PSA: Sign-up

Tonight Tomorrow night at midnight is the deadline on Healthcare.gov to sign up for coverage that starts January 1.

If you are already in a plan for 2016 and do nothing, you will be auto-assigned to a plan that (hopefully) is similar to what you have now.

If you are not covered, get covered tonight.

We don’t know what the Repeal bill will do that market as we have not seen enough of the language in it. We don’t know if there will be a Replace bill or what will be in it. If there is a Replace bill, it will most likely count on the idea of continuous coverage as its mandate analogue. So now is the time to build the history to survive Replacement.

Get covered tonight!

UPDATE: I missed a day



HSAs, tax deductions and help for those who don’t need it

Health Savings Accounts (HSA) are going to be a big component of whatever passes as Republican health policy over the next couple of years. An HSA is a tax advantaged savings account that can be used to pay for out of pocket expenses and premiums. They are initiated and contribution eligible when the owner is covered under a high deductible health plan (HDHP). One of the primary tax advantages for an HSA is that contributions are tax free. Growth (as long as it is used for qualified medical expenses) is also tax free. I want to focus on the first part though.

My wife was notified of her bonus yesterday. Her firm also gave her a cost of living and merit based pay bump. She’ll see her bonus in the first check in January. I was sitting in a meeting where I barely needed to pay attention so I started sketching out my family’s 2017 budget. 2017 is looking good for us. I figure that I’ll still do some soccer but the four year plan to trade quantity for quality will continue as I value my family time more than soccer time as I no longer need it to pay the mortgage. My son will be out of daycare this summer so we are seeing a major expense drop and our incomes are going up. As my son leaves daycare, we’ll lose the value of the tax free benefit of the flexible spending account and that thought made me angry. Not angry at losing a tax benefit but angry at getting a lot of help when my family really does not need a lot of help.

We are able to contribute tax free a significant chunk of his day care costs. In 2016, we are doing well for ourselves so our marginal income is taxed at a fairly high marginal rate. I’m okay with paying a high marginal rate as I like civilization and the public sphere. I thought back to 2009 and 2010. Those years were lean. I was either out of work or consulting and my wife was working but unable to find full time work. We were tight and paying the mortgage was an adventure some months. If we were able to afford to put money away, we would have seen a tax benefit that is significantly less than what we are getting now. And those were the years when we really needed help as we had an infant daughter and a fraction of total income in 2016 or projected for 2017.

I’m angry about this because the tax deduction racket shovels most of the benefits towards people who don’t need the additional help. Someone who is in the top bracket this year will see the federal government subsidize their $1,000 contribution with a $400 tax break. Someone who is making $10,000 a year will not be able to afford to make a $1,000 contribution and in the odd case that they could, the federal subsidy administered through the tax code is only worth $100. That is wrong on a moral basis. More help goes to people who really don’t need it as the marginal value of their last dollar is fairly low.

One of the policies I want to see advanced is a flipping of tax deductiblity towards an open ended credit so it is more of a sliding scale based on either income or contribution. Here is how I think it could work:

The first $200 of a contribution to an HSA or an FSA would have credit equal to the size of the contribution times the top income tax marginal rate.
The next $500 contributed would have a credit equal to the size of the contribution times the second highest income tax marginal rate
The next $500 would have a credit equal to the increment times the third highest marginal rate

This would continue until a threshold is reached where any contributions to a tax advantaged account receive a federal subsidy equal to the lowest marginal rate. It still encourages savings but it gives more help to people who need it and less help the the people who are in pretty good to really good shape.



Geographic disparities and HR2300

HR2300 is the incoming Secretary of Health and Human Services, Rep. Price (R-GA), PPACA replacement bill. It does lots of things. One of those things is it replaces income based subsidies with age based subsidies.

Sec. 101. Refundable Tax Credit for Health Insurance Coverage
 Provides for refundable, age adjusted tax credits with amounts tied to average insurance on individual
market adjusted for inflation.1
o $1,200 for those between 18 to 35 years of age
o $2,100 for those between 35 and 50 years of age
o $3,000 for those who are 50 years and older
o $900 per child up to age 18

Besides being grossly inadequate in size, there is another problem with these subsidies. These subsidies will have massive geographic disparities. Individuals who live in low cost medical markets with large and healthy risk pools will see their subsidy cover a far higher percentage of their premium costs for a given actuarial value. Individuals who live in high cost medical markets will pay a lot more out of pocket for their premiums. Below is a map of every county on Healthcare.gov excluding Alaska. The pricing is the least expensive Silver plan with no subsidies for a forty year non-smoker. The range is significant. The least expensive Silver in the data set is thirteen counties in Texas at $199.28 per month. The most expensive non-Alaska coverage is three counties in Arizona at $754.74.

least-expensive-silver-2017

The subsidy in the price plan will let the Texas 40 year olds buy 70% AV coverage for less than $20 a month out of pocket. Given quite a few other moving parts in HR0-2300 I can’t get a firm estimate but this is a good ballpark estimate. However the subsidy for the three Arizona counties for a forty year old would be sufficient to buy 25% AV coverage and the individual is paying $500 out of pocket every month.

