"So far, more than 2 million Americans, many previously uninsured, have enrolled in private health plans, thanks in large part to new federal subsidies for low- and middle-income people to buy coverage. Their difficulties in navigating the system since its rocky launch Oct. 1 have dominated the headlines. A far greater number — about 3.9 million — took steps in October and November to sign up for Medicaid, according to federal figures. That includes people who became eligible for the state-federal program under the expansion as well as those who could have enrolled previously, but for one reason or another did not sign up until now. Although the Medicaid expansion has gotten less attention in recent months, it remains a flash point. The issue has split the nation in half and has become a proxy for the broader debate over the role and responsibilities of government." Washpost
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The ACA is a strange beast. People are required under the original law to have health insurance acceptable to the federal government. A failure to do that is supposed to lead to a fine on a rising scale over years. Obama keeps delaying the mandates but the original law is still in effect. People with enough money can simply buy from an insurer. People who can't afford to pay the whole cost of this insurance can search in federal or state run "exchanges" for insurance. A complex formula then decides if they deserve a subsidy from the taxpayer in order to pay for that "private" insurance. If they are qualified they are paid this subsidy both in cash and in tax credits. The tax credit is paid in advance based on estimated income for the coming year. What will happen if income does not meet expectation is unclear to me. Does the government seek to recover the money advanced? There are other formulas in the "exchanges" that calculate whether or not a person has such a low level of income that they qualify for a form of the "dole" called Medicaid. People who so qualify would not normally pay federal or state income tax. Medicaid is essentially a single payer system. It is given gratis to the recipients. Medicare, a health care plan for wealthier, older, people, is not free. Premiums are paid for parts of Medicare. The ACA has made Medicaid available to a large number of people who would not have been qualified before.
A couple of observations:
– It should not be surprising that people who are qualified for private insurance subsidie or Medicaid choose Medicaid. It is free to them however costly it is to the taxpayer.
– This result was easily predictable. This raises a question as to whether or not the expansion of Medicaid was not the real goal of the ACA. The subsidies for private insurance are a huge windfall for the insurers. Was this a price paid in order to make Medicaid expansion politically possible.
– The taxpaying citizenry pay the cost of all this and it will be a high cost, but the biggest "losers" in this deal are people who are not eligible for subsidies or Medicaid because of income that is too high but not high enough to make unsubsidized but required insurance affordable. How many will there be in that group? pl
The ACA is a work in progress and like the early Medicare is full of anomalies, glitches and errors. It will take several years to come up with half-assed solutions to problems which probably will not be completely satisfactory. The money to cover the Medicaid increase is supposed to come partially from the cessation of the funds that are now given to hospitals and clinics to reimburse them for treating non-insured patients . This is a major problem in states like Texas that have not signed up for Medicaid expansion. The hospitals and clinics will lose their non-insured money but by law will still have to treat uninsured patients.
In the meantime, a number of adult children and grandchildren of my friends have signed up for Obamacare and are paying substantially less for better policies than they were able to obtain on the previous individual retail ripoff insurance market.
The ACA is a work in progress and like the early Medicare is full of anomalies, glitches and errors. It will take several years to come up with half-assed solutions to problems which probably will not be completely satisfactory. The money to cover the Medicaid increase is supposed to come partially from the cessation of the funds that are now given to hospitals and clinics to reimburse them for treating non-insured patients . This is a major problem in states like Texas that have not signed up for Medicaid expansion. The hospitals and clinics will lose their non-insured money but by law will still have to treat uninsured patients.
In the meantime, a number of adult children and grandchildren of my friends have signed up for Obamacare and are paying substantially less for better policies than they were able to obtain on the previous individual retail ripoff insurance market.
I think you’re right. Michael Moore predictably calls for a single payer system and sees a path to it through several state experiments in the field as well as several corporate efforts. I hope these moves toward a single payer system work. The current system based on the insurance industry is terrible. Can you imagine if the military health system was insurance based? I’d probably still be paying for my 250 foot helo rappel from a 200 foot rope.
http://www.nytimes.com/2014/01/01/opinion/moore-the-obamacare-we-deserve.html
I would describe the expansion of Medicaid as a plainly stated feature of the plan, not a hidden goal. The universal expansion of Medicare (or perhaps Medicaid) to everybody was unquestionably the goal of those who advocated for the Canadian style system, but that goal was not achieved.
A coalition of interests (led by the Mighty Sir Lieberman of AETNA, I might add) saw to it that our private insurance industry was both saved from the death-spiral of ever increasing rates/lower participation and preserved. A niche within the US healthcare system has been practically enshrined for them. Good? Bad? Works for the Germans, so who knows?
I don’t think anyone can be sure who will ultimately wind up as the losers yet.
