Reading the Manhattan Institute so you don’t have to: Part 1

I’m reading through the Manhattan Institute’s Obamacare replacement plan so you don’t have to.   A couple of things to note. The first and most important is that it diagnosises the problem as too much regulation of insurance companies and strongly suggests going back to pre-PPACA will lead to an incredible increase in freedom. It may if you are young, healthy, male and never will see those three attributes change (one is highly problable static, the other two are guaranteed to change).

Secondly, here are a few things I’ve picked up on the skim read of Part 1:

  • Underwriting or more specifically the string “underwr*” is mentioned once in 68 pages. Underwriting is the key concept of accessibility. Community Rating is mentioned as a source of evil as that allows the sick, old and female to get better rates than they would have had under medical underwriting at the cost of the young, healthy and male.
  • Stupid facutal errors. PPACA requires a premium spread of no more than 3:1 for ages 21 to 64. Manhattan Institute uses on p. 26 a claim about age rating applying to a 19 year old
  • misunderstanding of how insurance works

    P. 24 They required all plans to cover services (“essential health benefits”), such as drug addiction therapy, that few people might need: in effect, requiring all insured individuals to subsidize those services on behalf of the minority who use them.

     NO SHIT, that is how insurance works. Most people pay in and get very little to nothing paid out. Most of the pay-out goes to a small minority of people who have bad things/bad luck happen to them. The point of EHBs to make sure there is no race to the bottom on benefit configurations that discourage the use of services that have significant net social savings.

  • Interesting use of comparison areas

Do counties pay premiums or do people pay premiums? Simple question. Should we care more that there are 100 counties with under 2,500 people in each county could see higher rates than a single county with 2 million people in it seeing on average lower rates? I’m more concerned about people, but look at this doozy on .P. 25

As noted above, and in Figure 10, a Manhattan Institute study found that the average
county will experience premium increases of 49 percent in the individual market.19

Remember, this is the study that I called premium bullshit as it looked at plans like the following:

Arkansas: $26 per month for a $25,000 deductible 23% applicants denied. 28% uprated.

Ohio: $25,000 deductible, 19% denied, 17% uprated.

  • Cut benefits and subsidies massively on p. 26:

    In order to provide consumers with more affordable choices, the Universal Exchange Plan actuarial value tiers are 40, 55, 70,and 85 percent, respectively, for Bronze, Silver, Gold, and Platinum.

    That would mean the Bronze deductible would be, for a single indivudal, someplace in the $9,000 to $12,000 range based on back of the envelope calculations…

  • Subsidies would get a whole lot smaller as well:

    P. 27

    Under the ACA, the benchmark plans used to determine subsidies are Silver plans with relatively low deductibles and comprehensive benefits. These plans are the opposite of consumer-driven health plans. Under the Universal Exchange Plan, the benchmark plan has an average deductible of approximately $7,000 per individual per year, or $14,000 per family per year. Annual growth in the benchmark deductible would be linked to the Consumer Price Index plus 1 percent (CPI+1%).

    WTF — The cheapest Silver plan in my zip code has a deductible for a single person over $2,500 and an OOP max of $4,000. Going back even six years, the panacea of health care cost control was “consumerism” with $1,500 to $2,500 deductibles supported by HSAs. We’ve gotten to that point fairly easily. Going to $7,000/year deductibles might be cheaper premiums but given the Rand Health Insurance Study, it guarantees a whole lot more suffering and a whole lot more needless deaths because preventative care (which Roy chops as an EHB) is delayed and acute care becomes emergency care needs. Furthermore, look at the difference in how subsidies are calcuated. Currently under PPACA,  the Feds bear the risk of increased cost growth above benchmarks as the subsidies are tied to individual income. If I am subsidy eligible, my income remains static between year 1 and year 2, then my health insurance premium that I pay remains static as well assuming the benchmark Silver increased in price year over year. Under Roy’s plan, my health insurance premium costs increase. Nasty little change to shift risk onto the individual instead of society.

  • Big premium support subsidy cuts.

P. 26Under the Plan, those eligible for premium support subsidies are eligible, on average, for a subsidized contribution to a health savings account of approximately $1,800 per individual per year, or $3,600 per family, also growing at an annual rate of CPI+1%…. Under the Universal Exchange Plan, eligibility for subsidies ends at 317 percent of FPL.