We’ve talked about county level inequities within PPACA through Silver Gapping and Silver Hacking

More importantly, people in Perry County who are getting subsidized will see the ACA working really well. They have good, cheap health insurance. However their cousins across the state are getting a raw deal compared to the great deal that they get in Perry County. This is especially true as we move up the income scale which means moving up the likely voter scale and influence scale.

The people in the cheap Texas counties will see the Price plan as a great deal, especially higher up the income scale as the current subsidies fade out and then fall off a cliff. The people who make under 400% FPL in Arizona will be getting a raw deal.



Distributional Impacts of Price Plan (Reprise)

Now that we know Rep. Tom Price (R-GA) will be the next Secretary of Health and Human Services, it would be a good idea to look at the mechanics of his Obamacare Repeal and Replace bill. We did this in 2015 for HR2300 and I am reprinting the post on distributional impacts below. The mechanics of the plan are described in this post:

TLDR: The plan is good if you are healthy and wealthy as there are a ton of tax breaks and tax shelter expansions through HSA expansions. If you are chronically ill or poor, you are significantly worse off. And now for the moldy oldie:
Read more



Do Not Be Distracted By What The Shitgibbon Says. Pay Attention To What His People Do

One of the signal failures of the media throughout the Trump dumpster fire of a campaign was to focus on his words — parsing, shifts in terminology, trying to distinguish between lies and hyperbole, or simply providing theater criticism on his performances, connections to audience and so on.  All the while, the critical information: what the combination of his ample history, the (few) clear positions he staked, and the people he hired revealed about what Trump would actually do as President.

That basic error is still with us, nicely diagnosed in this post by Robinson Meyer over at The Atlantic:

It works like this: Donald Trump, the president-elect himself, says something that sounds like he might be moderating on the issue. Then, his staff takes a radical action in the other direction.

Last week, Trump told the staff of The New York Times that he was keeping an open mind about the existence of climate change.

This was, as Meyer notes, treated as a major shift, given Trump’s earlier claim that global warming was a Chinese hoax.  As a result, many slow learners touted this story (Meyer self-indicts here.) But, of course, Trump’s almost certainly intentionally vague statement —

“I think there is some connectivity” between human activity and the warming climate, Trump said. “There is some, something. It depends on how much.”…

both grants him almost unlimited freedom of maneuver and was almost immediately belied by what his transition team is actually doing:

A day after Trump talked to the Times, The Guardian reported that the Trump administration plans could cut all of NASA’s Earth science research….

…which, as many have already noted, is vital for ongoing climate monitoring and ongoing attempts to study the implications of human – driven global warming with the resolution needed to inform action.

hieronymus_bosch_versuchung_des_hl-_antonius

Then there’s this:

Politico reports that the Heritage Foundation senior research fellow, Steven Groves, has been added to Trump’s State Department transition team. Just last week, Groves called for the United States to leave the UN Framework Convention on Climate Change, the overarching treaty that governs how the world organizes itself to address global warming. Groves also said the U.S. should move to “dismantle” domestic climate regulations.

Thus, a picture of a Trump administration policy on climate change: destroy the research infrastructure needed to study climate, and wreck both national and international prospects for action to address what a true existential crisis.

The moral, to use Meyer’s phrase, is that Trump is a master of the two-step, baffling the unwary (aka, seemingly, the entire New York Times staff) while proceeding behind that verbal smokescreen towards the worst possible choices.  We need a much more vigilant press, and a brave one.

Image: Hieronymous Bosch, The Temptation of Saint Anthony (left panel detail), 1495-1515.  Not an exact match to the post, but I’m kinda just looking for apocalyptic images these days, and this certainly works for that.



If You Don’t Know Who The Patsy At The Table Is, Dear Trumpkins…

...it’s you:

Again and again, President-elect Donald Trump presented himself as the coal miners’ candidate. During the campaign, he promised to bring coal back into the economy, and jobs back into struggling Appalachian towns.

But now some in coal country are worried that instead of helping, Trump’s first actions will deprive miners — and their widows and children — of the compensation they can receive if they are disabled by respiratory problems linked to breathing coal mine dust.