About the subsidies, via NPR:
“…the authors of the Affordable Care Act didn’t want the subsidies to become a drain on the Treasury and add to the deficits. So they included provisions designed to offset the cost of the subsidies.
MIT economist Jon Gruber, who helped develop the law, says about half the costs are offset by projected savings in Medicare payments to insurers and hospitals. Another quarter is offset by added taxes on medical-device makers and drug companies.
“The other source of revenue is a tax increase on the wealthiest Americans,” he says. “Those families with incomes above $250,000 a year will now have to pay more in Medicare payroll taxes.”
Those provisions actually make the bill a net positive for the federal budget, the nonpartisan Congressional Budget Office. By the CBO’s accounting, Obamacare will produce a surplus. Gruber says the law will “actually lower the deficit by about $100 billion over the next decade and by $1 trillion in the decade after.”
You can also look at Obamacare as a payoff to the Democratic base. Its wealth transfer from middle class America to the poor, plain and simple. The cost of Medicaid, the tax credits, and the rest of the whole damn mess is going to balanced on our banks because of some mandarin’s insane notion of what’s “Fair”.
North Carolina provides MedicAID only to children and pregnant women. N.C. refused to set up its own exchange for ACA, refused additional MedicAID funding from the feds, and has slashed existing MedicAID funds. I expect the state’s move is to encourage people to not have heart attacks, cancer, pneumonia, etc.
Jill
I read Moore’s article. I believe Moore is projecting his own liberalism onto Obama’s intentions and “knowing what was best”. I believe Obama’s (and Baucus’s) intention was to prevent Single Payer from ever emerging. I remember reading that a coalition of States’ Rights conservatives and Dennis Kucinich forced an opening for state-by-state efforts into the law. I know Obama tolerated it, but I wonder how grudgingly. The one thing Obama really wanted for his insurance company patrons was the forced mandate. I suspect that Medicaid expansion was merely the bait to get the Democrats to bite the forced mandate hook. There will be plenty of time for directing all the Medicaid money to be spent on private profit insurance, which I believe has also been legislated in some states already.
Once the Republicans take both Houses and the Presidency, will they try to repeal the existing permission for states to try these various public-coverage experiments? Will they try legislating further voucherization and privatisation of Medicaid? I believe Obama wants to see Medicare privatised and voucherised in the long run. That’s why he sought the forced mandate and the O-changes for his successors to divert Medicare into if they are able. Maybe the Republicans will repeal the O-changes, but they will never repeal the forced mandate.
My understanding from people who seem to live, breath, and dream all things Health Care Policy related is that ACA was largely successful in addressing the ‘access problem’ in health care: too many uninsured have large ripple effects on the economy. The more people you cover, the more leverage you gain in cost control. Ergo, ‘the access problem’ was seen as a precursor to dealing with ‘the phenomenally escalating costs problem.’
My health care wonk friends argued that to solve the exploding costs problem, a preliminary step required getting more people insured. Originally, they didn’t envision solving this problem via Medicaid, but that’s the way it has turned out.
As I understand it, Medicaid was originally viewed as a fallback option for ACA. However, because of the rancorous partisan conflict (and lobbying pressures) involved in the creation of ACA, the Medicaid option was really the only viable thing left after very close votes barely passed ACA at all. I understand from my health care wonk friends that this is yet another example of ‘not great, but the best we could manage’. After decades of Congressional inaction, even this was seen as a significant improvement on what had preceded it.
Also, smaller businesses were reeling from health care costs and finally determined to push for some kind of solution to the fact that they were being increasingly excluded from health care due to spiraling costs. That built pressure for some kind of solution, even if it meant expanding Medicaid.
As I understand it, ACA did not successfully address the ‘cost problem’ of US health care. Apparently, the only way to really get a handle on that piece of the larger health care problem is to move toward a system that eliminates the costs associated with health care payment and delivery (primarily insurance, hospital, and pharma profits). However, that is apparently anathema to much of American political culture, which tends to sanctify profit-making, even in matters of life and death.
FWIW, I am in the Puget Sound region where we have large health care cooperatives (Group Health, UW Physicians) that are huge non-profits and operate somewhat like single payer systems: they are huge, managed-care operations. These work quite well overall: people pay their premiums, get an ID card, and are handled within that system of health care delivery – everything from prescriptions to MRIs to doctor visits are all provided within the system. Because of the cost structure of the large cooperative, it puts a lot of emphasis on preventative care, because it is very cost-effective.
I do not use the VA system, but I assume that it functions in a similar fashion to Group Health.
