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Friday, October 28, 2016

Nov. 18 (Bloomberg) — The Patient Protection and Affordable Care Act is floundering.

Conservatives who take satisfaction in that should be careful not to get ahead of themselves. The rollout problems — however serious and continuing — shouldn’t be confused with the law’s outright collapse. Even the administration’s recent capitulation (however humiliating) allowing plans to be “uncanceled” is a setback, not a surrender.

The reality is that large constituencies are in place to work to preserve Obamacare. States that have embraced the law’s Medicaid expansion — about half — will fight tooth and nail to keep huge new federal subsidies in place. And the conservatives who are lambasting the disastrous rollout should realize that the electorate that is uninsured, getting large subsidies and generally older will also fight to keep their newly minted policies.

Republicans would have to run the table in 2014 (hold the House, take the Senate) and win the presidency in 2016 to have any serious chance of repealing the law over strong Democratic opposition. In the interim, the administration has two more years to implement and prop it up.

What strategy, then, would move us closer to the patient- and consumer-focused health care system that conservatives desire while also recognizing the facts on the ground?

The answer might be simple: Propose changes that will make plans more affordable and drive enhanced competition among insurers and providers. In other words, make Obamacare a Trojan horse for conservative health- are reform. The administration of President Barack Obama has quietly introduced regulatory decisions that have made the exchanges a viable market for high-deductible, health-savings-account-eligible health plans.

Shortly after the law passed, it looked like the administration would use regulatory rule-making to kill health savings accounts. But subsequent rules clarified that HSA-qualified plans were actually the default structure for bronze plans on the exchanges. (Some silver plans qualify, too.)

Far from being driven to extinction, high-deductible, HSA-eligible plans have an opportunity to capture significant new market share on the exchanges.

Based on data available for about 85 percent of exchange plans, about 77 percent have deductibles of more than $1,250 and qualify under Internal Revenue Service rules for a health savings account. For a 27-year-old purchasing coverage, the median HSA-eligible plan costs about $238 a month and typically comes with a deductible of about $3,600. The median plan without a high deductible, however, costs almost 30 percent more ($310) for a 27-year-old, though it has a significantly lower deductible (about $600).

Over the course of a year, the choice of an HSA plan can lead to significant savings. Here’s why: The typical 20-something with insurance spends a median of $770 annually on health care (excluding premiums and over-the-counter drugs). Opting for an HSA-eligible plan costing $238 a month ($2,856 a year), the median 20-something ends up spending $3,626 in one year on health care ($770 plus $2,856). However, with a traditional plan, total spending jumps to $4,320 in one year ($600 in out-of-pocket spending plus $3,720 in premiums). In other words, the HSA plan holder comes out about 20 percent ($694) ahead. That savings can then be funneled into an HSA or other spending.

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Copyright 2013 The National Memo
  • sigrid28

    HSA advantages are counter-intuitive to individuals who are not savvy about buying health insurance, or who have such low income that accruing before-tax dollars doesn’t make sense. Let’s say you make $20,000 a year and take home about $1,200 a month after taxes and cost of minimal benefits–excluding health insurance. Your subsidy toward health coverage on the exchanges may be about $50 toward each monthly premium–meaning you’ll pay about $200/mo toward a decent policy and hope to get about $1200 back as a tax credit. So that means $1200/yr out-of-pocket for the premiums. With an HSA, with say a $3000 deductible, you will not spend a penny less for doctor’s visits and tests, etc., than you would WITHOUT health insurance, unless you end up in an ER or spend over $200 a month–every month–out-of-pocket to visit doctors and pay for tests, x-rays, or therapy. It is true that people who are insured pay less for procedures and doctor’s visit, even whole cost, because the rates are established by a large pool. Maybe the HSA route would make sense for families more than individuals. The problem with the HSA is, in true Republican form, it assumes $300 to $400 disposable income every month, but Republican policies have reduced most of us to a level of poverty that would make that enviable circumstance a fantasy.

    • TZToronto

      Let’s say that you are able put $400/month into an HSA. That’s $4800/year, but you do get a tax benefit. However, let’s say you get sick in 10 years. Now you have $48,000 (plus interest) in your account–but your medical bills might amount to over $100,000 for something serious. (Heck, my 3-hour visit to the emergency room in Las Vegas cost $8500!) Not to mention the fact that health care costs have been rising faster than inflation. So your $48,000 may not do much for you when you need it anyway. I don’t claim to have any first-hand knowledge of these HSAs, but it seems to me that saving small dollars for something that will cost really big dollars in the future doesn’t make sense.

