Who Knew Healthcare Could Be So Complicated? Part 3

Dear Donald –

We’ve already talked about the basic structure underpinning the ACA and the impact of the GOP bill on precipitating a death spiral by penalizing people who reenter the marker rather than those who stay out of it. Today I want to talk about subsidies. 

Health insurance can be expensive, so the ACA expanded Medicaid eligibility to anyone making less than 138% of the Federal poverty level and provided subsidies and tax credits to help those not enrolled in Medicaid purchase insurance on the private market. Now, let’s think about who needs help paying for insurance. Chances are, folks who don’t have much income are going to have a harder time being able to afford insurance than people with more money. Let’s say you have a $3,500 per year insurance plan. A 28 year old earning $20,000 per year will gave a much harder time covering that cost than a 55 year old making $100,000 per year. The ACA recognized that and made tax credits available to individuals purchasing private insurance on a sliding scale based on income. 

But wait. Money isn’t the same everywhere. Cost of living varies widely in this country and $75,000 in New York City doesn’t go nearly as far as it does in Sandusky, Ohio. That’s why the ACA actually made their tax credits not only contingent on income, but also on location. 

Those seem like smart designs. 

Now, let’s change things up a bit. First off, instead of giving subsidies to people based on income, the new Reoublican plan bases subsidies on age. Even though a 30 year old and a 50 year old may have the same health care plan, the 50 year old gets a bigger subsidy, even if she makes two or three times as much money as the 30 year old. Under the Republican healthcare plan, anyone making less than $75,000 per year, or couples making less than $150,000 per year, qualify for tax credits based on age. The subsidies increase by $500 for each decade of age, maxing out at $4,000 for individuals 60 and over. And that’s not all, those earning above $75,000 per year can get subsidies too, they just decrease the value by 10% of the amount you earn over $75,000. So a 60 year old earning $95,000 per year would get a tax credit of $2,000 ($4,000 minus 10% of $20,000). Similarly, a 22 year old making $15,000 per year would get a tax credit worth $2,000. 

Under what circumstances would two people making such vastly different sums of money need the same help to buy the same thing?  The only people this plan really benefits are wealthier and slightly older people. Young, low income people end up losing out in a major way. 

Particularly for those just above the poverty line, who don’t qualify for Medicaid (at least under the Republican plan), the $2,000 tax credit may be their only option for insurance coverage, and what kind of plan can you honestly buy for that? 

The Republicans have made a stock industry out of playing generations off of each other.  Any conversation about entitlements quickly sells out the young for the benefit of the middle aged, having decided long ago that younger generations should pay the price for years of financial mismanagement to benefit boomers.  

Paul Ryan recently said that the healthcare bill is about creating a fairer tax code, but let’s be honest, the only thing that fairer can possibly mean in this context is “more beneficial to older richer people”. That’s who Fepublicans have always been more concerned with, and nothing changes here. 

On Monday, minimum coverage requirements.  

Who Knew Healthcare Could Be So Complicated? Part 2

Dear Donald –

Yesterday, I wrote about the basics of how  we get from covering oreexisting conditions to the ACA in a few logical steps. Today, I wanted to start going through the GOP replacement bill and see how it stacks up. Last night (or should I say this morning) the Ways and Means Committee approved the bill after an 18 hour session. I’d be willing to put good money on the fact that most of the “yes” votes haven’t fully read the bill considering it was only out for less than 48 hours before the meeting started. To be fair, I don’t think many of the “no” votes read the bill fully either, but they knew there were enough bad provisions to poison the entire thing, regardless of anything they might have agreed with. 

