Republicans Quietly Make an Important Fix To Obamacare That Democrats Wanted

[progree]

37. Obama broke his campaign promise and imposed a mandate just for $4 billion/yr? Incredible

Last edited Fri Apr 11, 2014, 03:19 AM - Edit history (1)

[font color = brown]>> Progree 15. "If the individual mandate is effectively eroded or abolished, will enough of the young and healthy sign up to keep premiums from going up into a death spiral? (Supposedly that's why we have the individual mandate in the first place)."[/font]

[font color = blue]>>ILZ 33. "The penalties were more to help offset the cost more than to force insurance upon the unwilling" <<[/font]

Again, sounds like you are spewing a rightie talking point (the mandate is a money grab by a greedy black man from Chicago threatening harsh sanctions, rather than something necessary to avoid an adverse selection premium death spiral).

And he broke his campaign promise not to impose the mandate on adults for such a trivial sum? ($4 billion/yr) (In noticeable contrast to Hillary Clinton. Obama argued in the 2008 campaign that covering the uninsured by imposing a mandate to buy health insurance made as much sense as ending homelessness by mandating everyone buy a house. Clever, huh?).

And from a revenue standpoint, the $4 billion / year wasn't even necessary. At the time of the bill's passage in March 2010, the projected revenue and savings elsewhere more than paid for the cost of the ACA program over 10 years by $143 billion, according to the CBO {1}, p. 173.

Again, for an estimated $4 billion / year, do you really think Obama broke a campaign promise and imposed a mandate and penalty? That's not what the Administration argued before the Supreme Court ( http://www.justice.gov/osg/briefs/2011/3mer/2mer/2011-0393.mer.aa.pdf )

(p. 11) ... the minimum coverage provision {i.e., the individual mandate} is essential to ensuring that the Act’s 2014 guaranteed-issue and community-rating reforms advance Congress’s goals. As Congress expressly found (and as experience in the States confirmed), those provisions would create an adverse selection cascade without a minimum coverage provision, because healthy individuals would defer obtaining insurance until they needed health care, leaving an insurance pool skewed toward the unhealthy. Premiums would increase significantly under that scenario, and the availability of insurance would decline—exactly the opposite of what Congress intended in enacting the Affordable Care Act. The guaranteed-issue and community-rating provisions are therefore inseverable from the minimum coverage provision.

(p. 46) ... healthy individuals have an incentive to stay out until their need for insurance arises while, at the same time, those with the most serious immediate health care needs have a strong incentive to obtain coverage. Premiums would therefore go up, further impeding entry into the market by those currently without acute medical needs, risking a “marketwide adverse-selection death spiral,”

Note, it's not just the Obama administration that believes in adverse selection (the old and sick more likely to buy insurance than the young and healthy). Here is the progressive Center For Budget and Policy Priorities citing the CBO (
http://www.cbpp.org/cms/?fa=view&id=4012 )

Earlier CBO estimates indicated that permanently repealing the mandate would raise average health insurance premiums in the individual market — inside and outside the new health insurance exchanges — by 15 percent to 20 percent, amounting to hundreds or thousands of dollars a year in higher premium charges for large numbers of individuals and families. Without the individual mandate, the exchanges may well not be viable over the long run; the higher premiums would discourage many healthier people from enrolling, sending premiums up still more.

So you can make the point that the insurance death spiral is a right-wing talking point all you want. I don't think that's true, but anyway, you need to also acknowledge that it is an administration and progressive talking point too. I can assure you that no Democrat in Congress voted for the individual mandate just for $4 billion a year extra revenue, or a little over 0.1% of the budget.

Actually, it’s the righties that argue that no mandate is necessary, and have voted again and again in the House to repeal the mandate. And they burble on and on how great the health system was pre-Obama -- all without a mandate. Where kings and potentates from around the world came (pre-Obama) for the best medical care in the world yada. Since you seem to follow GOP propaganda 24/7 (see your #35), you have surely heard that RW talking point.

If the mandate isn't necessary, and raises so little money, why does the administration and Democrats cling to something that polls so poorly and is so regressive?

I also experienced the health insurance death spiral. Back until the mid-1990s or so, there was an excellent health insurance plan for electrical engineers through the IEEE (Institute for Electrical and Electronic Engineers). However, premiums went up and up as the average age of people in the program went up. Then it got to the point where the younger and healthier left the program in large numbers and finally the premium death spiral grew to the point where they ended the program.

From the Landmark book {1} p. 87.

"But in today's individual insurance market where people without employer-provided coverage buy plans, the spreading of risk does not function so well. About one-third of people age 20 to 29 go without coverage, double the rate for those age 30 to 64.... as a result, rates in the individual market are high, and that, in a kind of vicious cycle, makes it even less likely that younger or healthier people will decide to buy coverage."

[font color = blue]>>ILZ 36. Do you think a trivial sum is going to force someone to buy something they don't want which is much more expensive? <<[/font]

Apparently the administration and the Democrats in the 2010 Congress thought so. Do you really think they put the penalties in for shits and giggles? (Or with the hope of raising a measly $4 billion / yr in revenue?)

Anyway, we shall see. There was quite a surge in enrollments in March (the deadline to sign up without paying a penalty). How do you explain that, compared to the low enrollments in say January and February?

And it's not trivial to the people paying the penalty. For a household of 4 (2 adults and 2 children) making a modest $40,000, the annual penalty for not having insurance in 2014 is the maximum of $285 or 1% of income ($400), whichever is greater, namely $400. That's also the penalty a single individual earning $40,000 would pay.

I don't know how many threads I've seen in DU by people saying they are only paying $0 or $20 or $40/month after subsidies (though often for multi-thousand-dollar deductibles and out-of-pocket maximums), so at least in terms of initial outlays -- the premiums -- the penalty is some cases is the same or more. (As you know, it’s a DU talking point that ACA insurance is easily affordable, and woe be to anyone who dares suggest otherwise).

In 2016, the annual penalty on such a $40,000 4-person household rises to $2,085 or 2.5% of income ($1000), whichever is greater, namely $2,085. (A single individual earning $40,000 would pay $1,000).

It’s a fair kick-in-the-butt to quit procrastinating and do what one knows one should do.

Another reason for procrastinating: a lot of people just don't trust private for-profit insurance companies. Ever seen the movie Sicko? The first 10 minutes was about the uninsured. The rest of the movie was about the plight of the insured.

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{1} p. 173, Landmark, The Inside Story of American's New Health-Care Law And What It Means For Us All, by the staff of the Washington Post, 2010.