Category Archives: Health care and insurance

Affordable Care Act silence is deafening

Does it seem to anyone else like Democrats — including the President — passed the Affordable Care Act and then promptly stopped talking about it altogether? If my read on the situation is right, that’s because they perceived the law polls very poorly. But

  1. If you’re going to lose an election, lose with your back straight. Either voters dislike your voting for the law or they don’t. If they don’t care how you voted, there’s no need for you to be silent about it. On the other hand, if they dislike it, and you believed in the law when you passed it, then stand up for it. You didn’t run for office just to win re-election; presumably you ran because you wanted to achieve something positive, and you thought the law was positive. If the voters do care and you didn’t believe in it when it was passed, your opponent is still going to hound you for your vote when you run for re-election. So what’s the point in hiding from it?

  2. Whether something polls well or poorly isn’t an objective fact ‘out there’ in the universe; whether it polls well depends a lot on whether people whom Americans like — such as President Obama — are out there selling it. Which they aren’t.

  3. The ACA as such polls poorly, because it’s been demonized as ‘Obamacare’. But some of the individual provisions — no discrimination against pre-existing conditions, lengthened coverage under one’s parents’ health insurance — poll well. In many cases I think it’s just that people don’t know what’s in Obamacare. In other cases, like the mandate, people genuinely seem to hate it. That seems like a failure of education: people need to understand that there are only a few ways to make health coverage universal without the market unraveling. Democrats have been terrible about selling the mandate.

  4. Do you care about ensuring that everyone has health insurance, or don’t you? We really need to make clear that that’s what this comes down to: we believe in universal coverage; they don’t. If you believe in universal coverage, something like a mandate is unavoidable. (Expanding Medicare to everyone would have been another option, but insurers never would have stood for it.) Lately Republicans seem to be facing up to this, and at least admitting that they don’t care about universal coverage. If nothing else, that has the virtue of consistency. But it’s morally repugnant.

How much is the employer health-insurance subsidy worth? (Or, I regurgitate Austin Frakt.)

I come back to Austin Frakt’s post calculating how much the Federal subsidy for health insurance is worth every few months, and I think I have to re-study it every time. It’s a hugely important post.

Probably a lot of others don’t read wonky health-insurance blogs quite as obsessively as I do, so the background is like so: your employer (if you’re lucky enough to have an employer that supplies health insurance) doesn’t pay taxes on the health-insurance fringe benefit. When they pay you a dollar in wages, they have to pay their part of Medicare and Social Security taxes. Once they’ve paid their taxes and passed your wages on to you, you have to pay taxes on them. Health insurance isn’t like that: your employer doesn’t pay taxes on health benefits, and neither do you. So one dollar in health insurance is worth more than one dollar in wages to you and to your employer.

Turns out that the subsidy is really distorting. Professor Frakt’s exercise may already be clear to everyone, but I don’t think it was clear to me for a while. So in bullet form, trying to make it as clear as possible (to myself as much as to everyone else) it’s like so:

  • For every dollar an employer pays out in wages, a certain fraction of that dollar goes to taxes (employer pays Medicare and Social Security). Call that fraction T.
  • So for every dollar in wages that the employee receives, the employer pays $(1+T).
  • Flip that around: for every dollar in wages that the employer pays, the employee receives $1/(1+T).
  • Now the employee has his dollar in wages. Of that, a certain fraction goes to taxes (Medicare, Social Security, federal, state). Call that tax fraction E.
  • So the employee is left with $(1-E) of his dollar.
  • But his dollar was already $1/(1+T) of what the employer spent.
  • So of every dollar the employer spends on wages, what ends up in the employee’s pocket is $(1-E)/(1+T). Call this F, for “Final amount in the employee’s pocket.”
  • This means that $(1-F) goes to taxes, for every dollar the employer spends on wages.
  • Put another way: a dollar spent on health insurance, which no one pays taxes on, loses the government $(1-F). 1-F is called the “tax price.” Professor Frakt links here to a paper by the omnipresent Jon Gruber, an MIT professor who was central to building Massachusetts’ universal-coverage system, and who advised President Obama on the Affordable Care Act. The paper — “The Impact of the Tax System on Health Insurance Coverage” — sounds interesting.

To put some flesh on the numbers:

  • when the employer pays you a dollar (in wages, but not in health insurance), it spends 6.2 cents on Social Security and 1.45 cents on Medicare Part A. So T = .062 + .0145 = 0.0765.
  • you pay Social Security and Medicare Part A (same percentages as your employer), plus your Federal marginal tax rate (I’m in the 28% bracket), plus your state marginal rate (Massachusetts’ is 5.3%). So my marginal rate is 40.95%, whence E = .4095.
  • So when my employer spends a dollar on health insurance rather than on wages, the government loses 45 cents that it would have picked up in taxes. (Professor Frakt ends up with 37 cents using more-conservative assumptions, namely that the state tax rate is 5% and that my Federal marginal rate is 20%.)

