Getting the Exchange Subsidies Right
According to a new Health Affairs study, it’s going to be virtually impossible:
I performed a simulation that shows that under the most likely methods to be used to determine eligibility for Medicaid or for receiving subsidies through exchanges, one-third of people with incomes initially judged to be below the Medicaid threshold would actually [move] into an exchange at the end of the year. Other people would be wrongly deemed ineligible for advance subsidy payments because their projected income was too high, while still others judged eligible for subsidies would receive advance payments on those subsidies that were too high by $208 per year, on average.
This just shows that incompetence and miscalculation are staples of government action. Even if you were to trumpet this from every rooftop, I doubt the anyone who originally made the law would admit the mistake or need for change.
This is why we need real healthcare reform, like the changes Dr. Goodman champions, rather than the fake reform we’ve gotten from pharmaceutical lobbyists, big-government advocates, and communist sympathizers.
Some state governments know it can’t be gotten right. That’s why a few governors have returned grant money and even vetoed state exchange legislation.
Is this supposed to surprise me? The bizarre system of subsidies that requires convoluted calculations is par for the course.
Wow, how strange. It seems that this is needlessly complex. I wonder if there is a sensible solution to all of this.
The confusion, errors, and sheer bureaucratic friction of the subsidies is exactly what I expect also.
However, I want to consider another alternative — straightforward taxes, like Medicare.
Everyone pays a percentage of their earnings while working for Part A, and nearly every senior with a decent income pays a premium for Part B.
The payroll tax is collected from millions of businesses with minimum friction, and the Part B premium is collected from millions of seniors by a deduction from their Social Security check.
I am NOT advocating a complete Medicare for All program that would require a new 15% payroll tax and still go broke.
But I just want to make the point that government can do some things right.
Remember, the subsidies are going to be screwed up and they will require higher income taxes unless we borrow all the money from China.
An increase in Medicare requires the same higher taxes but it would actually work.
Bob Hertz, The Health Care Crusade
But think of how much money Wall Street will make by securitizing the accounts receivable and accounts payable derived from people who were either over or under subsidized. Obamacare meets Dodd-Frank! It’s a beautiful thing!
And we have not begun to see how people will game their incomes to increase their subsidies (often in cahoots with their employers). The wheels will fall off these exchanges very quickly.
Determining eligibility for Medicaid requires a pay stub, or a simple declaration if one doesn’t have a job or, for that matter, an address. Various states have various rules for income that is not counted–some exclude childcare payments, etc. It has always been known that Medicaid eligibility has a lot of churn in it. However, the idea that people’s incomes vary is difficult for a lot of people who have regular salaries and who are enthusiastic about means testing to understand.
So, to make things easier, HHS had a program awarding cash bonuses to states that stopped requalifying Medicaid patients every month and assumed 12 month eligibility after one application. This costs their taxpayers millions, but never mind. It had the nifty side benefit of paving the way for dealing with similar problems in ObamaCare–if you fit in one month, you’re good for 12.
Linda is right about Medicaid, but you can see the swamp of bureaucracy that is needed whenever public assistance has a ‘cliff.” Under $11,000 of intcome you get free healht insurance, over $11,000 ( in some states) you are exposed to the wolves of the indvidual market.
There are three atittudes that government can take, when a relative necessity like higher education or health insurance becomes too expensive for most households.
These attitudes are:
#1. No interest, tough bounce, get a better jpb, social darwiinism. If you cannot afford the health or education product, well, you are not that important to the economy enyways.
if you were a valuable scholar and/or employee, someone would take care of you.
#2. The government will help you buy the expensive product, but only after a minefield of applications and means testing and sometimes outriight lying.
Note that this help requires a lot of tax revenue also.
#3. The government collects taxes and just gives the product to you.
Tbis is the core model of Medicare and Social Security.
I go for #3 any time.
Bob Hertz, The Health Care Crusade