to be inordinately focused on expanding a flawed third party payer system. From this viewpoint we can see that as much the Affordable Care Act was a political success, it has been a health reform failure. When I started working in the 1970s the third party payer system was still a pretty effective to pay for health care. Forty years later it has declined to the point where it is viewed as one of the major problems impeding health care reform and I am once again thinking self-insurance is a feasible plan. Even when the Affordable Care Act supporters reluctantly admit to the third party payer system failures they cling to the belief that expanding the system is a price they are willing to pay if it expands access to health insurance to the poor.  I do not see a good future for health care reform with an expanded third party payer system. To those people who had their health insurance plans canceled and replaced with higher cost plans, the Act has increased their financial burden. They are the designated Affordable Care Act “losers”. To the poor who were not paying for their health care, it is much ado about nothing. It does not matter to them if the emergency room accepts Medicaid. The financial burden of hospital care was never going to be their problem. The only potential winners are the people whose subsidized insurance is less than their current plans. This dependence on subsidized insurance keeps reminding me of the insurance subsidies in the Farm bill. As I was pondering alternatives to the Affordable Care Act subsidized insurance I ran across the TriHealth pricing page and was surprised with the discounts they offer based on family size and income level. The biggest attraction of the Affordable Care Act exchanges was already being offered by a local hospital. Here is the table from their page.

I am left to ponder one final question. If we have an example of a direct financial subsidy system that does not require the Individual or employer mandate, why did we choose the Affordable Care Act option with its inefficient scheme of subsidized insurance?

Yesterday I pointed out an interesting oddity in the Insurance cancellation debate and today I read a more extensive post by Adrianna McIntyre on The Incidental Economist about the Administration’s plan to “help” the people whose health insurance policies are being canceled. Like all policy changes there are winners and losers. Here is my comment.

In a narrow sense some insurance companies may benefit from this ruling. As an example my policy with Aetna in Ohio is grandfathered since I acquired the policy before March 23, 2010. According to Aetna, policy holders who acquired the policy after that date are not grandfathered and are being canceled even though the policy will continue for people like me in 2014. Since Aetna is not participating in the exchange it would make business sense for them to un-cancel those policies acquired after March 23, 2010, which are just like existing grandfathered polices because they could hold on to existing customers.They become the hero. This a much bigger dilemma for companies participating in the exchanges like Anthem since they are going to get a lot more money by pushing their customers into the exchange. Any way you slice it, they become the goat.  Once again we are reminded that no good deed goes unpunished.