The Devil Is In the Details

by Dave Schuler on February 7, 2014

Mickey Kaus points out some of the issues in the PPACA that are becoming apparent as the program actually gets off the ground:

We know what happens when people who claim subsidies on the Obamacare exchanges underestimate their income–the IRS will grab the unwarranted part of the subsidy back at tax time. And we know what happens if they overestimate their income–they’ll be refunded the subsidy to which their lower income entitled them.

But the poorest Americans don’t qualify for subsidies on the exchanges. If they make less than the poverty line –about $20,000 for a family of three–they’re steered to Medicaid. (In states with expanded programs, they’re apparently sent to Medicaid if they make less than 138% of poverty, according to the Kaiser subsidy calculator). So what if someone is near the income boundary between the two programs–and what if this person overestimates their income, and thinks they qualify for a subsidized policy on the exchange–but it turns out they didn’t make what they thought they’d make. Maybe they didn’t get some work they usually got in the past, or their wages got cut, or they got laid off. According to the income they actually earned, they should have been sent to Medicaid. They didn’t just get too much or too little subsidy. They used the wrong program.

And then there are the impossibility for many people of knowing what their income will actually be, the incentives for cheating, and so on. I don’t think it’s just a case of the problems that occur when any major program is rolled out. I think it’s a problem of when a program is prepared in haste and implemented by people who aren’t particularly detail-oriented, don’t really know very much about the healthcare system as it exists in practice, and are predisposed to make terribly bad decisions based on a flawed notion of human nature. Not to mention that they might be motivated to make their decisions based on the politics of the situation rather than its pragmatics.

All of this points to the preferability of doing something like the PPACA on a state-by-state basis so that at the very least the problems that inevitably emerge won’t be happening everywhere at once and the damage can be controlled. There are, after all, real people with real problems and real lives that are at stake.

{ 19 comments… read them below or add one }

michael reynolds February 7, 2014 at 9:02 am

No, that’s not the problem with Obamacare. The problem with Obamacare is that the lousy roll-out compounded by the intransigent stupidity of Republicans who don’t give a good god damn that people are unable to get medical care, have scared their ignorant goober voters into going without.

Meanwhile, in the civilized world: http://www.marinij.com/marinnews/ci_25070979/marin-other-bay-area-counties-exceed-health-care

More people than expected in the Bay Area signed up for health care under the Affordable Care Act through the end of the year, state health officials said.

In the nine county Bay Area, which includes Marin, 116,635 people enrolled in subsidized and non-subsidized Covered California health insurance plans from Oct. 1 to Dec. 31, according to Covered California, the state’s health care insurance exchange, and the California Department of Health Care Services.

Those three months represent 130 percent of the base projection of 89,599 that Covered California anticipated for the region during the six-month enrollment period, which ends March 31.

The problem is that a need clearly exists, a solution is clearly in-hand, but large numbers of Americans live in Republican fiefs and are losing out because Republicans would rather have a political issue, no matter how false, and no matter how many more people must be bankrupted by illness. Of course those are only humans and nowhere near as important as scoring political points.

... February 7, 2014 at 10:06 am

From the ancient time of January 27th, 2014:

An interesting point is made in this article: as of this writing the PPACA has resulted in a net decrease in the number of persons with healthcare insurance in California of more than a half million. In other words the number of persons insured under the PPACA in California would need to double between now and March 31 just to get back to where we were before the PPACA took effect.

PD Shaw February 7, 2014 at 11:02 am

As I recall the sequence, the ACA relied upon the tax code for subsidies because there was no support even among Democrats for additional spending following the stimulus, and relying on the pre-existing tax code structure was deemed more efficient than creating a new system. (I think using the tax code as a way to avoid the Constitutional problem with the mandate was secondary)

The problem was that taxes are finalized over a year later, and this approach was ridiculed for the reality that people who couldn’t afford the insurance would not be helped. I think Obama used rulemaking to make the subsidies available at the front-end, which in turn made enrollment extremely complicated, requiring computer systems to access a variety of different government databases to determine eligibility, leading to the computer problems.