 

  • Open Enrollment reform

This actually makes a decent amount of sense if one is looking for an individual mandate work-around. I would make this trade if I could get a Halbig proofing and a couple of other things in exchange. There are a lot of ways to deal with the free-rider problem. Mandates and open enrollment are one of them. Late enrollment penalties are another. I think this is mainly a shiny objective for conservatives that as long as the free rider problem is addressed somehow, it is not too consequential how it is addressed.

Beginning in 2017, the Plan would reform open enrollment such that it takes place for a six-week period every two years. Under this system, individuals who choose to forego coverage could do so without paying a fine; however, they could not simply enter and exit the system at will and take advantage of consumer protections such as coverage for preexisting conditions, and cross-subsidies such as community rating.

  • Go fuck yourself with a stalk of broccoli

The second is that, despite the mandate’s weakness, it represents an unprecedented—if not unconstitutional—expansion of congressional power: compelling individuals to purchase a privately delivered service.

The Supreme Court disagrees with you. Would you support a public option? No, you just don’t want people to get coverage who need coverage.

 

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26 replies
  1. 1
    Librarian says:

    Actually, it’s spelled Manhattan. I assume you’re not from NYC, Richard.

  2. 2
    Suffern ACE says:

    Lots of people get cancer, but why I should have to pay for your particular cancer is beyond me. Even a minority of the cancer afflicted get that type. We should have one insurance pool that only has cancer patients in it, each paying $100,000 per year for premiums. But not your cancer. You cancer is just too freaky even for our pool. Even normal cancer patients say so.

  3. 3
    Gin & Tonic says:

    First URL no worky.

  4. 4
    Elizabelle says:

    Squid Ink. You called it, Richard.

  5. 5
    Tommy says:

    I’ve said this time and time again in your posts and I will keep saying it because people need to understand. Know this. I work for myself. Through the IL exchange my plan is $87 less per month and about twice as good. It kind of rocks compared to what I had before. I am blessed with amazing health, but 45 now. Heaven forbid health issues might arise for me. Before with the policy I had I was worried if I got sick. Now I am not. Peace of mind for less money …..

  6. 6
    Richard Mayhew says:

    @Gin & Tonic: fixed

  7. 7
    rikyrah says:

    So glad that you are here posting this information.

  8. 8
    Tommy says:

    I don’t think I ever have mentioned this in one of your threads. First off FUCK REPUBLICANS and their ideas for health care.

    But that isn’t my point. In March of last year my mom got really sick. It was something out of the TV show House. They were not sure what was wrong so they tried this. Made it worse. So they tried something else. Made her even worse. This repeated a couple times more.

    She was in the ICU for five weeks. As I have told her now I didn’t think she was making it out of that hospital alive. She did.

    Then two weeks in a rehab facility.

    Weeks later, cause I am curious, I asked my dad what the medical bills were. Over $750,000. I asked what he paid. Nothing. Not a single penny. See my father worked 30+ for the DoD. As part of his retirement package health care is provided for my dad and mom.

    I say all this cause I bet most Americans would like the same. Anything that needed to be done to help my mom was just done. Never a second of thought of the cost.

  9. 9
    FlipYrWhig says:

    Here I am like a chump paying insurance for my house when it hasn’t even burned down! And yet my money goes to pay for those lucky duckies who lose everything! What a scam.

  10. 10
    SuperHrefna says:

    @Tommy: yeah, I am saving $1K a month with Obamacare and my plan is fab, now that I’ve found one whose network contains my local doctors. I’m so happy with it!

  11. 11
    Bill D. says:

    go fuck yourself with a stalk of brocoli

    Understandable sentiment, but makes this a post I would not send to someone I’m trying to convince.

  12. 12
    Richard Mayhew says:

    @Bill D.: The goal of this post is to inform the Balloon-Juice audience of what is out there as the ‘serious conservative’ ‘co-opt Obamacare’ plan; it is a limited post by audience. And within this mileau — telling someone to go fuck themselves is well within community norms.

    Roy is trying to relitigate NFIB v. Sebelious, so he deserves to be mocked for it.

  13. 13
    Matt McIrvin says:

    Most of the really vehement criticisms of the ACA I’ve seen out there are, at bottom, objections to the entire concept of insurance.

    It’s just “But I’m not sick! Why should I have to pay for sick people?” They don’t want there to be insurance. Or, at least, they don’t want anyone other than themselves to have it.

