The only ones without help

Bloomberg recently ran a great story on a family that is facing hard times affording health insurance because they don’t qualify for ACA subsidies and they don’t get coverage through work. The key take-away for me is that this population is one of the few insured groups that receives very little direct assistance.

David and Maribel Maldonado seem the very definition of making it in America….David’s annual salary reached about $113,000 by the time the children were in their teens. It was more than enough to live in a pretty suburban house outside Dallas, take family vacations, go to restaurants and splurge at the nearby mall. And to afford health insurance.

Then, in 2012, Maribel discovered she had breast cancer. “Your world comes crumbling down,” David says…
Health insurance offered through the company would soon be discontinued. It had simply become too expensive for the small company to provide it.

For David, the responsible head of a thriving middle-class family, having health insurance was non-negotiable. But the coverage he found to replace the company plan cost $1,375-a-month, up from the $260 a month he had been paying.

By the end of the story, a family of four has one person insured.

This family gets no explicit help. People who make between 100% and 400% Federal Poverty Level (FPL) are eligible for premium assistance subsidies. People who are insured through work have their insurance paid with pre-tax dollars. More importantly, those payments are mostly invisible so people only react to the employee contribution coming out of their paycheck. The elderly have their healthcare from Medicare while the poor or the disabled have Medicaid. People who buy on the individual market and who make more than 400% FPL get nothing. They are some of the few people who pay full freight.

The ACA has helped this family. In an underwritten system, the mother is uninsurable at any rate that looks vaguely affordable for an upper middle class family. It has not helped enough.

Solutions that allow for healthy people to pay lower premiums by splitting the risk pool might help cover the son with affordable coverage. The daughter and the father have medical history that could lead to uprates or rejections. Splitting the risk pool will significantly increase the premiums for the mother as she can only be covered through guaranteed issue policies. As healthy people leave, the ACA risk pool is more morbid and expensive on a per-capita basis. The family would absorb a dollar for dollar increase in premiums.

Medicaid buy-in proposals could be useful as Medicaid tends to pay doctors and hospitals significantly less than commercial plans. These lower provider payments lead to lower premiums but the trade-off tends to be narrower networks and less convienent access. The other solution that is plausible is a national cap on the percentage of family income that can be assumed to be reasonable and affordable to pay for a benchmark Silver plan. A cap of 10% would allow the family to buy Silver coverage for $11,300 a year which is still significant and presumably painful but far less painful than spending almost a fifth of their pre-tax income to pay for the entire family.

A cap and a split market are not neccessarily opposing policies. I argued last year that these policies could work in conjunction with each other:

Removing the cap on ACA subsidies so every family can access the ACA Silver plan for no more than 10 percent of its family income would provide immediate relief for Senator Cassidy’s constituents and others in similar situations. At the same time, the proliferation of underwritten plans will offer less expensive options for families without health challenges.

Patients and families will be able to choose the plans that will work for them. The ACA market will mostly cover the working poor who receive high subsidies and low deductibles, as well as the very sick who need to have comprehensive benefits and broad provider networks.

The underwritten market, which Republicans support and are seeking to expand, will consist of healthier individuals whose premiums no longer subsidize the care of the chronically ill in the individual market.

This type of solution is plausible if both parties want a healthcare ceasefire over the next couple of years.

40 replies
  1. 1
    MomSense says:

    Twelve years ago I was paying more than $1,375 a month. Even with the costs going up in the last two years, it is still below what it was pre-ACA and it’s actual insurance now. Annual wellness visits and other services were not covered or they went towards deductibles which were also much higher then.

    Obviously we need to do more, like a more gradual lessening of subsidies after the 400%fpl, but I think we should remind people that the situation was much much worse before.

  2. 2
    Fred Fnord says:

    So, when the company stopped offering health insurance, did they increase everyone’s paycheck by the amount that they USED to pay for their insurance?

    …he asked cynically.

  3. 3
    Gin & Tonic says:

    Boy, that “if” in the last sentence is doing a lot of work.