I would also add that it is relevant that President Obama ran a campaign against McCain’s healthcare reform proposals on the grounds that it constituted the largest middle tax increase in history. That tied the hands of an alternative approach that relied more on government spending than tax deterrents and regulation.

jan February 7, 2014 at 11:19 am

The problem with Obamacare is that the lousy roll-out compounded by the intransigent stupidity of Republicans who don’t give a good god damn that people are unable to get medical care, have scared their ignorant goober voters into going without.

That is the most incomprehensible piece of rhetoric I’ve heard for awhile, in piecing together the reasons for the troubling, troubled implementation of the PPACA. Yes, the roll-out was incompetent, and is still not functioning to the standards most private sector people would demand in their business roll-out. But, it’s the history of this entire bill, including not one person of the opposition party, the republicans, being brought into the fold to construct this bill, accounting for not one person in that party to vote for nor support it in the aftermath of it’s continuing flaws and problems.

Like the caption of this thread reads — “The devil is in the details.” Those details of this bill include: it’s extremely long and convoluted machination of confusing words in a 2700 page bill that no one read beforehand; aided and abetted by numerous HHS alterations that totally changed the bill’s impact on people already insured, once it was passed; compounded by the WH imperialistically customizing the bill, without congressional collaboration, by delaying the mandate or creating subsidies for some, giving waivers to others, leaving the rest to fend for themselves in the chaos following the Oct. 1st roll-out; capped off by tens of thousands of pages of new, time-consuming rules and regulations for exchange physicians to process and put into play. Someone then casting blame away from the people creating, manipulating, having total oversight over the implementation of this bill has either an abundance of partisan temerity or just a chronic case of ideological myopathy!

michael reynolds February 7, 2014 at 11:27 am

Jan:

Tens of thousands of your neighbors and mine now have health insurance who previously did not.

But rather than focus on that, you complain the bill was too long. Soooo many pages!

Meanwhile, in places like Alabama people who qualify for Medicaid can’t get it and thus do not get care and get sick and run out of money. Actual human beings, Jan.

But hey, all those many many pages! Oooooh. So very long. So much reading. Gosh, can’t we get a Sparks Notes version? Or maybe a USA Today pie chart?

Your party is refusing health insurance and health care to working people all across this country in the states they rule, out of sheer spite. Meanwhile up here where you and I both live, people are getting health insurance.

... February 7, 2014 at 11:35 am

Tens of thousands of your neighbors and mine now have health insurance who previously did not.

does not reconcile with

An interesting point is made in this article: as of this writing the PPACA has resulted in a net decrease in the number of persons with healthcare insurance in California of more than a half million. In other words the number of persons insured under the PPACA in California would need to double between now and March 31 just to get back to where we were before the PPACA took effect.

unless you just want tens of thousands of new people to get insurance at the expense of those that already had it.

And it is entirely irrelevant if the insurance can’t get them in to see HC professionals.

jan February 7, 2014 at 12:45 pm

“Tens of thousands of your neighbors and mine now have health insurance who previously did not.
But rather than focus on that, you complain the bill was too long. Soooo many pages!”

This bill is handicapped by ideological obesity rather than augmented by simple, reasonable reform — plain and simple. The details of it’s one-sided passage is important, as no other massive piece of legislation has been passed under an arm-twisted one-party vote. Even Bush’s prescription drug bill had proponents and supporters from both sides of the aisle — a bill that I opposed.

As for the disappointing number of uninsured people enrolling in the PPACA, they are dwarfed by the number of people who have lost their health insurance, forcing them to seek (oftentimes reluctantly) another policy conforming to the unrealistic criteria of the PPACA — frequently more expensive and having fewer HC service options too. These individual policy disruptions, however, are but hors d’oeuvres to what has been projected by the government and others to come when the business mandate kicks in next year — amounting to tens of millions of people losing HC coverage through their jobs, and thrown out onto the exchanges, or elsewhere, to replace health insurance that met their needs. As you might recall, anywhere from 85%-90% of people expressed satisfaction with their health insurance before the PPACA was imposed on everyone. I’m sure that is certainly not the case now.