This distorts the labor market — encouraging employers to buy more-expensive health-insurance plans — and costs the government money that it could be spending on other valuable things.

And it’s regressive: if you’re in the top (35%) bracket, you’re getting more of a benefit from the health-insurance subsidy than is someone in the 28% bracket. Same goes for the mortgage-interest deduction, and it may be even worse there: not only do higher-income people get more off their taxes for every dollar they spend on mortgage interest than do lower-income people, but the more you spend on a house, the more you can take off your taxes. Assuming Bill Gates’s house cost the $97 million that some random web page says it did, that he put 20% down, and that he financed it with a 2%, 30-year fixed-rate mortgage, he’ll be able to use the mortgage-interest deduction to avoid paying taxes on $26,345,019.10 in income over the life of the mortgage. Assuming he’s in the 35% bracket, that’s $9,220,756.69 that the mortgage-interest deduction saved him. Whereas if you’re in the 28% bracket and finance a $350,000 home the same way, you’ll save $33,270.77 over those same 30 years.

These “tax expenditures” cost the government money in the same way that buying a bomber or building a road costs it money. But tax expenditures haven’t, until recently, appeared on the radar in the same way that a $500 toilet seat does. We may well be paying for Bill Gates’ $500 toilet seat, but it hasn’t had the same visceral effect.

Choosing low-calorie meals (at the margin)

It’s one of the largely unpublicized but seemingly very important parts of the Affordable Care Act that restaurants with more than 20 establishments will have to start attaching calorie counts to their menu items. (This is in section 4205 of the bill. Because THOMAS links are still, bizarrely, after 15 years, inscrutable and impermanent, I’ve included that section below the fold.) I find this completely excellent. It may not end the obesity epidemic in this country, but it will certainly help at least some people make healthier decisions at restaurants. Quite often one just doesn’t know which items are unhealthy. It’s shocking how often a seemingly healthy menu item really isn’t; for instance, I got a Cobb salad from Cosí/Così just about every day for a few months, until I found on their website that it’s a 700-calorie salad. I no longer order that. At any lunch place that lists calories on the menu (Au Bon Pain, say), I routinely look for the lowest-calorie item. Even if I don’t pick that item, I look around the menu with that as a baseline. (The descriptor “low-calorie,” unfortunately, often means the same thing that “diet” does on soft drinks [which I also never drink]: “a natural-tasting ingredient has been replaced with the finest gross-tasting chemicals that Northern New Jersey petrochemical plants could churn out.”)

So I give huge thumbs up to this innovation. It may not solve anything, but it’ll help.

Continue reading

Health reform maybe striking a blow for gender equality?

This is really out of my butt, but I do wonder:

  • A lot of couples would really like to split the childcare more evenly.
  • It would really be ideal, toward that end, if both members of the partnership could work part-time and take care of the kids the other part of the time.
  • But there’s very little meaningful part-time work in this country.
  • Part-time work is made even less of an option because health insurance largely only goes to full-time employees.
  • But under health reform, you’ll be able to get health insurance through an exchange, if your employer doesn’t offer it to you. (Note to self: look up the details of who’s eligible to buy on the exchanges.)
  • So some couples won’t need to send one partner into full-time work, because they’ll be able to get health-insurance with only part-time labor.

Obviously this isn’t a full solution, and obviously there are benefits to full-time labor that part-time labor still won’t be able to match. But at the margin, at least, I suspect this will lead more than a few couples to split the childcare. Which is a good thing.

Stop going off about the public option

Sorry to be so negative, but really: people just shouldn’t be getting pissed about the absence of a public option, for at least three reasons:

  1. Even with a public option, we always would have needed to address subsidies for those with low incomes. People are welcome to chime in with other information here, but the public option does not address affordability at all. It addresses the quality of insurance. Subsidies were always the bigger deal.
  2. We got coverage for 32 million people. We got affordable coverage for 32 million people. We got coverage that saves 32 million people from health-care-related bankruptcy. Liberals of a certain stripe have gotten monomaniacal about their preferred policy, rather than focusing on the end goal — which is to help people who couldn’t afford good health insurance to afford good health insurance.
  3. Now we have something that we can fix. Before we had nothing. New entitlements don’t disappear, as David Frum has now-famously pointed out. Entitlements get better. So let’s make this one better.

This has been, in some ways, a great hour for the Left. In other ways, it has revealed them to be monomaniacal public-option fetishists. Now is not the time to continue the fetish. Now is the time to consolidate our gains and keep moving forward. You want a public option? Great! You’re closer to a public option than you were a year ago. So go get it. Donate to candidates who support it. Call Bernie Sanders’s office and ask what tactical advice he’d give. Don’t act like an armchair quarterback and complain that the big bad U.S. Congress with its big bad traitorous liberals didn’t give you what you wanted.