Let’s start with what is basically the linchpin of the entire ACA – the individual mandate. Without it, insurance pools quickly fall into a death spiral as healthy people drop out of the market and leave the sick ones behind. Since the very beginning, Republicans have attacked this provision as a direct assault on freedom, democracy, and apple pie. They argued that, by requiring individuals to purchase health insurance, you were mandating their participation in a market that they might not want to participate in. They said it was akin to requiring everyone to eat broccoli. As bizarre as that analogy is (who wrote that talking point? Someone’s four year old refusing to eat their vegetables?)it’s also way off base. Most traditional marketplaces actually provide a genuine option for non-participation without negative externalities. Basically, I can choose not to buy broccoli and it doesn’t really hurt anyone who does choose to buy broccoli. Health insurance is different. First of all, I can’t really choose not to participate in the healthcare system. By being a living breathing thing, I will at some point get sick or have an accident that requires medical care or die. At any of those junctures, I will interact with the healthcare system. My very existence is a guarantee of eventual market participation. 

As for the second issue, my decision not to purchase health insurance actually harms those who choose to purchase insurance. By not buying insurance, I operate outside the risk pool and drive up costs for others by either being exceptionally costly to serve when I join or by driving up the costs by not being able to pay my bills out of pocket as Heath care providers inflate what they charge insurance to cover the cost of the defaults. 

Regardless, Republicans HATE the individual mandate and made it a key piece of their repeal agenda. So what did they come up with?

An individual mandate that incentivizes staying uninsured for as long as possible. 

Remember, the ACA mandate charges individuals an annual tax as long as they stay uninsured and the government uses that money to help offset the costs of insuring more people. Under the replacement plan, individuals who lose their health insurance or let their coverage lapse would not be taxed by the government. Instead, private insurers would get to charge them extra when they do finally Get insurance again – up to 130% of the standard rate. That’s right, the Republican plan to end the individual mandate, increase coverage, and bring costs down keeps the mandate, penalizes those who are net covers when they decide to re-enroll, and increases costs. 

Let’s start with a basic issue – inertia. People, like objects, are content to keep doing what they’re doing unless something makes them change. The ACA penalty does that.  It makes staying uninsured costly. The new plan makes staying uninsured ideal, particularly when the cost of insurance would be 30% higher than it was when you lapsed coverage. Let’s imagine someone paying $5,000 per year for healthcare which they let lapse. Suddenly, they have the extra $5,000 per year and no penalties. Then, should they choose to reenroll, doing so could now cost them $6,500. What’s my incentive to re-enroll then until I absolutely have to have coverage – when I’m going to be the most expensive to the insurer and when I’m most likely to help precipitate the death spiral. The penalty is on those who choose to re-enter, not those who left, so the incentive is to just not re-enter. 

Next, note that now the penalty would get paid out to the insurance companies, not to the government, meaning that the global harms I may have done to the insurance market are offset with payments to private industry. The government no longer can use those funds for more genral welfare purposes. They get used to inflate CEO bonuses, not subsidize healthcare for low income Americans. 

It’s a truly bad idea that incentivizes all the wrong behavior and rewards the wrong actors. As a general rule, you penalize people doing what you DONT want them to do; you don’t penalize them for doing the right thing. Tomorrow, subsidies. 

Who Knew Healthcare Could Be So Complicated? Part 1

Dear Donald –

Seven years in development, and we finally have the GOP healthcare bill to replace the Affordable Care Act (aka Obamacare). And it’s bad.  Really bad. Despite all of the promises they’ve made over the years, this bill is really a slapdash of conservative talking points without any real cohesive vision. As you said, who knew healthcare could be this complicated? (other than anyone who’s watched the news or read a paper in the last decade or so) so I figured it’d be worthwhile to take some time and send you a few notes about some of the main pieces to help you understand what’s really at stake. 

Let’s start off with the basics. Insurance is about pooled risk. That means that it’s all about getting enough people to buy into the program to cover the costs of just a few of them needing payouts. For example, if I’ve got 100 people in my insurance pool each paying $1,000 then I’ve got $100,000 to make payments. If the folks I’m insuring need $150,000 in payouts, then I’m losing money. The whole idea is to balance high risk people with low risk people, preferably with a focus on the low risk ones so there’s money left over to pay salaries and such. 