Your party is refusing health insurance and health care to working people all across this country in the states they rule, out of sheer spite. Meanwhile up here where you and I both live, people are getting health insurance.

That is fictional rage, on your part Michael. For one thing, I have been a conservative democrat for decades, who last year changed my party affiliation to independent. And, while neither party really reflects a balanced composite of my social/fiscal views, I lean towards the R’s simply because they make more economic sense, seem far more tolerant than the democratic party in allowing dissenting perspectives without personal attacks, and appear to have less insufferable denial over mistakes made.

Even now, as you are lauding this program, the Obama administration is looking to make yet another unilateral change to the PPACA. This time they are trying to assuage the tremendous loss of insurance (6.2 million policies) by asking the insurance companies to extend those “unworthy,” governmentally-defined sub-par policies until 2016 — another 3 years. If the PPACA is functioning so well, passed by adequate knowledge of what was in the bill, versus blind ideological faith, and accepted by the majority of the populace as reasonable HC reform, I doubt there would be so much citizen push-back, as well as the need for such a kaleidoscope of continuing delays, silly marketing ploys, and exclusions from the bill for cronies and FOO (friends of Obama) .

Furthermore, according to the article posted by ice, CA has not gone forwards in signing up people for HC, as the insurance cancellations and losses have outpaced the sign-ups. And, those sign-up numbers don’t necessary reflect policies that have been paid for, which is an erroneous figure when tallying up completed policies. Also, there have been a plethora of dissatisfied tweets being relayed by people in CA attempting to navigate their new HC system.

TastyBits February 7, 2014 at 1:14 pm

EITC is the same. At the end of the year, you pay back if you earned too much. This is a major problem if you get married at the end of the year, and your wife was collecting the EITC during the year.

It ain’t pretty. You owe all the EITC plus all the taxes on her income at the combined rate. Obviously, this is not a frequent event.

A possible solution might be to use the previous year’s income. Another possible solution might be to spread it over a few years. These are just rough ideas.

PD Shaw February 7, 2014 at 1:51 pm

@Tastybits, I wasn’t aware that you could get an advance on the EITC, but it looks like the Advance EITC was discontinued in 2010. Link It looks like the administrative expenses were deemed too great for the benefit, and there was an 80% noncompliance rate from recipients. Obama thought the money was better used to help states with Medicaid and additional teachers. Basically, it sounds like we have an advance benefits program that was also too problematic to continue.

The insurance issue is probably even more problematic because individuals have to make a decision on which program and which insurance they want based upon future predictions. Pure tax issues tend to be more incremental.

I am concerned about a third issue that Kaus doesn’t mention, the lawsuit brought against the IRS to prevent it from providing tax subsidies in states (like Illinois) that did not set up their own exchanges. I don’t know what happens if people buy insurance on the exchanges with the assumption they get a subsidy and then the Court of Appeals rules that the IRS is wrongly providing that subsidy. The trial judge has already ruled in favor of the IRS, so its probably more likely that the IRS will be affirmed, but the Court of Appeals will review the issue completely on their own.

PD Shaw February 7, 2014 at 2:06 pm

I assume marriage would have the same effect on radically changing eligibility for Medicaid or subsidies. Probably not easy thing to address if the Tax Code is the source of the subsidies.

TastyBits February 7, 2014 at 3:10 pm

@PD Shaw

The only way EITC makes any sense is to help augment ongoing expenses of folks who are having trouble making ends meet.

This is just unfucking believable. Just when I thought that the unqualified could not get any more unqualified, they prove me wrong.

PD Shaw February 7, 2014 at 4:57 pm

@Tastybits, the link says that the Advanced EITC was only used by 3% of those eligible, and 80% of those failed to comply with at least one of the program’s requirements. This might be a program that works well on paper, but didn’t work well in reality.