      • sigrid28

        Most Republicans don’t even relate to anyone who lives paycheck to paycheck instead from interest on savings (Romney-like) or income from stock investments. It shows how out of touch they are when they imagine an HSA would improve matters even a smidgen for anyone who qualifies for a subsidy or tax credit through the ACA. The HSA’s I’ve seen on the website (and those of insurers in the private marketplace) are really a thinly disguised trick by insurers whose goal it is NEVER to have to pay out on claims while still collecting premiums. I hope visitors to the website really understand what it means when a policy does not honor any claim until a deductible of several thousand dollars is spent on health care–by one individual!

    • howa4x

      Great analysis

  • disqus_ivSI3ByGmh

    That is because it was the compromise demanded by Republicans, who ended up voting against it anyway. We should have had just the single payer system that the President wanted in the first place.

    • Garmin Woods

      How does this narrative survive, and get 19 up votes no less? The bill, as passed, was not a compromise with Republicans. Saying it was is tantamount to calling Democrats stupid. This bill was written, amended and passed by Democrats without any support from Republicans. Blaming its deficiencies on Republicans is as ludicrous as Republicans taking credit for its strengths.

      And the President DID NOT want a single payer system. Saying he did is tantamount to calling him an ineffective President. Single payer advocates weren’t even invited to the table. It’s not too difficult to see who the people responsible for the good and bad in this law are. Lying to ourselves about it is a great way to make sure it never improves.

      • RobertCHastings

        I guess you, among many of your friends and allies, have not read it. A significant portion of the ACA was written by the Republican minority in the House, using Republican-recommended wording and ideas. Dispute it, if you wish, but the Republicans were more involved in the crafting of the ACA than most of them care to admit.

  • highpckts

    What? You mean compromise? Work to make it better? Compromise is a word that hasn’t been their vocabulary for quite some time!!

  • Canary_in_coalmine

    By “essential health benefits” they obviously mean contraceptive coverage for women. Which BTW, is primary care for most young women to begin with. These are the republicans we’re talking about, right? That would completely blow out the point of getting half of the young people insured (free contraceptives -their primary health concern- is a significant benefit to the young and poor). Most don’t earn enough to have extra income to put into a HSA, that’s a luxury to working poor.

  • Allan Richardson

    High deductible with HSA only makes sense for young people with “affluent” level jobs such as young people WERE getting in the 1960s and 1970s, from employers who actually WANTED to keep their people healthy and help them save, and paid them enough to be ABLE to fund the savings accounts. Today, the largest private employer in America has donation buckets in their employee lounges asking their employees to give foods to help THEIR FELLOW EMPLOYEES “in need” to be able to celebrate Thanksgiving!

    If you get sick BEFORE you have had time to put enough money into the HSA (unless you have a generous employer who prefunds the account), you have become, for all practical purposes, uninsured. So again, conservatives assume that “of course” all these healthy young people have secure jobs and high incomes so that the tax breaks will save them money. How much does a tax break mean to someone working but not earning above the poverty level? Say, at company W?

    Today’s young workers are not leaving themselves uninsured because they consider themselves invulnerable to illness or accident. For the most part, they just do not have room in their budget for non-subsidized plans, and that is what the ACA was designed to help. It is too bad that, after Republicans talked it down to dropping the very lowest income workers into Medicaid to get their votes, then they ALL voted against the very plan they had forced to cut down, then they decided to refuse to expand Medicaid, leaving the poorest uninsured anyway.

    As for “I don’t use X so why should my premium cover X?” arguments: I don’t have children in school, so why should I pay taxes to support schools? Insurance, like taxes, is meant to SPREAD THE RISK AND COST, so that everyone pays a little and no one has to pay a lot, to support the common good. Uneducated citizens make the overall community less prosperous (and, if poverty leads to crime or disease, less safe), so we all pay something to support schools for all (how effective they are is another argument; whether they EXIST or not should no longer be debated). And the uninsured are not only a financial burden when they use the ER, as indigents, for what we who are insured go to a doctor to treat, they are a safety risk. After all, the uninsured will put off treatment as long as possible, and if they have a contagious infection, INCLUDING one caused by a terrorist biological weapon, it will spread to many more people than if they could get treatment, and diagnosis, immediately.