  4. 4
    Turner Hedenkoff says:

    Hear hear. I’m in that position — both my wife and I are independent contractors and make enough that we have to pay full freight in the individual market. That was just under $1,100 a month this year, headed for nearly $1,300 for 2019, with deductibles of $5k each. When my gall bladder crapped out and had to be removed earlier this year, my insurance covered only the last couple hundred bucks.
    I know it would be worse without the ACA, but every month’s payment leaves me dreaming of guillotines.

  5. 5
    Victor Matheson says:

    Mayhew, nice article as usual. But, I am not sure exactly why you think this is a workable plan given the current political makeup. The money to provide subsidized insurance for the sick has to come from one of two places. Either it comes from the healthy insurance buyers which you lose because of the split market (and the lack of a mandate), or it comes from the government through taxation, which is, of course, evil socialism. In what world do you foresee Republicans voting to increase spending (and therefore taxation) on health insurance for the middle class sick?

    One of the whole points of the ACA was to hide the “taxes” needed to pay for health insurance on the poor and sick through the individual mandate. I presume at least some of that was out of necessity given resistance to hiking taxes on anyone.

  6. 6
    Betty Cracker says:

    @Turner Hedenkoff: Yep. We pay about that and for shitty coverage featuring such high deductibles that our “coverage” only comes into play for well care or if we have surgery or are hospitalized. Better than the pre-ACA days? Yeah, but it still sucks big green gators. It’s a ridiculous and unsustainable system.

  7. 7

    And…with all this going on, the dude voted for Trump, and Ted Cruz. Because he’s angry.

  8. 8
    Gardner N. says:

    When I read this in the Bloomberg article:

    Nor does he think the outcome of the midterm elections will change anything. “It’s just going to be a bigger mess,” he says.

    I knew he was a trumper. And surprise, surprise, a few grafs down…

    He’s still a firm Trump supporter, and the prospect of Republicans and Democrats sharing power isn’t something for him to celebrate. … While he thinks Ted Cruz was “the lesser of two evils,” David was relieved to see the candidate he voted for prevail over Democrat Beto O’Rourke, who ran on a platform that listed single-payer health care as one of its cornerstones.

    Yep.
    Let them experience the consequences for their choices. They insisted on it. They acted on it. They voted for it. They were willing and helped enable to have this scenario happen to other people and their families. Fuck em.

  9. 9
    PST says:

    I fully sympathize with this family and have faced similar situations in my family’s life. However, living as we do in a time and place where about 18 percent of GNP goes to healthcare, we have to adjust to the fact that one way or another, we will be spending a huge proportion of our incomes on medical insurance and treatment. On average, families at twice the median household income cannot expect to be subsidized, although through insurance the lucky will help the unlucky.

  10. 10
    FelonyGovt says:

    My husband and i are about to go on Medicare. Medicare itself is really cheap, about $135 a month each, but it has so many holes we decided to buy a supplemental policy, which will cost about $230 a month ago each. Then there’s the prescription drugs plan. The coverage will be great and we’re appreciative, but it will still be a big expenditure for us.

  11. 11
    patrick II says:

    I thought this problem was over. I worked at the EEOC and a lady who was fired because she had cancer and that was causing the small companies rates to go up. So they let her go. Someone they knew and worked with for 20 years. The real reason would be illegal, so they made up reason, noted if she was five minutes late, or missed some arbitrary timeline and used that as an excuse to fire her. She was left with cancer and without a job or insurance. She took some money in mediation, they were playing hardball and a mediator is not an arbitrator and could not make her say no.
    Some months later she called back and said her money was gone, and she needed another mediation. That couldn’t happen. I don’t know what happened in the end. Maybe if she sold her assets off quickly enough she qualified for medicaid before cancer got her. But with cancer every day counts.I think about her and the system that lets that happen and the people who are ok with that, and not with good will.

  12. 12

    @FelonyGovt: Yes. When people say “Medicare for all,” they seem to think it’s free. It’s not.

    ETA: I will say they pay the bills without quibbling. So far, my heart attack has cost me $11. Oh, and $800 in drug coverage that my Part D didn’t pay.

  13. 13
    Fair Economist says:

    Cap and split is OK policy, but it’s very unlikely because it would mean a substantial increase in government payout, since the feds would both pay subsidies for the >400 FPL and have to up subsidies for the loss of the healthier members on the exchanges. It would basically be replacing the mandate with subsidies and I saw an estimate long ago that that would increase costs by 30 billion per year. This was just another one of the sham offers the Republicans have made on health care to muddy the waters, with no interest in actually passing it.