BTW/ I don’t think Romneycare subsidized private insurance purchases, so this layer of complication didn’t exist.

michael reynolds February 7, 2014 at 7:39 pm

Ice:

The canceled policies were largely b.s. policies offering nothing in exchange for low premiums. There’s a lot of that. The kinds of policies being canceled are one of the very reasons we need Obamacare: because companies collect and don’t pay out, or screw women for being women, or top out at some absurdly low number, or can be canceled on a whim or on a technicality.

These are insurers committing fraud who are now getting caught. This is one of the things that was so wrong with the old system. Real money being paid for phony coverage. So the 900,00 lose nothing and can shift to an actual policy with actual benefits, and if they can’t afford it, they can get some help.

http://coveredcanews.blogspot.com/2013/11/covered-california-launches-hotline-for.html

While 32 million Californians will keep their existing plans and another 4 million uninsured will get coverage beginning next year, it’s projected that about 900,000 Californians will be moved off policies that are discontinuing as of Dec. 31, 2013, because the plans don’t meet the minimum benefits of the Affordable Care Act.

I would note that all the right wing anecdotes thus far advanced have collapsed upon investigation, including the case presented in the first of the 20 or so GOP rebuttals to the SOTU.

Red Barchetta February 7, 2014 at 9:36 pm

KILL THE REPUBLICANS !! Give them up to the Almighty. Then ObamaCare will hum like a flawless Swiss watch I tell you.

When did Ed Schultz start commenting here?

jan February 8, 2014 at 12:08 pm

The canceled policies were largely b.s. policies offering nothing in exchange for low premiums. There’s a lot of that. The kinds of policies being canceled are one of the very reasons we need Obamacare: because companies collect and don’t pay out, or screw women for being women, or top out at some absurdly low number, or can be canceled on a whim or on a technicality.

…just another example of your ideological ignorance, Michael. Also, who are you to judge another person’s health insurance needs and preferences, anyway?

steve February 8, 2014 at 4:34 pm

I dont find these general claims about numbers losing insurance very helpful. Those losing a mini-med program (they pay $1000/year for $2000 wort of medical care), are not losing real insurance. If they are choosing to not buy insurance on an exchange, they are probably not going to buy much of any plan. Until there are some specifics on what is being lost and what people are replacing it with, real costs being trotted out and not bogus ones made up for cable TV, I will wait until they come out.

Steve

Dave Schuler February 8, 2014 at 4:43 pm

That’s largely been my position, Steve. I think the number of times I’ve written “time will tell” must mount into the scores if not the hundreds.

However, that cuts both ways. If it’s premature to declare defeat (which I think it is), it’s also premature to declare victory (which I also think it is).

jan February 8, 2014 at 10:59 pm

Walter Russell Mead has written a succinct summary of recent PPACA blunders and misinformation in this piece. However, what really stood out were his last two paragraphs, giving a generalized overview of what is needed in HC reform approaches, versus what we are trying to fix in today’s chaotic legislation.

This, in turn, points to a central fact: Health care is a dynamic and unpredictable field that’s very hard to manage from the top. The basic impulse behind much health care wonkery—that we can fix our system by tweaking this or that federal policy—is incorrect and continues to do harm whenever it is acted upon. All the while costs continue to go up, networks continue to narrow, and more and more people—even the insured—are being threatened with financial insolvency because of high medical bills.

That doesn’t mean there isn’t any role for policy in health care, but it has to be focused on opening up spaces for innovation and consumer control, not on bureaucratic tinkering. What health care policy needs to be doing is looking toward tomorrow’s innovations, not freezing today’s status quo into law. Things like reforming service delivery, price transparency, and technological innovation are all key priorities. The way forward for health reform is not through sclerotic federal control but in helping to create a dynamic, open market.

Dave Schuler February 9, 2014 at 8:46 am

The question remains: why are the United Kingdom, France, Germany, Canada, Australia, New Zealand, and Western European countries able to have healthcare systems that cover more of their people (with considerable government involvement) with comparable outcomes and we aren’t?

My answer would be they have higher social cohesion and, consequently, greater trust and trustworthiness, less avariciousness, lower wages in their healthcare sectors, and a presumption that there are motives other than the profit motive.

Leave a Comment

Previous post:

Next post: