Health-insurance deductibles and the average American’s assets — July 20, 2017

Health-insurance deductibles and the average American’s assets

Here‘s a little thing about health-insurance deductibles:

In short, the BCRA makes changes to regulations that will cause annual deductibles for individual market health plans to skyrocket — to $13,000. But other regulations set the legal limit on annual out-of-pocket spending to $10,900. This means the BCRA’s health plans could actually violate the law.

If you want to get a sense of how large a $13,000 deductible is, consider this, from the Federal Reserve:

respondents are asked how they would pay for a hypothetical emergency expense that would cost $400. Just over half (54 percent) report that they could fairly easily handle such an expense, paying for it entirely using cash, money currently in their checking/savings account, or on a credit card that they would pay in full at their next statement (collectively referred to here as “cash or its functional equivalent”). The remaining 46 percent indicate that such an expense would be more challenging to handle and that they either could not pay the expense or would borrow or sell something to do so.
[…]
among respondents who would not pay the expense in-full using cash or its functional equivalent, 38 percent would use a credit card that they pay off over time and 31 percent simply could not cover the expense.

So around 1 in 7 Americans couldn’t pay a $400 expense in any way.

(There’s a BankRate survey that seems to ask a similar question, but I couldn’t identify the exact question. The Fed’s question is precisely laid out. And of course it’s a more trustworthy source.)

When people talk about how insurance ought to be only for catastrophic expenses, I hope they realize what ‘catastrophe’ entails for a lot of Americans.

A couple conservative pieces on health insurance — July 8, 2017

A couple conservative pieces on health insurance

One from Philip Klein. And another from Peter Suderman.

Both pieces openly acknowledge what the liberal side has been saying for a long time — that Obamacare is a three-legged stool, and that you can’t keep the pre-existing-condition regulations (“guaranteed issue”) without keeping the rest. Klein and Suderman then, fascinatingly, land on conclusions exactly opposite to the ones that liberals would land on. Both Klein and Suderman would do away with guaranteed issue, community rating, and all the rest. They would then replace Obamacare with catastrophic insurance, health savings accounts, high-risk pools, and so forth. Fundamentally, they don’t view health care as a human right, and they don’t believe that government has any business getting involved in the insurance market. If you start from those premises, you’ll likely end up where they do.

You get this sort of clarity from op-ed writers, but not from elected officials. I would posit that that’s because the moral basis of Obamacare is in line with most Americans’ values: most Americans would, I think, agree that you shouldn’t be denied care just because you had a pre-existing condition. (A close friend’s son had open-heart surgery very early in life — I want to say before he turned 2 years old. Do we want him to be uninsurable for the rest of his days?) Having granted this premise, elected officials can either give Americans something in line with their moral values — that is, Obamacare or stronger — or can do what writers at Reason would find congenial, tear off the Band-Aid, and give them health care that’s stingy and (by most Americans’ lights) immoral. It’s no wonder that conservative politicians hesitate to take the orthodox-economist position; or, having taken it, refuse to admit that that’s the position they’ve taken. The BCRA can only pass most Americans’ moral muster under cover of darkness.

Parts of the orthodox-economist position are in line with wonky liberalism. Suderman, for instance, writes that the tax deduction for employer-sponsored health insurance “is the original sin of the United States health care system,” and is “[w]orth more than $250 billion annually.” Many liberals would love to get rid of it; I certainly would. There’s a liberal case against it: it’s regressive, and it makes a dollar of health insurance worth more than a dollar of salary, with the predictable effect that employers pay less in salary and more in health insurance. (I’ll look around for research on how much of Americans’ well-documented wage stagnation can be explained by this tax preference.)

The much-maligned “Cadillac tax” in Obamacare sought to do away with this regressive tax expenditure, albeit stealthily. High-value employer-based health-insurance plans would be taxed, and the definition of “high value” would not be adjusted for inflation. So over time, more and more health plans would be subject to the tax. The dream was that high-value health plans would slowly fade away and salaries would rise; we’d take away with one hand (the Cadillac tax) what we gave with another (the tax deduction).

I have no problem granting that this is ugly: to correct one tax sin, we create another. It’s the embodiment of a libertarian parody of how government works. While granting this, I’m sympathetic: politics is the art of the possible. My liberal dream also collides with the art of the possible: I’d prefer something akin to the Canadian system or expanding Medicare to everyone, or expanding the VA hospital system to everyone, but those are also not yet possible. We take what we can get for now.

In any case, it doesn’t matter: the Cadillac tax was unpopular with everyone, including labor unions. Orthodox economics runs up against the art of the possible.

I’m happier with a discussion centered around the Philip Kleins and Peter Sudermans of the world than I am with one centered around Paul Ryan and Mitch McConnell; at least the former are more honest about what they want. Though this, from Suderman, is misleading:

Medicare, meanwhile, offers a huge system of federal benefits to older Americans that typically run far beyond what most have paid in. Its introduction was associated with explosive growth in hospital-costs inflation during the 1970s.

That was absolutely true about Medicare … in the 70s. It’s not true anymore. The keyword you want to Google for here is the “prospective payments system”. See this review from the Centers for Medicare and Medicaid Services, for instance. Suderman has better arguments than this; I wonder why he chose to use a poor argument there.

Obamacare featured lots of experiments to control costs, including the Independent Payment Advisory Board, which Sarah Palin famously derided as “death panels”. It’s somewhat isolated from the political process, presumably because politicians realize that doing what’s right will often be at odds with what voters want.

I don’t believe, though, that any number of experiments in cost control will sway those of a libertarian cast of mind, because I believe we’re fundamentally having a debate over values rather than one over implementation details. I’m happy that those values — the desire for universal coverage against the belief that health care should be treated like any other market good — are out in the open. Let’s argue it on those moral grounds.

Health-care-debate frustration of the day, Philip Klein-of-the-Washington Examiner edition — July 7, 2017

Health-care-debate frustration of the day, Philip Klein-of-the-Washington Examiner edition

And now, this podcast, namely The Gist with Mike Pesca. Three things Klein says frustrate me:

  1. Shelley Moore Capito was pro-Obamacare repeal when Obama was president and her opposition was all talk. Now that she’s got some power over the BCRA, she’s chafing at the reductions in Medicaid. Pesca raises the obvious point that Capito doesn’t want the residents of West Virginia to suffer, which is what you’d expect from their senator. Klein responds that maybe the citizens of West Virginia should pay higher taxes, then.

    I didn’t think this needed to be said, but that’s not how the United States works. Wealthy people subsidize poor people. Wealthy states subsidize poor states. Senators represent individual states, with actions that sometimes affect other states. The way deals work is that my state gets a little something, your state gets a little something, we each pay for the other, and that’s how we govern. Oppose that way of doing things if you like, but we’re a unified nation of 50 states. The Civil War resolved that question. I’m surprised to see Klein reaching for such a juvenile model of how our government works.

    You can also feel free to call her a hypocrite if you like. Me, I’m well and truly exhausted of the hypocrisy label being bandied about. Don’t get me wrong: when Republican politicians thunder on about homosexuality and the decline of the traditional family, then turn out to be philanderers or closeted, I smirk as much as the next smug liberal. But the real problem isn’t hypocrisy. The real problems are that these politicians are wrong in their evaluation of the country’s moral decline (I for one think that starting a war for no good reason in Iraq is a far graver sin than is falling in love with someone of your own gender), and are pushing policies that condemn a subset of their fellow-citizens to second-class status. Let’s stop talking about hypocrisy, and instead talk about whether the politicians are right or wrong.

  2. Klein returns to the old canard about how government involvement in health care leads to rationing. He neglects to mention that it’s already rationed; it’s just rationed by income. “If there’s only a finite amount of care to go around, the wealthy should get it rather than the poor” is a coherent worldview, which I think the bulk of Americans would reject as morally abhorrent (because it is). I would like Klein to come out and say that this is his principle. Everything else that he says hints that he doesn’t believe health care is a human right, and that he does believe it should be rationed by income. I’d like to see him be explicit about this principle.

  3. Klein also mentions that he’d like a world where consumers shop for the best options. Everyone knows why this doesn’t work, so again I didn’t think it was necessary to go over it. First, someone like me — who visits the doctor a few times a year for routine checkups — is not responsible for the bulk of medical expenses. People in the final year of life, people with multiple chronic ailments, people whose illnesses require expensive treatments, etc. are responsible for the bulk of medical expenses. Klein is implicitly asking cancer patients to shop around for the cheapest chemotherapy. Which is absurd for reasons that I really do not intend to go into.