    Extending the subsidies to all income levels is something I support and would cost considerably less but the Republicans will never vote for it because the weak horror stories like this that are one of the few, if half-assed, arguments they can make against Obamacare.

  14. 14
    ProfDamatu says:

    @Gardner N.:

    Let them experience the consequences for their choices. They insisted on it. They acted on it. They voted for it. They were willing and helped enable to have this scenario happen to other people and their families. Fuck em.

    Too bad that in our system, it’s not just them experiencing the “consequences of their choices.” I just can’t take satisfaction in people like that getting screwed by Republican policies, because of all the collateral damage. Can’t screw them over without also hurting thousands of others who didn’t vote for bad policies.

    @PST:

    On average, families at twice the median household income cannot expect to be subsidized, although through insurance the lucky will help the unlucky.

    I can see where you’re coming from here, but the reality is that unless something is done to rein in medical costs, it absolutely *will* become reasonable for those twice-median-income families to expect subsidies – in fact, depending on the size of the family, I’d argue that in many cases we’re already there! Obviously, relief is more needed for lower-income brackets, but even if you’re making $100k for a family of four, it’s still going to be problematic for insurance premiums alone to cost 10% of your income if you have anyone in the family who’ll be using the insurance on a regular basis. Given current OOP limits, with two sick family members you could be looking at $12-15k in premiums and another $15k+ in OOP costs. I know it’s hard to muster up sympathy for people making six figures, but $30k in medical costs is going to hurt even them. And it will probably be necessary to help people in those shoes in order to also help those for whom that $30k is 50% of their income, or 70%, rather than “only” 30%.

  15. 15
    The Pale Scot says:

    @MomSense:

    That’s what I was thinking, back in the 90’s my friends in the trades that were not in a union were paying 6000-8000 a year for a family of 3-4. I’m paying 1100 a month from the ACA. I’m 55 yrs old and other mechanical repairs to my knees and feet I have no pre-existing conditions. But at 55 with my peers dropping from cancer and heart disease, it’s a tab I’m OK picking up. The insurance from work sucks. I moved into a new place with lower rent (finding it was an act of DOG, I know I’m lucky finding it).

    This guy had his budget figured with the idea that the insurance from work was sufficient. If the company had decided that they couldn’t afford to support a plan they could have payed out the money that the company sent to the insurance company At a 1 to 1 payout 260×12 = 3120x. (taxfree medical accounts) Include what he pays that would be a base of6Gs. That would make his increase 500.00 a month. That’s not an unusual increase to keep the policy. It’s not just that co. thinks insurance costs is too high for them to manage, they’re also pocketing the money they (the co.) were put up. That’s trimming.

    It would be interesting to see if there has been a change of personnel in the exec suite, from say good ol’ uncle Bob as comptroller retires to his nephew Biff straight out of school with an MBA and just brimming with New Exciting Ideas on how to cut Costs!!

  16. 16
    The Pale Scot says:

    That’s the day David says he decided to vote for Donald Trump.

    Oy….

  17. 17
    Quaker in a Basement says:

    But the coverage he found to replace the company plan cost $1,375-a-month, up from the $260 a month he had been paying.

    I’ll argue that he was paying in the neighborhood of $1,375 for his employer-provided insurance. Just because his employer sends money directly to the insurer instead of letting that money pass through the employee’s hands doesn’t mean it costs less. The “employer-provided” insurance is still part of the compensation the employee receives.

  18. 18
    Rileys Enabler says:

    In the same boat here. Single parent, contractor, do not get subsidies. I’d have to make less than $68,000 per year. The cost of ACA insurance was just too much, so I’ve taken the risk of joining a health-sharing company instead. It’s not insurance, but it’s something – and it is far more affordable than even the worst Bronze plans I could find. It’s a risk though. Our choices are absolute crap here; my stress levels alone are probably wreaking havoc on my health.

    I do NOT pity that Trump-voting family. They would seek to take away the few options that are on the table for others in my boat. Assholes, the lot of them.