    I think Obamacare should be replaced … with Medicare for all, which is what Medicare was proposed to be in the first place. But until then, it should be made as low-income-friendly as possible. High deductible, HSA-type plans should coexist with comprehensive plans as long as comprehensive plans are still AVAILABLE and draw MOST of the customers, and one way to make that happen is NOT to hype the high deductible plans for those who cannot save enough, quickly enough, to make them affordable. Perhaps making them ineligible for the UP FRONT tax credits would be one way, since they would have to collect the FULL cost, and attract only the higher income health people. And perhaps a mandatory warning in the advertisements that they should ONLY be purchased in conjunction with a minimum $X thousand HSA.

    • sigrid28

      This post is really insightful and helpful.

  • jnap

    I don’t agree with anything stated in this post because the Republicans are looking for backdoor ways to repeal Obamacare and this looks like one of their plans. I don’t trust any Republican that have tried 46 times to repeal Obamacare and then says that they have changes that make it better.
    I have no way of confirming the numbers being presented and therefore don’t believe them either.

    • mandinka

      You are correct. The repubs wanted this to fail to win the next election

      • charleo1

        First of all, we need to put your statement, that Republicans want
        ACA to fail, to win the next election, into some context. By asking,
        what initiatives proposed by President Obama, would this statement
        not apply to? The facts are, since this President’s election, the
        Republican Party has failed to support any of Obama’s proposals.
        Not on the merits of those proposals, but on the politics of being
        seen as creating a solid uninterrupted wall of opposition. Again,
        not because the office of President is held by a Democrat. But,
        because that Democrat is Barack Obama. Does this qualify as
        plainly committing what is usually an unspoken rule. That Party
        politics should never come before what is best for the people.
        I think there is no question, the answer is absolutely yes. The
        larger question is whether we collectively reward that kind of
        behavior? And allow partisan obstruction to paralyze, our Gov.
        on every single issue, from this point, to who knows how far into
        the future? But is it really as bad as some say? I would have to
        say yes, maybe worse!

        • Go4man

          It is all part of the Republican’s sponsors overall plan! They control the Judiciary Branch and House of Representatives (and the Senate by Filibuster). All they need is a Senate Majority and the Presidency to effectively eliminate all checks and balances.

          Look at the Republican controlled states like Michigan, Ohio, North Carolina, Florida, Texas, Wisconsin and the rest as examples of the results. Republican unity will rule. The rest of us will no longer have a voice. Just remember, this is bigger than just the ACA. Note to the lower income people who do not have Federal income Tax “skin in the game”, be prepared to continue sending your loved ones off to fight in more Republican Wars!

        • RobertCHastings

          I have yet to see anyone say it any better. Clearly and precisely stated, without rancor or hyperbole. Nicely done!

          • charleo1

            Thank you Robert. Coming from a gentleman such as
            yourself, I consider it high praise indeed! And I do believe
            more people are coming to see this very unprecedented
            behavior as a matter of great concern the longer it goes
            on. And, if it works for the Rs, then the Ds will return the
            favor. Which to be real honest, I would most likely support.
            Due to the fact I’ve seen most of the Right’s proposals.
            However, it’s a very competitive world out there. And I
            just don’t see how we can afford to just flounder around
            like this for the next half century!

  • mandinka

    ACA should be allowed to rise and fall based on its merits since it is the law. Unfortunately Obama has rewritten the law and now its Obamacare. 2 totally different programs… 1 is a law the other is a dictator fiat

    • charleo1

      What sensible people realize, is nothing that’s ever been built, or invented, whether it’s an I-phone, or, the first phone, works perfectly the first time out.
      And I’d be willing to bet, in some laboratory right now, someone is still working
      on the telephone. To allow it to do more things, be more convenient, take
      sharper pictures. We should expect this, and give those in charge the latitude
      to make changes when necessary, and solve problems when they arise.
      But, to say as you do, the program is the law, is the law, and by Obama
      changing any part of it, he becomes a dictator, is very ridiculous, to be
      blunt. Did it ever occur to you, when the law was written they were not so
      shortsighted as to not include, as part of the law, that changes could be
      made to address problems, they knew would inevitably come up. What
      you are in fact saying is, I don’t like the law, and there’s problems with it.
      So let’s just scrap the whole thing, shall we? Well, we can’t. There are too
      many people for which this law is a Godsend. We have in this Country, a
      full blown crisis in healthcare. It’s real, and it’s worsening, everyday we put
      off dealing with it. So, in that sense, failure is not an option. We need to
      make this work!