An interesting benefit for the large health care cooperatives is that patients within those health care systems have excellent medical records — for instance, if I take my ancient father to Group Health ER, any doctor there can instantly access his most recent medical appointments, lists of all of his meds, all of his medical tests, etc. This can be a lifesaver, and it is due to the fact that all of the medical records for each Group Health patient — including XRays and imaging results — have been digitized and are part of a vast database. (In contrast, I don’t belong to one of these systems and my health care files are basically stacks of paper in several different medical offices. If I show up at ER unable to speak, there’s no way for a doc to know what meds I might be taking, because there is no way for them to access a comprehensive medical record in one place.)
To summarize, and I’m only a second-hand source:
The ‘access problem’ for health care was regarded as urgent. It was also viewed as a precursor for any more serious work in bringing down health care costs over time, while improving service delivery. As I understand it, Medicaid was about the only thing left after the partisans and lobbyists gutted the other options.
“The biggest “losers” in this deal are people who are not eligible for subsidies or Medicaid because of income that is too high.” Precisely.
And the older the person, the greater the “loser.”
The other problem with Obamacare is that deductions are enormous and co-pays eye popping. Deductibles are so high that in most cases people will be paying out lots in premiums and deductibles before getting back anything in insurance.
In other words, Obamacare amounts to what we used to call catastrophic coverage.
In political terms, Medicaid recipients and those subsidized will be appreciative. But their propensity to vote is fairly low.
Those who must pay the exorbitant full price without getting much in return are unlikely to be pleased. And are more likely to vote.
“It should not be surprising that people who are qualified for private insurance subsidie or Medicaid choose Medicaid. It is free to them however costly it is to the taxpayer.”
It is my understanding that those who fall within Medicaid’s income eligibility levels are not eligible for private insurance subsidies. They have no choice.
Imho, the people who take the biggest hit under Obamacare are those who are Medicaid eligible under Medicaid’s expansion criteria, yet live in a state that has opted out of that expansion as a result of the S.Ct. ruling.
Obamacare never envisioned those folks receiving subsidies for private insurance–it was Medicaid only for them.
So, those individuals are stuck between not qualifying under certain state’s Medicaid eligibility, and not earning enough for subsidies.
Overall, I think it was shameful of those GOP governors to refuse expanded Medicaid. It would not have cost their states a nickel in the short term. And when the federal Medicaid subsidies began to be scaled down, they could have opted out them. Millions of their citizens will remain uninsured simply to spite Obama.
Having said that, I am not a fan of Obamacare whatsoever–it’s a gigantic subsidy to the insurance company middlemen who add nothing of value to healthcare.
I don’t know that Medicaid counts as true “single payer” as it is state-administered. In my state two insurers offer plans under Obamacare and also offer plans under Medicaid (along with 3 others). In my state just about anyone who employs someone for 20 or more hours must provide insurance, so the individual market isn’t that big. The state insurance commissioner also gave approval for the same two insurers to continue pre-ACA plans if desired by the consumer. The insurers are charged a state administration expense for the operation of the exchange web-site (which doesn’t work particularly well) and that expense has been reflected as about a 4% increase in insurance plan rates for 2014. The same insurers also provide Medicare Part C (Advantage) plans so they earn income any way you slice it (they are not-for-profit, so can’t be called greedy capitalists). We also have a large military population, whose plans are administered by United Healthcare (Tricare) and Wisconsin Physicians Service (TFL).
Col. Lang,
The referenced WaPo article is, IMHO, unclear on a key point.
The ACA subsidies and the Medicare expansions do not overlap. No one will have a choice between free and subsidized.
The original idea behind ACA was to provide subsidies to buy private insurance all the way down to what was the then income eligibility level for Medicaid. However, as the article states, “the dramatic Medicaid expansion that became part of the Affordable Care Act… turned out to be significantly less expensive than providing federal subsidies to lower-income people to buy private health insurance.” That is to say, you can provide full Medicaid coverage for less than the price of the subsidy for an equivalent private plan. (Medicare & Medicaid cost about 25-30% less to run than equivalent private plans). So, rather than subsidize all the way down, the ACA provided for Medicaid to rise halfway, so to speak, to meet the subsidy cutoff.
Of course, the subsidies and the Medicaid expansions cost taxpayers money. However, in order to require hospitals to provide emergency trauma and emergency stabilization to all comers without regard to ability to pay (your basic EMT services), local, state, and federal governments all provide substantial subsidy payments to hospitals. The federal payments were administered through the medicare program, but they will cease under ACA, because theoretically everyone will have insurance that covers such emergency care (a key part of “ACA compliant”). This is the “ACA Cuts Medicare!!” that the R’s were screaming about.
These savings from ending the hospital emergency subsidies are how the ACA pays for the private plan subsidies and the Medicaid expansion. The states who have expanded Medicaid expect to save similar money from their own public heath budgets, making Medicaid expansion financially attractive (but not necessarily ideologically). The CBO originally rated the swap a break even for the federal budget, but now their latest estimates show a net taxpayer gain, presumably because the exchanges have increased competition between private insurers and lowered their premiums. We’ll see.