  19. 19
    Wapiti says:

    I have a cousin who is a rancher and whose experience brushes against this situation. I figure that a lot of self-employed, small business owners, or small business employees are seeing vastly different healthcare costs than those employed by large companies.

    On average, families at twice the median household income cannot expect to be subsidized, although through insurance the lucky will help the unlucky.

    I think that those employed by large companies *are* effectively subsidized by the young and healthy people who work alongside them.

  20. 20
    Ohio Mom says:

    I’m in a grumpy mood. Let the family in the article downsize and take extra jobs. It’s what people like them are always saying poor people should do — let them do without vacations, entertainment, new clothes and the like. Each family mrmber only has one set of feet, one pair of shoes each should suffice.

    Obviously barely regulated for-profit health care is an expensive and inefficient system. Hard to see our country giving it up any time soon though.

  21. 21
    PhoenixRising says:

    This was our situation as well, almost exactly, in fall 2011. The ACA protection that started for ’12 coverage forced our insurance company to offer us another year at community rates while the exchange was built, so we got to keep our house.

    Luckily (?) the 2012 taxable income from self-employment that set our 2013 subsidies was 35% of 2011 income, because I didn’t work for months while I was sick (and looking back at my work product during early treatment, those clients should have sued me).

    Here’s my question: Would Medicaid buy-in let this family pay a capped % of AGI in premiums, or…? What are the models for how that might work? Asking because unlike these GOP-voting mooks who can’t figure out who’s standing on my neck, I live in NM.

  22. 22
    Mart says:

    The great weakness of the ACA is for folks over 50 making good money without a company plan. So many middle and upper middle class independent contractors, consultants, and small business owners feel screwed by the ACA. Many of them republican (we built this) so this fueled hatred for it. Most do not realize the junk policy they used to have would have bankrupted them had they needed major hospitalization. I would have quit my job and worked as a part timer a year or so ago except for this weakness. Should have been born in Canada.

  23. 23
    dr. luba says:

    @The Pale Scot: The company was not paying $260 a month. That was the employee’s “contribution.” The company was probably paying upwards of $1000 a month, if not more.

    This is what many people fail to realize, usually Trump voters who bitch about how little insurance cost them when they had employer provided insurance (as opposed to paying out of pocket on the Marketplace). They don’t see the part the employer pays, only the part they pay.

  24. 24
    Hoodie says:

    @PST: The reason that healthcare is 18% of gnp is because wages are not keeping up with healthcare costs. Similarly, they are not keep up with educational costs. The social contract was premised on the idea that someone who works hard, plays by the rules and lives modestly should be able to get ahead, not see their economic status continue to be eroded by healthcare and education costs. When you have a system that prioritizes capital over labor and substitutes cheap consumer goods for real quality of life, this is what you get – someone arguing scarcity while Jeff Bezos gets 1 billion in tax subsidies and a new helipad to allow him to continue putting brick and mortar retail out of business.

  25. 25
    Steve says:

    And the employer contribution is untaxed
    as income.

  26. 26
    WereBear says:

    @Ohio Mom: Obviously barely regulated for-profit health care is an expensive and inefficient system.

    I see that as at least 50% of the problem. Europe has been digging into ways of take care of people that don’t cost nearly as much. The idea behind actual tested treatments, not being ripped off by drug prices, and encouraging lifestyle changes instead of just taking pills has been actually working in other countries: there’s no reason they can’t work here.

    There’s an incredible amount of profit taking in the present system.

  27. 27
    Kent says:

    So how much of his premium increases are due to the following two circumstanes:

    1. Trump and Republican efforts to sabotage the ACA marketplace at the national level.

    2. Republican efforts at the state level to sabotage the ACA by refusing to expand medicaid (in Texas) and sabotage the exchanges at the state level. One can draw a direct line between the refusal of the state to expand medicaid and premium increases for private insurance. All those indigent care cases that the hospitals are absorbing that would otherwise be paid by medicaid are instead being subsidized by all the other users of the system in Texas.

    So what is it? 50% 40%? Someone should explain to this tool that his insurance premium increases are the direct result of his votes.

    Honestly I get so tired of these stories. Fuck them. You wanted Trumpcare and Cruzcare? You got it. Suck it up and stop your whining.