Prior to the ACA, people with preexisting conditions had a hard time getting insurance coverage, mostly because the risk of payout was too high for insirers  As a result, people had to forego coverage for those conditions or join what is known as a “high risk pool” – a group of people whose risk of payout was much higher than normal, so the premiums were much higher. Needless to say, many folks couldn’t afford to join these high risk pools and just didn’t have coverage. 

One critical feature of ACA is what is known as “guaranteed issue,” which means that insurance companies have to offer insurance to everyone, regardlesss of preexisting conditions. However, the standard approach of insurance companies to guaranteed issue is simply to charge those higher risk people more money. To make sure that people can actually afford coverage, the ACA required guaranteed issue at the standard rate, meaning that they couldn’t charge high risk people more. That creates a problem for insurers though, because then individuals with these conditions have no incentive to maintain coverage, as they can wait until they get sick to buy insurance, meaning that the only people in the insurance pool are costly and the insurer can’t charge them more. We’re stuck again with a $100,000 pool needing $150,000 in payouts. As a result, the insurance company needs to raise the standard rate to cover the payouts. Now, they want to charge those 100 people $1,500 each to cover the payouts. That price increase will drive more people out of the market who don’t need the costly payouts. That means less money into the pool while the remaining people are sicker than average. And on and on and on. This is the “death spiral.”  Insurance companies have to keep raising rates to offset costs which drives more people out leaving sicker people behind. 

To stop the death spiral, insurers need a crop of healthy low risk people to offset the costs of the sicker, high risk people. And that’s the individual mandate. By making everyone buy insurance, the ACA protected insurers against the death spiral.  The individual mandate was enforced by assessing a penalty on anyone who didn’t maintain coverage and continued to assess it as long as they remained uninsured. Those funds went to the government to help finance the expansion of Medicaid for low income people who couldn’t afford to buy private insurance. 

Now that everyone’s got to buy insurance, you’ve got to make sure that (1) they’re not being charged exorbitant prices and (2) they’re actually receiving something worth buying. To address the first issue, the ACA capped the profit margins that insurance companies could have. If insurers neded up making more than a certain percentage profit, it meant they were overcharging the pool of consumers for their own benefit. In such an instance, insurers are required to reimburse consumers. They still get a profit, but that profit isn’t unlimited, recognizing that consumers, under the individual mandate, don’t have be option not to participate in the market. 

To address the second issue,the ACA required all insurance plans to offer a basic level of coverage. Think of it like car companies being required to offer a minimum range of safety features in their vehicles – they have to have headlights and seatbelts and turn signals and brakes. You can make a car with less features, but you can’t drive it on the road legally because it would put both the driver and other people on the road at risk. An insurance plan that didn’t cover basic items still put consumers at risk of catastrophic expenses that would go uncovered,  making them just as good as uninsured. Additionally, it put all other consumers at risk because if they couldn’t pay the cost of that extra uncovered illness, the costs would get passed on to everyone else. 
So, yeah, healthcare is complicated. But it’s also pretty straightforward. If you start with the premise that people with preexistingcinsitions should be able to get insurance and they shouldn’t have to pay exorbitant rates, you pretty quickly get to ACA. That’s just the way it is. Tomorrow, we’ll start to discuss how your Republican friends are screwing it all up. 

Gold Star props

Dear Donald –

Your speech last night has been getting decent reviews, with most outlets praising your “tone” – a clear sign to me that the bar is incredibly low for you right now. Truthfulness or policy prescriptions don’t matter as much as whether or not you seemed batshit crazy up there. Case in point, one analysis showed 51 falsehoods in your 61 minute speech, and yet the reviews aren’t talking about that. 