Since the whole thing is founded on free-market economics, the Republicans have so far found it impossible to come up with an alternative, if the whole thing collapses, that is materially different. (…or maybe they will have a stroke of genius and take TTG’s advice?…)
All
So, the ACA system as it developed crunches numbers and then simply assigns people to Medicaid if the scores dictate that? If Medicaid is cheaper than the subsidies to be paid to insurance companies then surely the political tendency will be to move to a single payer system. With regard to the elimination of present Medicare subsidies to hospitals for emergency room services, what will happen in the future if someone is brought in unconscious and the hospital cannot establish his insurance status? pl
“not qualifying under certain state’s Medicaid eligibility, and not earning enough for subsidies.”
I beg your pardon? “[N]ot earning enough for subsidies?” The only thing disqualifying one for subsidies is earning too much. You cannot earn too little to qualify for subsidies.
“It would not have cost their states a nickel in the short term. And when the federal Medicaid subsidies began to be scaled down, they could have opted out them.”
It doesn’t work that way. The feds didn’t offer a choice of “you get to expand when we’re paying for it and quit when you have to foot the bill.” That’s why they opted out. They knew it would “not have cost their states a nickel in the short term,” but they are smart enough to look past the ends of their own noses.
“you can provide full Medicaid coverage for less than the price of the subsidy for an equivalent private plan.”
That should have told us something, shouldn’t it? But apparently it did not, since we are still primarily relying on the private insurance model and its higher cost. This country and its government can be incredibly dumb.
“what will happen in the future if someone is brought in unconscious and the hospital cannot establish his insurance status?”
Same thing that happens now thay treat him and figure it out later. If he has no insurance, or if his coverage is inadequate, they bill him and send him into bankruptcy.
Let’s not also forget to mention the extremely narrow provider networks in addition to the eye popping dedeductibles and co-pays, which Bill H was kind enough to point out.
Basically your hope is that you’ve got a doctor or hospital in the area that takes your insurance, or you’re SOL as far as being covered goes.
Coming from a “medicare for all” point of view, I recommend this article as an especially clear account comparing the cost of the 1966 Medicare rollout with the ACA rollout and the reasons for the difference.
http://healthaffairs.org/blog/2014/01/02/medicares-rollout-vs-obamacares-glitches-brew/
cui bono?
Hint:
“subsidies for private insurance are a huge windfall for the insurers. Was this a price paid in order to make Medicaid expansion politically possible.”
Cast your mind back to the drug benefits deal, which guaranteed high profits for public purpose. That’s all that mattered then, as well as constant anti-generic copyright protection agitation. I hope you get to single payor, the insurance co.s are the biggest obstacle to your health. And big pharma at least makes something.
“…in the short term” Precisely. They have to live and govern in the long term.
As for how the “estimated income” is reconciled with actual income and subsidies. The answer I’ve received on this is that at the end of the year, you will receive a tax document from your insurer that details how much you’ve paid (and how much the government has paid) towards your policy. You file this with your 1040. Depending on how much you earn, you will either pay increased taxes or receive credit for a tax refund. This would all be handled through the IRS.
You are forgetting about the “usual customary and reasonable” rates of reimbursement. They’ve been going down for years and patients get stuck with the bill for the difference.
I hope Hillary and the Democrats take everyone advice and adopt single-payer systems as their banner is 2014 and 2016…
Col,
Seems likely the nature of our economy will determine whether or not it morphs into a single payer system. If we have a lot of good paying jobs, the private insurance sector will dominate. If however we have a large amount of unemployment and low-paying jobs, it will fall to the government for so many people that it will simply be a matter of time.
irony alert ..
I live in NC and I think the present governing body here want the sick to die and the poor to move to another state. For a state that claims to be so Christian, it appalls me how unlike Jesus they are.
Helluva way to make public policy.
Charles,
It’s a POS, but we can hope it will “enlarge the problem” to the point where something simpler and more rational becomes politically feasible.
Best I can tell, there exists a sieve in which a person earns (a) enough money in a year to have to file federal taxes, (b) too much to qualify for Medicaid in states that did not expand, and (c) not enough to qualify for subsidies for private insurance. When people fall through that sieve, surely the fine won’t be collected.
The only step that was politically possible was to bring everyone (for some “everyone”) into the existing system of health insurance, while everyone (for some “everyone”) who had insurance would deal with approximately the same nonsense they got used to until the change.
Some of private, for-profit health insurance promotes R&D. History tells it. I’m much less optimistic that profit motives always or generally result in innovative solutions for treatment of chronic diseases, birth control, etc., when the economic system does not require new solutions in order to maintain or increase profits short-term.
Hope the intention becomes reality!