    Second, shouldn’t insurance companies already have an incentive to negotiate for the best prices? Why don’t they? Why would consumers — who certainly have less leverage than insurers — be expected to do a better job at negotiating or shopping around than the insurers do? And here’s a completely non-rhetorical question to which I don’t have an answer: I’ve wondered for a while why insurers don’t already tell their patients, “We’ll pay for your chemotherapy, but it’s half the price if you travel across the state to a cheaper hospital. We’ll even pay to drive you there and back, and for the hotel when you get there. Even after paying for all that travel, it’s still cheaper for us.”

    Third, I return always — practically every day — to Socialism: Converting Hysterical Misery into Ordinary Unhappiness for a Hundred Years. Who actually wants to spend his time on hold with insurance companies, trying to cajole them into paying for a coronary bypass? This is not the world I want to live in, and I doubt it’s the world you want to live in either. I have a hard time imagining that Philip Klein wants to live in that world, but maybe he expects that in Marketopia, concierge services will appear whose job it is to sit between you and the insurance company, negotiating on your behalf? Is adding another layer of rentiers really the dream end-state for conservatives? I honestly wonder what the goal here is.

Ezra Klein’s latest interview with Avik Roy is maddening — July 6, 2017

Ezra Klein’s latest interview with Avik Roy is maddening

The tl;dl to this episode is that Avik Roy believes some future hypothetical Republican health-insurance bill will be a significant improvement over the existing health-insurance market. It happens that the actually existing Better Care Reconciliation Act is not that bill, which Roy seems to have no problem conceding. It’s not clear at all from the interview which problems Roy actually thinks the BCRA solves, yet this is the bill about which Roy tweeted

There’s some hypothetical Republican Congress, says Roy, which will care about providing universal coverage for the poor, but it’s not this Republican Congress; there’s some hypothetical humanitarian Republican health-care bill which could hypothetically arise out of the ashes of the BCRA, but the BCRA is not that bill. Roy says we’re supposed to be happy with the BCRA because it’s the result of a debate between the hardcore “throw the poor out in the street” wing of the Republican Party and the “let’s give the poor some health insurance that they can’t afford” wing of the Republican Party. It’s a compromise, and at least they managed to get legislation out the door. The Democratic Party wants, as a core tenet of its platform, to provide health-insurance coverage to everyone, so the result of a Democratic compromise is something that’s at least ideologically coherent: we knew we couldn’t get single payer, and even the public option was too liberal for the likes of Joe Lieberman. It’s not at all clear what the result of this notional Republican compromise is supposed to accomplish.

I believe Roy is a person of conscience, and I take him at his word that he wants good coverage for everyone. Central to his belief system, though, seems to be a cramped view of government that is likely to make it work more poorly and get less public support. Health insurance, he says, is meant to prevent bankruptcy. If you believe that, you’re going to downplay the humdrum day-to-day use of health insurance — e.g., going in for a checkup, or getting a routine dental cleaning; those aren’t the sort of things that threaten people with medical bankruptcy. You’re also going to land, as Roy does, on a spare view of the government’s role in health insurance. The government, he says, should be subsidizing the poor more and the wealthy less. I agree with this, which is why I think it’d just be simpler to provide a service, pay for it with taxes, and make those taxes steeply progressive. Roy takes it in a different direction: if I understand him, he would have the government provide stingy care for catastrophic illnesses only, and only to the poor.

I have major concerns when we think about government like this. Universal programs get universal buy-in: if your wealthy grandfather gets Medicare, he’s going to fight like hell to keep it — even if, by Roy’s lights, he’s too wealthy to need it. In the world Roy envisions, only the poor, who don’t donate to political campaigns and often can’t afford to take time off from work to vote, have an incentive to fight for (Roy’s version of) Medicaid.

The government Roy envisions provides systematically poor service. It’s not just in health insurance; you see Roy-style government also in, say, mass transit. Hence the excellent Matt Yglesias Twitter thread ending here:

Here in the U.S. our mass transit is dirty, overcrowded, and unreliable, at least in part because of an Avik Roy-style ideology that thinks the government should be providing a “safety net”: if every other means of getting to work fails for you, at least you’ve got this one crappy option; if you’re poor, at least you won’t end up too far in debt trying to pay for your health care. So people come to think of government as the provider of crappy services. So they bail on those services and use the expensive private options. So the services become crappier and the cycle continues.

And in many cases what Roy envisions is just too complicated. Roy and Klein go back and forth about premiums, deductibles, cost-sharing, etc., as though we didn’t already have a government which is extremely good at collecting taxes. The Laniel Plan for government is: provide people an excellent service (subways, health care via the VA, health insurance via Medicare), then tax them for it, and make the tax code steeply progressive. (Roy and I would agree that removing the tax deduction for employer-sponsored health care is vital here. Doing so would be both good for the overall health system and very progressive.) No deductibles. No copays.

Scale out just the tiniest bit. The goal should be that the insurance you get via the government — whether it’s Medicare or Medicaid or the VA or the ACA exchanges — is as good as the best employer-provided health insurance. Why are we always settling for a “safety net”? We’re a wealthy country. We can afford to provide stellar coverage to everyone. Not only can we afford to provide excellent services; our habit of not providing them has led us to the state we’re in, where government services are near-universally perceived as … well, as the government cheese of whatever service they’re supposed to provide. We’re in a self-fulfilling vicious cycle now, where government services are perceived as poor, which makes cutting their funding politically easier, which leads to poor government services. I’d like to see us reverse that into a virtuous cycle.

It seems clear that Roy would disagree with all of this, and that Democrats would agree with most of it. To the extent that our laws look muddled — as, arguably, Obamacare did — it’s because we know that the thing we actually want (single-payer, basically) is not feasible, so we unfortunately compromise into something muddled. Whereas it’s not clear what Roy wants; and to the extent that it is clear what he wants, what he wants is something that would make the government work even less well. What’s truly terrifying is that Roy is the moderate in his party.

I wish Boston were better with sidewalk repairs — July 1, 2017

I wish Boston were better with sidewalk repairs

The city has at least two varieties of poor sidewalk repair.

In the first variety, we start with something relatively nice, like this:

(dog not always included) Over time, it gets beaten up, like this:

Often this doesn’t get repaired with bricks; instead it gets repaired with asphalt, like this:

That’s a decent repair job, but bricks are nicer.

When the job is more slapdash, you get this:

What seems to have happened there is somewhat different than the above bricks-to-asphalt scenarios. In this last one (taken at MIT), I think people tended to cut across that corner as they walked, so someone decided to just replace the grass (which I assume had been matted down and muddied) with asphalt. But they half-assed the job.

A similar work of halfassery took place, it seems, many years ago outside of Back Bay station, at the intersection of Columbus Ave. and Clarendon St.:

Someone clearly told them that they needed to put in something like a curb cut. I imagine this either satisfies the letter of the regulation (maybe the Americans with Disabilities Act?), or that no one’s bothered to call them on it yet. It’s ugly, in any case.

The second major variety of sidewalk problem is just that the sidewalk remains unrepaired for years. See, for instance, the sidewalk out in front of Back Bay station:

I don’t know how a sidewalk this prominent — Back Bay gets 18000 orange-line riders per day — remains in a state of disrepair like this for this long. I opened a BOS:311 request about this a while ago, and the best guess at the moment is that the sidewalk falls into some procedural gap: it’s either considered a bridge over the Mass. Pike, hence under the supervision of the highway part of MassDOT; or it’s supervised by the MBTA. A similar question of responsibility may explain this hacked-together patch job on the sidewalk where Massachusetts Avenue crosses over Commonwealth Avenue.

I’ll be curious who ends up claiming responsibility for the Back Bay sidewalk. The repair may have to wait for the Back Bay redevelopment project, which would be kind of silly.

None of this touches the standard variety of, say, buckling brick sidewalks. A walk down most side streets in the South End involves going up and down little hills when you thought you were going to be walking along a straight street. I don’t know how older people, or people with disabilities, manage to live there. Perhaps they don’t?

As someone who walks everywhere, I take all of this personally. As someone who has mobility-impaired family, I’m particularly sensitive to how difficult walking is on even unbroken sidewalks. As someone who loves Boston, I want to see the city put forward a better face, rather than seeming, sometimes, a little provincial and broken-down.

I’ve often heard that much of this comes from Boston’s severe winters. To my ear that’s never been a convincing argument; in fact, what it says to me is that we should have had 387 years to figure out how to do winters right. I’m open to being convinced that America’s Walking City can’t

  1. figure out where to put all its snow
  2. keep beautiful brick sidewalks
  3. make those beautiful brick sidewalks level and walkable

but I contend that we have the technology and the manpower to achieve these things, and that we have a city beautiful enough to deserve it. While we’re at it, we have the resources for some single-payer show shoveling. In fact, I suspect that single-payer shoveling would be cheaper than asking everyone to shovel his or her own sidewalk.

Large problems like mass transit, education, and housing costs can often seem unsolvable. So I thought I’d focus on very specific, very comprehensible, presumably very solvable things: specific patches of sidewalk that can be made more walkable. I was warned years ago that what I think is just one specific half-assed sidewalk repair is in fact a thin veneer over a systemic problem. Maybe so. I’d like to find that it’s a solvable systemic problem.

Studying math on my own: tips? — June 30, 2017

Studying math on my own: tips?

I have a basically limitless pile of papers to read, a large fraction of which (I’ve not counted) contain a heavy math element. To take one example basically at random: Stein’s paper on “The Inadmissibility Of The Usual Estimator For The Mean Of A Multivariate Normal Distribution”. I don’t really get that paper. In particular, I don’t have the intuition about the topic that I do about, say, Unix or even economics: I can’t come to the topic and consume the whole thing in big chunks, which I can understand as a unit; instead I’m groveling through it line by line, and maybe understanding one tree at a time while the forest remains unassaulted. My reading of mathematics is a lot like my reading of French, while my reading of other topics is fluid like my reading of English.

Backing up from academic papers: it’s been a long-term goal of mine to learn measure theory, which underlies probability theory. I have ever so many books that cover aspects of measure theory: this one, and also this one, not to mention this one, and of course we’d be remiss if we didn’t mention this one. They’re all good, but I find them all hard. To pick another random mathematics book off the shelf: Körner’s book on Fourier analysis is fantastic at the high level at which I’ve been able to understand it, but digging into the details has always felt to me like an impossible slog.

Is the answer no more complicated than

  1. go to a library with just those books (no phone, no laptop), a pad of paper, and a pen
  2. bang your head against the problem sets for hours and hours
  3. GOTO 1

? It’s always felt to me like, no matter how much I bang my head against them, I’m going to be unable to prove theorems. I wonder if that’s true, or if that’s just the wrong side of my brain talking. I wonder if it’s the side of my brain that Ira Glass mentioned when we saw him in Boston a while back; a canonical form of the quote seems to be the one here:

All of us who do creative work, we get into it because we have good taste. But there is this gap. For the first couple years you make stuff, it’s just not that good. It’s trying to be good, it has potential, but it’s not. But your taste, the thing that got you into the game, is still killer. And your taste is why your work disappoints you. A lot of people never get past this phase, they quit. Most people I know who do interesting, creative work went through years of this. We know our work doesn’t have this special thing that we want it to have. We all go through this. And if you are just starting out or you are still in this phase, you gotta know its normal and the most important thing you can do is do a lot of work. Put yourself on a deadline so that every week you will finish one story. It is only by going through a volume of work that you will close that gap, and your work will be as good as your ambitions. And I took longer to figure out how to do this than anyone I’ve ever met. It’s gonna take awhile. It’s normal to take awhile. You’ve just gotta fight your way through.

An unspoken part of this is that not everyone is able to do creative work at a high level. (And mathematics is certainly included within “creative work”). Something similar would have to be said about, say, basketball: I watched a lot of the Bulls during the Michael Jordan era, and I knew from quite early on that my playing basketball at that level was just not an option. Or maybe it was — maybe I just needed to put in the hours, hire the coaches, etc. But it would always be harder for me to reach that level than it would be for Jordan. If I put in 9 billion hours of work, maybe I could get where he got with the mythical 10,000 hours. Probably not, though. There I stood on this side of the chasm, and there he stood on the other, and nothing I did was going to get me to his side.

Obviously I’m closer to being a professional mathematician than I am to being a professional basketball player. I feel like I’ve got more inherent writing talent than I do inherent mathematical talent. This isn’t to say that I’m John McPhee, but writing comes to me more fluidly than mathematics does.

Anyway, so yeah: do I just go to the library with some books and let the rest happen naturally? An obvious alternative is to pay someone to sit by my side while I read books and do problem sets; here in Boston, anyway, we call this “college”. So do I go to this mythical “college” to learn some more math? Or do I adopt some good self-study methods and do it on my own? Or is there some better way to learn math on one’s own?

How long should parents wait before getting insurance for their newborns? — June 27, 2017

How long should parents wait before getting insurance for their newborns?

The revised BCRA includes this change to Obamacare’s “Special Enrollment Periods” (SEPs):

(4) EXCEPTIONS.—Notwithstanding paragraph (3), a health insurance issuer may not impose a waiting period with respect to the following individuals:

(A) A newborn who is enrolled in such coverage within 30 days of the date of birth. …

(internal quotation mark omitted)

This is a change from the ACA, which gives parents 60 days to enroll their kids in health insurance. I asked on Twitter (see thread ending here) what the justification would be for this change. The answer is basically: to avoid parents’ enrolling their kids in health insurance only when they know that the kids have serious illnesses. In this way, it’s of a piece with other policies that try to get a good mix of healthy and sick people into the risk pool.

How would we determine the correct length of an SEP? Zero days — i.e., you must sign your kid up for insurance on the day he or she is born — is clearly too short; parents have a lot of other stuff on their minds on that first day, and it’s unreasonable to expect them to take care of insuring their kids right away. On the other hand, there’s clearly some period of time — a year? Two years? Infinity years? — that’s too long. If we wait too long, we really will encourage people to only enroll their kids when they know the kids are sick.

So what’s the appropriate waiting period? To be clear, I don’t know if this is an economic question; it may be a moral one. And there may be no better answer than “see what the best private insurers do, and mimic them”; people shouldn’t get stingier/more-Draconian coverage just because they’re using a federal program.

I have similar questions about other aspects of the new Republican health-care bills. I’m not inclined to give them any benefit of the doubt, but how about, specifically, their change to age-ratings bands? This is the wonky way of saying: the ACA allows old people to be charged at most 3 times as much as young people; the AHCA increases that to a 5-to-1 ratio. I’ve heard howls of outrage from the left about the 5-to-1 band, and I certainly have a gut moral objection to it: I’d prefer that everyone just be charged the same amount (aka “community rating”). This comes from a place of preferring simple laws (one flat rate is simpler than a variety of rates), and from a belief that the young and healthy ought to be subsidizing the old and sick. That second reason doesn’t really justify a 3-to-1 age-rating band, though: we’re still subsidizing the old and sick with a 5-to-1 band; we’re just subsidizing them less.

But clearly there comes a point when an age-rating band is tantamount to no subsidy at all. A 100-to-1 ratings band would hardly count as a subsidy, for instance. So somewhere between 1-to-1 (community rating) and 100-to-1 (no subsidy) is the optimal (in an economic, moral, or other sense) band. Is there any objective way to determine the correct band?

Whenever I ask a question like this, I’m reminded of this comment by the much-beloved Cosma Shalizi:

our gracious host would really like to be just a little bit to the left of a technocratic center, and to debate those just a little bit to his right about optimal policies within a shared objective function, and pretending that it is a technical and not a political discussion. But because shit is fucked up and bullshit, and because everyone at all on the right has spent forty years (at least) doing their damndest to make sure shit is is fucked up and bullshit, even the smallest gesture in that direction is not so much reconciliation as collaboration. And so our host has sads. (So, for that matter, did Uncle Paul, before he learned to relish their hatred.) The realization that this applies to economists — that much of the discipline is not a branch of science or even of dialectic, but merely of rhetoric (and not in an inspirational, D. McCloskey way either) — cannot come too soon. Whether someone who still assigns Free to Choose to callow freshmen, in 2012, is really in a position to complain about the absurdities of Casey Mulligan is a nice question; but recognizing that half your erstwhile colleagues were always mere ideologists is a step in the right direction.

Maybe looking for optimal (in whatever sense) age-ratings bands is in the same vein.