That’s because buried in the Affordable Care Act are three sentences that made it much easier to access these benefits. If Trump repeals Obamacare — as he vowed to do before the election — and does not keep that section on the books, the miners will be back to where they were in 2009, when it was exceedingly difficult to be awarded compensation for “black lung” disease.

coal_mining_18th_c

This is by no means a done deal, given that at least some coal-country legislators (Joe Manchin, for one) have declared their support for retaining this in whatever comes out of the health care catastrophe the GOP is determined to commit.  But McConnell is, as usual, mum on the matter, and if I were a coal mining family depending on the pittance they do get (top payment for a miner with three dependents: $1,289/month), I’d be getting ready not for hard times — they’re already here — but worse.

[update: obligatory post soundtrack]

The key change the ACA implemented in black lung cases was to shift the burden of proof: instead of a miner having to prove that the work caused the disease, under the new rules,

If a miner has spent 15 years or more underground and can prove respiratory disability, then it is presumed to be black lung related to mine work, unless the company can prove otherwise.

This wasn’t a case of free money all around. As reporter Eric Boodman writes,  “In 2009, 19 percent of claims for black lung benefits were successful; in 2015, that percentage had jumped to 28.” That’s a big jump — but hardly evidence that the black lung compensation process is a wild government grab of beleaguered coal company assets.

Those companies hate the rule, with a spokesman telling Boodman that it’s created “a supplemental pension program” rather than the compensation for occupational disease, which is as fine a bit of high priced turd polishing as I’ve seen in a while.

TL:DR?  Think of this as Mencken’s rule in action:

Democracy is the theory that the common people know what they want, and deserve to get it good and hard.

Trump voters in coal country — West Virginia, Pennsylvania, Ohio, Kentucky — were promised their country back.

What will they receive?

The shaft, deeper and darker than any hole miners have dug in the hunt for what will continue to kill them where they stand.

Image: Léonard Defrance, Coal Mining, before 1805.



A few mechanical points about replacing the ACA

Just a few points that need to be made as the Republicans finally caught the car that they were chasing and can now repeal and replace the ACA.

First the ACA is really good for their base voters who don’t have employer sponsored coverage and the Republican think tank plans are really bad for those same voters:

Secondly, the talk right now is the repeal and replace components are to be split.
The mechanics are fairly straightforward. Congress would pass the FY 2017 Budget resolution that calls for reconciliation on healthcare in the first week of January. A reconciliation bill that zeroes out all subsidy spending on the ACA passes. The funds will sunset on 12/31/2018 for Exchange subsidies and Medicaid expansion so there will be a 22 month bridge period. That bill gets signed by early February 2017. Repeal is in the books and if nothing happens 20 million or more people lose their insurance on 1/1/19.

Replace is a more nebulous concept. Now that there is a hard deadline, the thinking is that something gets passed through normal order with some Democratic votes as Democratic Senators won’t want to hurt their constituents.  The rumbling that the Senate Republicans won’t kill the filibuster makes this very interesting as a bill that needs at least eight or nine Democratic defectors means everyone is responsible for the outcome and no one is blamable in 2020.

Best case scenario is the Replace bill (of some sort) is passed late summer or early fall. Let’s say is signed on October 1, 2017 with a go live date of January 1, 2019.

There is a problem here. Any big bill will have major rule making. Any big bill will require insurers to reconfigure and retweak their systems. I worked 70 hour weeks from roughly July 2012 to October 2013 to get my little part of the QHP Exchanges to a point where the user facing chunk was minimally functional. I then spent another six months getting all of the back-end mechanics of directory and network information working cleanly in an operational, no human intervention sense.  (I was up 53 of the 60 hours before October 1, 2013 launch date getting the final network directory ready to launch).

The ACA had roughly a 45 month ramp up period from signature to going live on the major components. The REPLACE bill would have 14 months. And honestly, the functional time frame is shorter as any insurance company changes need to have a code freeze at least three months before the open enrollment period for effective testing. We could hold a hundred million claims for the first quarter of 2019 but that would be BAD (TM). So assuming an October 1, 2018 open enrollment period, the insurers need to have their changes in the final test environment by the middle of July which means development specifications for minor changes need to be developed by January 2018. And that means CMS or whatever other federal entities that need to issue rules and guidance will have less than three months to issue the rules/regulations, take comments, modify proposals and send out final regulations.

That is impossible.

If the replace bill is signed in April, 2017 a 1/1/19 go-live date is vaguely plausible. I’ll be very glad that I’m not a plumber anymore but it is vaguely plausible.  If the Replace Bill is anything more than a rebranding of the law and a dropping of subsidies, required actuarial value and essential health benefits, insurers need at least eighteen months from the signature to get something together and preferably 18 months from when CMS issues the big rules to get a good launch.  If it is just a rebrand and a chopping twelve to eighteen months is needed to not have a fiasco of a roll-out.