History is written by the winners; history also exalts the winners

If this health-care-reform thing happens, people will find Reasons Why It Happened. Look at what happened when Scott Brown won in Massachusetts: people tried to look for a Large Trend or whatever that explained why the Republicans were taking over. Brown won with 52% of the vote — certainly a solid lead, but not exactly a landslide. Many things could have caused a three-percent swing in votes. Coakley could have been a better candidate, for instance. But once Brown won, journalists had to opine on What It All Means — because it had to Mean Something.

Now here we are on the eve of what looks like the greatest progressive victory since Medicare. I, for one, am incredibly excited. I’m excited both because 32 million of the least fortunate Americans will have a safety net beneath them that’s a bit stronger; and because I hope that this will energize progressives toward future victories.

So now the press will have to come up with explanations. Health reform succeeded because Nancy Pelosi is one of the greatest Speaker in House history, for instance. The Republicans failed because the Tea Party movement, while important, was ragtag and ill-focused. Etc.

But we were all alive over the last year. We saw where this could have failed any number of times. It could have failed if House Democrats had fallen apart after Scott Brown’s victory, as it looked like they would. It could have failed last summer if the Tea Party thing had freaked people out more than it did. Had it failed at any of those moments, the press would be looking for reasons. Nancy Pelosi would still be the Speaker, but now she’d be the worst Speaker in House history — squandering a massive lead, etc., etc. Flip a few Congressmen the other way, and suddenly the narrative changes massively.

I’m not saying that this victory — should it happen — is entirely arbitrary; of course it’s not. What I am saying is that, if it were as inevitable and foreordained as the narrative will make it out to be, then no one would have panicked over the last year.

I like simple explanations as much as anyone else. I like, for instance, the Larry Bartels model that predicts presidential elections on the basis of macroeconomic factors like the unemployment rate. So far as I know, there’s no such model predicting victory in this health-reform debate. The only explanations that people can advance are post-facto ones.

Which doesn’t bother me a bit, in this case. My side looks like it’s going to win. (If it doesn’t, I will do the appropriate amount of crow-eating.) If this will have any effects, they will be positive effects for my side. Victory is like that.

What I’m curious about is how long-lasting the effects of a victory — any victory of this magnitude — are. It’ll help us, but for how long?

What would people like to attack after this? Financial-system reform?

Conservatives mock the uninsured

Via Matt Yglesias’s Twitter feed: a really disgusting round of conservative class-baiting, mocking those who lack insurance and suffer as a result.

It’s really quite simple, and it’s really been quite simple for at least this past year: there are those who care about protecting the uninsured, and there are those who don’t. There are those who think it’s a problem that 30 million or more Americans suffer and die needlessly, and there are those who don’t. If you see it as a problem, you search for ways to solve it; if you don’t, you don’t.

Of course there are those who believe that government just cannot solve the problem. But these folks have proposed remarkably thin gruel in response; e.g., the Republican “plan” that will only cover 3 million people. The only reasonable conclusion is that Republicans don’t think there’s an actual problem.

If they could come right and say that they don’t care about the uninsured, at least we’d have some honesty. But they know that Americans want health coverage for their uninsured countrymen. So they have to come up with “solutions” that don’t actually solve anything and cost very little. Health insurance, in this mode, is about marketing rather than solving problems: Republicans can continue to market themselves as the party of fiscal discipline and mock Democrats as “tax and spend”, all without actually doing anything.

So again, the choice is simple: either you think it’s a problem that tens of millions of your fellow-Americans lack insurance and can go bankrupt just by getting sick, or you don’t. If you do, there’s one political party that’s trying to solve it, and one that views the uninsured as a marketing tool. If you believe that the uninsured are a problem, but you have problems with the Democrats’ plans, do all you can to fix those plans. Don’t look to Republicans for a solution, because all they have to offer is empty sloganeering.

One little note on Scott Brown, Martha Coakley, and health reform

This election has me more miserable than I really want to go into, so let me just say this:

Yes, Brown’s election means that a lot of filibusters down the line are possible. But what people are really flailing all around about now is that health reform, in particular, might be filibustered to death.

Now then. If that’s what people are actually concerned about (let me be really fucking clear that that’s what I’m concerned about), then we could have dodged the bullet on this long ago. Obama and Senate Democrats tried to play nice with Republicans for a long while. That failed. It led to months of delay. If we’re essentially into conference-committee territory now, we could have been in conference-committee territory months ago. By the time Scott Brown’s miserable ass got sworn into Congress, we could have long since had health reform that people aren’t embarrassed about.

Lots of people, myself included, have railed against Senate procedure causing everything to get slowed down. But the fact is that health reform was and is an unforced error. The threat of a filibuster cannot explain why Democrats took so long to get the job done.

A brief note on the ethics of Harry Reid and of his critics

It speaks to our failings as a society that Harry Reid could be pushed to resign for saying some words about Barack Obama, whereas the entire Republican party feels no compulsion to resign for, objectively speaking, consigning many thousands of uninsured poor people to die every year and resisting all attempts to improve the lives of the less fortunate.

It speaks to the Democratic Party’s failings that they don’t say this.