  28. 28
    piratedan says:

    @Steve: and naturally, when insurance is discontinued by the company… the employee doesn’t see a raise to compensate, ‘natch. I can grok where the company outlay that was going to insurance being too burdensome, but many of these guys simply pocket the change and in good faith do not supplement the income with the money that they HAD allocated previously to help things out for their employees.

  29. 29
    dnfree says:

    @FelonyGovt: We also have a supplement plan (F, the one that is going away). When we went on Medicare, I attended meetings for Advantage plans, which are much cheaper. But even the Advantage salesperson said in the meeting, “IF you have known health conditions and IF you can afford it, a supplement plan is the way to go.” We have had a couple of health crises, and between Medicare and Supplement F, we have paid not a penny out of pocket. So yes, it’s expensive, but it’s a predictable expensive. You can also go to any doctor you want to (pretty much) without worrying about in and out of network, and you’re covered fully if you’re away from home.

  30. 30
    The Pale Scot says:

    @dr. luba: It was a guess-tamite, another reason to tax benefits, transparency. It’s amazing how the phrase “financial transparency’ incites rage and fear.

  31. 31
    PST says:

    @Hoodie:

    The reason that healthcare is 18% of gnp is because wages are not keeping up with healthcare costs.

    I think this underestimates the degree to which healthcare costs more because we can do more. I’m old enough to remember a childhood friend dying because some infection shut down his kidneys. No dialysis, no transplants. Leukemia was always fatal. We are getting a lot for our 18%. People accept paying 25 or 30% of income for housing. In the long run, spending a large share of income for healthcare will be a new normal, whether it comes as a tax, a premium, income forgone that our employer pays on our behalf, or something else. One way or another, we will consume less of other goods so we can have modern medicine.

  32. 32
    gvg says:

    you know, I think running stories like this with the dumb fuck still supports Trump, are actually sabotaging the democrats message, that this can be fixed. It makes people overlook all the smart people who are just as bad off, with just as sick a family, who were smart enough to vote for democrats who try to help, but who are still being harmed by these malevolent tribe voters. Journalists seem unable to leave out that kind of hook to get people to read and talk about the story.

  33. 33
    sheila in nc says:

    @PST:

    One way or another, we will consume less of other goods so we can have modern medicine.

    Yeah, that’s an important point. I seem to remember Uwe Reinhardt said the same thing — along the lines of, “If you think about all the things you could spend money on, wouldn’t good health be up near the top? Maybe 17% of GDP isn’t out of line?”
    I’ve had a GI condition for over 40 years, so I’ve had a front-row seat for the development of incredible new treatments during that time. Now I’m taking a biologic which is egregiously expensive.
    I have GREAT insurance (I’m a Federal employee) and I read my pay slips so I know how much my employer is paying (it’s about twice what I’m paying), but I’m sure there are many, many people for whom my treatment would be out of reach — even insured people. Not sure what to do about that, but it would certainly help the policy discussion if people had some idea how much the full cost of ESI really is.

  34. 34
    ProfDamatu says:

    @PST:

    I think this underestimates the degree to which healthcare costs more because we can do more. I’m old enough to remember a childhood friend dying because some infection shut down his kidneys. No dialysis, no transplants. Leukemia was always fatal. We are getting a lot for our 18%. People accept paying 25 or 30% of income for housing. In the long run, spending a large share of income for healthcare will be a new normal, whether it comes as a tax, a premium, income forgone that our employer pays on our behalf, or something else. One way or another, we will consume less of other goods so we can have modern medicine.

    With respect, I think this is only part of the explanation. Yes, medical costs have risen partly because we can now do more for many conditions that used to be fatal or extremely disabling. But that doesn’t fully explain the fact that medical inflation is so much faster than inflation in other parts of the economy. That, I suspect, is a “because we can” situation. Think of all the instances we’ve seen of legacy drug prices being raised exponentially just because some drug company can – I’m thinking here of EpiPens and insulin, but there are many others. And let’s not forget that in Canada, the UK, much of Europe – they have the same treatments we do, but somehow are not paying 18% of GNP on health care.