  • howa4x

    If this is a conservative fix, why aren’t more conservatives signing on? Actually the entire ACA is a conservative plan because it relies on existing insurance entities to administer health care finance in the market place, and allows those same companies to make a profit off of you. It also works on a sort of supply and demand. If the demand for more services is high, or people need more complex care the price of insurance goes up. If they require less care the price should go down but premiums never do because the insurance companies have a closed market system and that savings for them is their profit. So if I don’t go to see a doctor in 2 years the cost of my premium should drop because, I’m not using the service but my cost is the same. Why? I’m paying for those that have multiple conditions, so it is a system where the healthy pay for the sick and profits of the insurance companies stay the same. This is all fixed market capitalism. This is why the medical system is slow to change. There is millions of dollars there for them so why cut costs. There is no incentive to do so.
    A real change would be to go to a public option buy in system for those with pre existing conditions or make a salary below a living wage. That is the way we will get out of this one pays for the other system/healthy paying for sick. That is the true way we will see a drop in insurance rates since the truly sick will be taken out of the pool of the rest of us. But since few politicians think rationally it won’t happen.

    • Kurt CPI

      howa4x is right on the money. Warren Buffet would tell you that investing in insurance has never had a more shining prospectus. While I’m not in favor of nationalizing private enterprise, I’m far less happy with nationalizing an industry while paying big bucks to private companies (indefinitely) to act as glorified billing agents. On the other hand, a single-provider system (the government being the provider) would essentially strip publicly owned companies of their market if they were no longer able to sell one of their primary products. That being the case, there should have been a roadmap toward a single provider over a fixed time span in the ACA. I continue to say what I’ve said all along, it won’t be Republicans who lead to the demise of ACA, it will be the willy-nilly, have-to-get-it-done-between-election-cycles, damn-the-consequences mentality of the administration. The political agenda trumps everything from best business practices to common sense. It might get done, but it’ll be a white elephant. The only way to do this right is with bipartisan support over an extended period.

      • howa4x

        That’s why I think a bifurcated system of government insuring the ones with pre existing conditions and those making below a living wage would lower rates for those with job related insurance and private purchased with healthier life styles

        • Kurt CPI

          It might if you could somehow factor out government inefficiency and political tampering.

          • howa4x

            I’m on Medicare and when I worked we had a clinic that took in uninsured and Medicaid. It was easier to deal with them than insurance companies

    • RobertCHastings

      I agree with you. However, I remember when the health industry was NOT for profit, when doctors (for a small fee) would make house calls to care for a sick child or a dying parent, when medical bills could be paid without the intercession of a third party and, generally, with no more than one had in his wallet. My wife’s grandfather retired in the mid 1950s and never had to buy insurance. When he died in 1982 or so, the two-week stay in the hospital was a matter of only hundreds of dollars. Our son had to spend 29 days in the hospital recently, and were it not for Medicare, we would be bankrupted. The for-profit system has been a mistake, period.

  • nana4gj

    Do we even need Catastrophic plans with ACA and the consumer protections contained within?

    The only thing the Gov of Texas has done, beside taking health care access and delivery away from Texans, is to terminate the state’s Catastrophic pool of insurance, because, he told those insureds in a letter, they could get better coverage and lower costs on the ACA.

  • George Allegro

    Today’s liberalism is impelled by the same destructive forces as its marxist, socialist, and communist ancestors.

  • George Allegro

    Where we are subjugated by central planners, we are restricted to those actions that offer predictable results to those doing the planning.

  • Socialism is Organized Evil

    The world laughs at Hussein Obama’s delusional nonsense.

  • Socialism is Organized Evil

    The collectivist tendencies imported by Stuart Chase are, in all essentials, the German definition of socialism offered by Werner Sombart when he described socialism as a regulated, planned, and controlled system.