  14. 14
    FlipYrWhig says:

    @Matt McIrvin: I think it’s more like “if I get sick it will be due to circumstances beyond my control, for which I will deserve help, not like Those People who practically make themselves sick because they don’t Take Personal Responsibility.” Same logic as taxation/spending/”welfare.” In their minds they’re never the beneficiaries, only the dupes and victims. For everything. In every sphere of life. Pretty sickening, really. So sickening it’s a good thing we have insurance.

  15. 15
    Epicurus says:

    Republicans (and their mouthpieces) lie. Once you understand this principle, you can stop wasting your time reading their fairy tales. That is all.

  16. 16
    Poopyman says:

    @Richard Mayhew:

    telling someone to go fuck themselves is well within community norms.

    Yeah, but would it kill ya to spell “broccoli” correctly?

  17. 17
    Poopyman says:

    You know I’m just snarkin’, I hope. I really appreciate someone who knows what they’re talking about wading through all of this chaff.

  18. 18
    Peter says:

    @Poopyman: Seconded! These posts are hugely valuable.

  19. 19
    Richard Mayhew says:

    @Poopyman: Yes it would :)

  20. 20
    Villago Delenda Est says:

    The Manhattan Institute needs to be nuked from orbit.

    Only way to be sure.

  21. 21
    Villago Delenda Est says:

    @Poopyman: Seconded. As usual, Richard just goes through this crap and destroys the entire thing, because he knows what the frack he is talking about, unlike the dipshits of the Manhattan Institute, may they be nuked from orbit to be sure.

  22. 22
    Villago Delenda Est says:

    @Matt McIrvin: It’s the basic libertarian whine: why should I have to pay for any community infrastructure that I take advantage of? I want to freeload off the backs of millions of others, why should I have to pay anything? I built everything myself with no help from anyone!

    My hatred of these stupid people is infinite.

  23. 23
    JustRuss says:

    @FlipYrWhig:

    if I get sick it will be due to circumstances beyond my control, for which I will deserve help, not like Those People

    Bingo. Interesting that the example they picked for “Why should we pay for other people’s health problems?” otherwise known as “Insurance: How Does It Work?”, was drug rehab. Because, you know, only Those People need rehab.

  24. 24
    Mike G says:

    It’s a piece of shit plan that can be demolished like wet newspaper, because like most policy plans from the wingnutosphere it’s not designed to actually solve any problems but to deceive the gullible and provide profit-making opportunities for the funders of stink tanks like the Manhattan Institute.

  25. 25
    Snarki, child of Loki says:

    …an unprecedented—if not unconstitutional—expansion of congressional power: compelling individuals to purchase a privately delivered service.

    Oh yeah, Unprecidentent and Unconstitutional, but supported by those Pinko-Commie Revolutionary Vanguard at Forbes Magazine.

    But wait, it gets better! Because of those weaselly political characters, who totally dismiss Original Intent, namely Madison, Jefferson, and their ilk, have pushed for a plan that mandates health coverage.

    Damn that Obama and his time machine! It was bad enough that he went back and planted birth announcements in Hawai’i newspapers, but to go further back to 1798 and CORRUPT the Founders? INCONCEIVABLE! Why, he probably put that whole “3/5 compromise” in there just to make white southerners look like racist assholes.

    Impeachment is the only solution, but you just know that as soon as the House tries it, that section of the Constitution will mysteriously disappear, amirite?

  26. 26
    jl says:

    Thanks for two really useful columns today.

    The unregulated free market fundamentalism of movement conservatism really has become a religion. There is a lot of work, from very detailed empirical studies to high toned fancy mathematical models (starting with Roy Radner almost 40 years ago) that show financial markets, and insurance markets in particular are not like markets of real goods and services, like, say, broccoli (preferably fresh and not previously used for self pleasuring). They are not stable, subject to catastrophic market failure, and savage discontinuous behavior when individual incentives lead to counterproductive and self-frustrating aggregate outcomes that reduce social welfare.

    Each line of insurance requires its own set of regulatory fixes and ground rules for market organization special designed to address its unique problems in order to work well. I am repeating myself from a comment from several months or weeks ago, but the state governments understood this in the 1830s and 1840s when they figured out ways to regulate and organize market for life insurance, and that industry was transformed from a sketchy mess worse maybe than US health care finance and delivery today into a pillar of the community. They really do want to drag us back to the early nineteenth century and even further.

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