    I’ve also got to push back against the idea that we should just get used to the idea of paying 18% of our income on health care, that we can just consume less in other areas of our lives. First of all, it does amount to a highly regressive tax. Yes, we “accept” housing costs of 25-30% of income, but there are things that can be done to ameliorate those costs: you can live in a smaller dwelling, in a less desirable area, you can have roommates (N.B. – yes, I do realize that even those measures don’t work at all for everyone, but I’m trying to illustrate how much worse the situation is for healthcare). But with medical care, you need what you need, and there very often isn’t any cheaper alternative that’s as efficacious that you can try first. And that’s assuming that you can find out what things cost in the first place!

    Not to mention the fact that the 18% you quote is of necessity an “average” of sorts. It might actually be a worthwhile tradeoff to consider if we could get rid of all insurance payments and substitute a tax of 18% that paid for all health care (no co-pays or coinsurance) – though I might argue that’s still too high and that cost containment needs to happen also. The way it actually works now is that some people pay up to 9.65% of their income in premiums and nothing else (the healthy ones), while those who had the temerity to get sick pay that plus exorbitant and rising out of pocket costs. For example, if I hit my OOP max for next year, I’ll have paid 30% of my income in medical costs. And that percentage will only rise, because except for the poorest, although premium costs are capped as a percentage of income, OOP costs are not, and indeed MUST rise in order to avoid metal level creep. To put it another way, if it’s true that we just have to get used to paying that much for medical care, if we truly wish to have a society, we need to figure out a way not to impoverish those who are less medically fortunate, and/or prevent them from having their life options foreclosed by medical costs.

  35. 35
    Chetan Murthy says:

    @PST:

    I think this underestimates the degree to which healthcare costs more because we can do more.

    Other OECD countries achieve equivalent levels of care (and outcomes) without anywhere near the %GDP of expenditure. It’s a uniquely American problem.

    @PST:

    However, living as we do in a time and place where about 18 percent of GNP goes to healthcare

    My recollection is that it was 10% — wow, I’d forgotten it was 18% . I have to say: I -get- that this family is suffering. But if they expect to pay less than 18% of their income for health care, then they need to sign up for steep progressive taxation. Or *aggressive* cost-control. And at a first approximation, they CANNOT expect to pay less as a percentage of their family income, than the -nation- pays as a percentage of its income.

    To be clear: I think the answer is confiscatory progressive taxation AND cost-control.

    Like @Victor Matheson:

    Either it comes from the healthy insurance buyers which you lose because of the split market (and the lack of a mandate), or it comes from the government through taxation

    I don’t understand how a split market helps. And further, young healthy people [who want low premiums b/c underwriting] become old sick people [who want low premiums BECAUSE DON”T ASK THAT”S WHY]. I don’t understand how this makes sense, except as a way to softly-softly get us to single-payer-as-a-backstop-for-all. Which I don’t object to, but, y’know, I’d prefer it be stated that way.

    David, I really like your posts about this stuff. I know we civilians aren’t really qualified to understand it all, and I appreciate your explanations very, very much.

  36. 36
    smintheus says:

    He wants to help Republicans take health care coverage away from others because why should it be subsidized, but the ACA is to blame because his own insurance isn’t subsidized? Where is the logic? The guy makes more than 100K per year, he and his family can surely afford to live on that and buy health insurance. There are a lot of very poor people who lack affordable health care because those same Republicans have decided to make it so.

  37. 37
    ProfDamatu says:

    @Chetan Murthy:

    Other OECD countries achieve equivalent levels of care (and outcomes) without anywhere near the %GDP of expenditure. It’s a uniquely American problem.

    Heh, you said what I was trying to say in many fewer words!

    More generally, I think this discussion is kind of eliding the difference between premiums and total medical costs, and also not grappling with the uneven distribution of those costs. I’d think that at least for people reasonably above the median income, 18% wouldn’t be a ridiculously out of line amount to pay for health care, so long as (a) that’s the total and (b) that’s a hard cap. I’m not really comfortable with arguing that everyone should have to pay 18%, because that’s going to be much more difficult for people who make the median income or below. I mean, it’s already a bit painful for those at the high end of the subsidy window to pay 9.65% of their income for insurance premiums; nearly doubling that would throw a ton of people out of the affordability window. That’s also why I’d say that the 18% (or whatever at lower income levels) would need to be a hard cap on all medical costs. As I mentioned above, if I hit my OOP max next year, that plus my premiums will amount to about 30% of my *pre-tax* income. (Universe willing, that won’t happen, but when you’ve had cancer twice the possibility is always there.) That sort of cost is just not sustainable year in and year out, which I know happens to people with expensive chronic conditions. I could see potentially being able to budget for 15-18% of your income going to medical costs – it would suck, but would potentially be do-able – but not the 30% or more that many people now face.

