Thursday, February 6, 2014

Affordable Care Act......The Twilight Zone

 Rod Serling could not have written a better story than that of the rollout of Obamacare. Gazing into the future he saw imaginative and surreal happenings which he shared with all of us. He died at an early age (50) and hopefully so too will Obamacare.

"The Twilight Zone" was a television saga from the 1950s when most things on TV were on black and white, which were appropriate colors for this science fiction anthology.  When one watched this series your frame of reference was always questionable for the things, places and times were not what you were led to believe, and only  at the very end did you find you were following  'The Pied piper'.

After analyzing the Affordable Care Act I was doubtful about it's mechanisms although I was very much in favor of it's end game (to produce an equitable and accessible health care system) as were most physicians.

To say that the Affordable Care Act was well meaning would be a platitude for a destructive and wanton negligent act.  My opinion has become more hardened since October 2013 when this 'great hope' for change went into effect.

My relatively neutral opinion at the time was a precautionary tale, as I hoped I would be incorrect. It has not been, and much worse than I could have imagined.

In additon to the direct effects on the health system, the collateral samge is worse for the economy including employment.  The CBO (Congressional Budget Office) states succinctly ,

"The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024. … CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor – given the new taxes and other incentives they will face and the financial benefits some will receive. … In the longer run, some businesses also may decide to reduce their hiring or shift their demand toward part-time hiring – either to stay below the threshold of 50 full-time-equivalent workers or to limit the number of full-time workers that generate penalty payments."

Scott Gotlieb goes on to explain;

As workers transition from part time work (without benefits) to full time work (with health benefits) many workers will actually lose income in the form of the subsidies that they will have to forgo (and the additional fact that lower wage workers, who are in lower tax brackets, won’t benefit as much from the implicit subsidy they will get from the special tax treatment of health benefits that they receive by purchasing their health insurance through their employer). CBO seems to focus mostly on people who are out of the labor force for a period of time and transitioning back to full time work, which suggest its estimates may be low.
CBO states, in reference to these impacts, that the “exchange subsidies effectively constitute a tax on labor supply for a broad range of workers.” CBO focuses mostly on those transitioning to full time work (with benefits). But the same disincentives apply to workers on Obamacare who are already employed full time, and looking to grow their income.
The congressional actuaries go on to state that forgoing Obamacare subsidies and returning to full time work with health benefits (for lower wage and middle class workers) amounts to an average, implicit tax of about 15% paid by each worker. CBO does note that these considerations only affect a segment of the workforce – specifically the middle class and working class who earn annual incomes that put them below 400% of the Federal poverty level (about $95,000 for a family of four). But that represents a large portion of the labor market.

These disincentives can’t be easily fixed – they are baked into the structure of the Obamacare subsidies. A refundable tax credit, similar to the one offered in some conservative plans, sidesteps many of these effects.

Sean Davis has more from the report. And it’s not like the non-partisan CBO is alone in this conclusion: It is consistent with the latest report from the Federal Reserve as well. Whatever the reality of Obamacare’s impact on the percentage of America that is insured or uninsured, it seems clear that they are reducing the number of working hours available and decreasing hiring in professions and positions that are most likely to be filled by the working class … the very people Obamacare was originally intended to help.

-- Benjamin Domenech

All the dynamics that drive up health costs have coalesced in southwestern Georgia, pushing up premiums. Expensive chronic conditions such as obesity and cancer are common among the quarter million people in this region. One hospital system dominates the area, leaving little competition. Only one insurer is offering policies in the online marketplace, and many physicians are not participating, limiting consumer choice.

Until these elements are brought under control, it will be challenging for the Affordable Care Act to fully live up to its name, not just here but in other parts of the country where premiums are high. Other expensive places include rural Nevada, parts of Wisconsin, most of Wyoming, southeastern Mississippi, southwestern Connecticut and Alaska.

Case in point:

But for those earning too much to qualify for federal financial help, the premiums can be overwhelming. A 60-year-old making $47,000 in Albany would have to pay a quarter of her income for the least expensive mid-level “silver” policy, the level most consumers are buying.

Even some people who qualify for federal assistance, such as Stacie Brown, owner of a pottery shop, are balking. The cheapest “bronze” plan for Brown, her husband and son would cost the family $300 a month but not begin paying medical bills until they exceeded the $6,300 individual deductible. The cheapest silver plan would cost $508 a month but not start paying until a $3,000 individual deductible was met. Her son’s pediatrician was not in any of the networks, and that was the one medical service she felt sure her family would use.
Brown ultimately bought a $256-a-month Assurant Health plan for her son, sold outside the marketplace, which covers his pediatrician and unlimited office visits. She and her husband have decided to forgo coverage for themselves, even though they may face a tax penalty of $700.

“I can’t afford the affordable health care,” she said. “I don’t know anyone in this area who can afford it, and I do pretty well in life.”

Post a Comment