All that aside, there’s one moment in particular I’d like to talk about.  During your speech, you made a point to recognize the widow of Ryan Owens, the Navy SEAL killed during the botched raid in Yemen you ordered last month. It was a poignant moment, no doubt. But there are some major issues underlying it that many outlets are glossing over.

First, the raid itself. As I’ve noted before, you ordered the raid over dinner with General Mattis, Steve, and Jared without being fully briefed about the operation. Multiple civilians were killed, including an American girl, and Ryan was also killed. And for all that, we got intelligence that was already easily available online. In short, it was a debacle. It’s amazing that it hasn’t snowballed more than it has. 

Despite that fact, you continue to tout it as a major success, as you did last night, saying that the intelligence gathered makes Americans safer. But you still refuse to take responsibility for Ruan’s death. In an interview with Fox News that aired yesterday, you tried to pin responsibility on the generals, saying that they wanted to do it and “they lost Ryan.” No. Incorrect. You’re the one in charge. You’re the one making the decisions and you have the green light. Ryan’s blood is on your hands. Without your sloppy management and laissez fairer attitude about military oversight, he would still be alive today, as would the 15 civilians killed. 

You never saw combat. You got three deferments from the draft, using daddy’s connections to get out of serving your country when everyone had to go. Ryan signed up and volunteered when he didn’t have to. He was a true hero who understood service and sacrifice. For you to treat his life so callously should be an affront to us all. 

Instead, we have a draft dodger using the widow of an American hero he ordered to his death as a prop in his speech designed to further his xenophobic rhetoric and justify sending more men and women to their deaths. 

And the news talks about “tone.”

Immigration order

Dear Donald – 

A cornerstone of your campaign, since the very beginning, has been the demonization of immigrant communities. Whether it be your statements about rapists and murderers, border walls, or Indiana born judges, youveconinually sought to isolate, fear monger, and scapegoat immigrants. Last week, your Administration used the powers uou now wield to start your long-promised crackdown. 

Your immigration order vastly expanded the number of individuals subject to immediate deportation. The Obama Administration focused its efforts on “hardened criminals” – those convicted of serious felonies and repeat offenders. Your new order prioritized these folks, but also those charged with a crime (even if they haven’t veeen convicted), and those who could be charged with a crime. Since anyone in the county without a visa could technically be charged with a crime, you essentially “prioritized” everysingle  undocumented immigrant in the country. 

You ordered the hiring of 15,000 new border patrol agents, a 75% increase over current levels. The last ramp up was played with problems, driven largely by an inability to find qualified staff. There are even a huge number of vacancies today. If we can’t fill the positions we already have open, how are we going to massively increase staffing without cutting some major corners in vetting applicants? And with populations as vulnerable as those coming across the border and concerns about undue influence from coyotes and drug smugglers, CBP officers need to be beyond reproach. 

Your order increases the number of people subject to expedited review and deportation (from those in the country less than 2 weeks to those here less than 2 years). Functionally, this means you’ve dramatically increased the number of people who will not receive a hearing or adequate due process prior to deportation. How is denying due process to anyone an American value?

You’re also trying to expand a program that deputized local law enforcement to participate in deportation actions, meaning that immigrant communities are less likely to engage with law enforcement, even when they need them. For example, if I know my neighbor or brither or coworker is undocumented, am I going to call the police when I get robbed or abused if I think they might jail and deport the people I care about? Let alone if I’m the one subject to deportation. Undocumented immigrants in this country are already subject to substandard treatment because people know they’re less likely to report violations. Why exacerbate that problem? You only drive them further into the shadows. 

We all already know about the case of Guadalupe Garc├Ča de Rayos, but more stories are coming out now. There was a woman in Texas who was removed from a hospital when she was seeking treatment for a brain tumor. And the woman who was arrested when trying to file a complaint against her domestic abuser. These stories will only continue to grow as the deportation force continues to sweep across the country. 

I can only hope that Americans of good conscience stand up against this travesty of justice and make their voices heard.