    Which brings me to my other point, which is that all of this discussion of average medical costs tends to obscure the fact that medical costs have a huge rightward skew. This means that if we aim our policies at the “average” health care consumer, we do have a tendency to massively screw over the people in that right tail. (This is a bigger problem for those who remain in that tail, but even for people who have one bad year or two, the financial consequences can be lifelong.) It just seems to me that financing care for the most expensive 5%, who account for well over 50% of all health costs, is almost a separate problem. Not that I’m an expert, of course, but it’s just frustrating! On the one hand, the ACA saved my life – under the old system, I’d have been uninsurable when I got breast cancer due to having had lymphoma previously – but on the other, every year I’m expected to pick up a greater and greater share of my ongoing monitoring costs (as deductibles and OOP maxima rise), to the point where, as I said, it’s well over 20% of my pre-tax income, and there’s no real near term possibility of it getting any better.

  38. 38
    bob hertz says:

    I have been writing for 3 years that subsidies should be available at all income levels. These “cliff” programs where subsidies drop arbitrarily to zero create hardship and bitterness.

    As mentioned earlier, the Repug-nicans would rather keep the horror stories going versus spending some money and fixing the problem.

    I have scoured the internet and have never found a good study of how much it would actually cost to extend the subsidies.

    Here is how to approach the problem:

    1. How many persons over 400% want to buy health insurance?

    2. What is their average income?

    3. What would be the average subsidy?

    Example….a family of four earns $120,000. ten percent for health insurance means their maximum premium would be $12,000 or $1,000 a month.

    But the ACA Silver premium is $2,200 a month. So their subsidy would be $1,200 a month or $14,400 a year.

    You do the same for singles and couples. I am betting you wind up with $10 tp $20 billion a year total in new federal spending. Well worth it in my view.

  39. 39
    ProfDamatu says:

    @bob hertz: Extending the subsidies would be an excellent idea. I like Charles Gaba’s framework on that, where we decrease the percentage of income that most of the currently-subsidized are required to pay for their premiums, while eliminating the subsidy cap.

    As my previous posts show, though, I’d be willing to eliminate the cap but leave existing percentages in place if we could get a percentage cap on out of pocket expenses for people over the CSA subsidy threshold. Don’t get me wrong, I’m glad folks below the threshold get that assistance! My argument is that it’s a problem to saddle people with ever-increasing out of pocket costs; already, for people not too far above the CSA threshold, they feel like they’re just “buying a premium,” that they can’t afford to use their insurance because they’ll have to cough up another $5,000-$7,000+ before the insurance kicks in…which, when added to premium costs, ends up being 30% or more of their income.

    I forget who I got this from, but really, we should maybe be talking more about health *financing* rather than health *insurance*, when it comes to the people with the highest need. The model we’re using now assumes implicitly that high OOP costs are acceptable because a major medical problem is like a car accident – you take a one-time financial hit, which can be fairly painful, and the insurance takes care of the rest, and that’s okay because it’s just the one time, and “most” middle income and above people can absorb that. Lots of wrong assumptions in there, of course, but the one that’s bothering me here is the one about people needing insurance for “hit by a meteor” events, when in fact a lot of the most medically expensive people are in that boat year after year, meaning that high OOP costs are not okay. TL;DR – an insurance model just doesn’t work for people with high, consistent expenses, unless they’re wealthy.

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    ProfDamatu says:

    @bob hertz:

    But the ACA Silver premium is $2,200 a month. So their subsidy would be $1,200 a month or $14,400 a year.

    Also, it occurs to me that your example here isn’t really out of line with the amount that many employers are paying as their contribution to their employees’ health insurance!

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