The ACA as originally conceived included a mandate that all Americans obtain health insurance. That meant that anyone not covered by their employer or Medicare or some other way would have to purchase health insurance through heath insurance exchanges. Everyone. The idea was that the premiums would be affordable because the pool would be large and would include healthy young people. The Republicans objected to this universal mandate and in order to get the bill passed it was stripped out. Young healthy people did not participate and premiums were therefore higher than originally anticipated. That’s how the Affordable Care Act became unaffordable. It’s been so ever since and the situation just gets worse and worse. A quick and easy fix would be to reintroduce the mandate. It’s a tough sell politically but anything else is even tougher which is why the Republicans have not come up with a plan of their own.
Twenty years ago my wife and I were self employed I paid 750 per quarter for insurance with a 2500 dollar deductible for each I'm sure that cost has gone up
I was a recruiter for many years Some people could not change jobs because insurers would not insure pre existing conditions With the new bill, to the largest extent, that would be the case again
People that lose their jobs generally have to go on COBRA to have insurance Even with a short unemployment there is typically a waiting period to get insurance again
With 24 million Americans buying their own insurance, using a very conservative additional cost of 1K each per month I believe that works out to almost 250 trillion a year
A lot of the elderly will be put into pools that have a higher cost
The one thing I take away from your excellent article is how complicated health care is in America. This is just one small part and I suspect you could spend just as much time writing about the complications in Medicaid and Medicare. It seems like there should be a better way to protect the health and life of a countries citizens.
If I understand correctly, a dollar less spent on Obamacare doesn't necessarily save the government a dollar in the long run. An uninsured person may forgo preventive care (mandated under ACA coverage), driving up their healthcare costs that will then be picked up by the government through hospital reimbursements and eventual Medicaid or Medicare enrollment.
Wouldn't it be cheaper for the government to sponsor (dare I say it - socialize) healthcare all the way around? Everything lumped in there Medicare, Medicaid, all healthcare - would it be cheaper for government to provide healthcare instead of insurance companies which just seem to be a middle man between money and medicine?
You answered your own question when you dared to say the word. FDR and every Democrat since has wanted socialized health care, as seen in many other deveoped countries. As their experience shows, it, too, has flaws (including lots of opportunities for fraud). Obama got us closer to that goal than anyone else has, but it remains a political 3rd rail
This is confusing to me too. Per Gabe you have to be at or above the poverty level to get any ACA subsidies, and the biggest subsidy is given if you are just over the poverty line, so that's the income people are reporting. I think if you are under the poverty line you get Medicaid instead. Maybe Gabe is saying people may be overstating their income to get ACA for free instead of Medicaid?
In states where Medicaid has been expanded, anyone whose income is under 138% of the federal poverty level is eligible. So the main reason to inflate your income here would be if you live in one of the states that hasn’t expanded Medicaid, some of which set eligibility for Medicaid well below the poverty level. A person just below the poverty level in those states wouldn’t qualify for Obamacare subsidies (because they are below the federal poverty level) or Medicaid (because they are above the threshold in their state), which is why they might inflate their income to appear eligible for Obamacare.
Hi Michael, sorry if this was confusing -- the way to read this chart is to first look at the first three columns to see the original PTC scale, and then the last three columns for the enhanced PTC scale. So, for example, someone in the income tier that’s 150%-200% of the federal poverty level (FPL), would have had to pay between 4-6.3% of their income towards their premiums under the original tax credits. (The initial/final premium %s are the range for that income tier.) For that same income tier under the enhanced tax credits, someone would have to pay 0-2% of their income towards their premiums under the enhanced tax credits. So the max for that tier went from 6.3% in the original PTCs to 2% now. Hope that makes more sense -- sorry it was confusing.
I’m curious Gabe why people are not paying their monthly premiums “because they’d rather have help”? Why do they need help? And are there any alternatives to receiving that help already in place that are underutilized?
This was great, thanks. The failure of Reps to have a better plan remains their biggest political weakness. Great notes on the subsidy cliff, which is all too frequent in many govt programs.
Forcing the healthy to pay for the sick might not sound so bad, but those being forced aren’t so happy. Forcing healthy young folk with healthy lifestyle choices to pay for richer, old, smoking drinking fat sick folk doesn’t sound so fair.
Forcing folk to pay for themselves, with lifestyle choice results changing their premiums is my preference, but is somehow quite politically unpopular.
Subsidizing the genetic less healthy seems like an excellent civilization benefit.
The system needs to minimize the responsible being forced to pay for the irresponsible, not easy.
The annual tax subsidy to employer provided health care is many times larger (10x?) than ACA subsidies. And this tax subsidy increases with income decile. Net of tax benefits and employer contributions, the highest earning deciles pay the least for healthcare in the US.
The ACA as originally conceived included a mandate that all Americans obtain health insurance. That meant that anyone not covered by their employer or Medicare or some other way would have to purchase health insurance through heath insurance exchanges. Everyone. The idea was that the premiums would be affordable because the pool would be large and would include healthy young people. The Republicans objected to this universal mandate and in order to get the bill passed it was stripped out. Young healthy people did not participate and premiums were therefore higher than originally anticipated. That’s how the Affordable Care Act became unaffordable. It’s been so ever since and the situation just gets worse and worse. A quick and easy fix would be to reintroduce the mandate. It’s a tough sell politically but anything else is even tougher which is why the Republicans have not come up with a plan of their own.
Thanks for this reminder. Perhaps bit of legislative history would help us all understand this political issue
There are some other things to compare in this
Twenty years ago my wife and I were self employed I paid 750 per quarter for insurance with a 2500 dollar deductible for each I'm sure that cost has gone up
I was a recruiter for many years Some people could not change jobs because insurers would not insure pre existing conditions With the new bill, to the largest extent, that would be the case again
People that lose their jobs generally have to go on COBRA to have insurance Even with a short unemployment there is typically a waiting period to get insurance again
With 24 million Americans buying their own insurance, using a very conservative additional cost of 1K each per month I believe that works out to almost 250 trillion a year
A lot of the elderly will be put into pools that have a higher cost
Hospitals and clinics are mandated to see anyone
Preventive medicine reduces medical cost
These are the real costs were looking at
The one thing I take away from your excellent article is how complicated health care is in America. This is just one small part and I suspect you could spend just as much time writing about the complications in Medicaid and Medicare. It seems like there should be a better way to protect the health and life of a countries citizens.
Gabe. Awesome explanation. I would bet that some Senators and Representatives do not understand how this works.
If I understand correctly, a dollar less spent on Obamacare doesn't necessarily save the government a dollar in the long run. An uninsured person may forgo preventive care (mandated under ACA coverage), driving up their healthcare costs that will then be picked up by the government through hospital reimbursements and eventual Medicaid or Medicare enrollment.
Wouldn't it be cheaper for the government to sponsor (dare I say it - socialize) healthcare all the way around? Everything lumped in there Medicare, Medicaid, all healthcare - would it be cheaper for government to provide healthcare instead of insurance companies which just seem to be a middle man between money and medicine?
You answered your own question when you dared to say the word. FDR and every Democrat since has wanted socialized health care, as seen in many other deveoped countries. As their experience shows, it, too, has flaws (including lots of opportunities for fraud). Obama got us closer to that goal than anyone else has, but it remains a political 3rd rail
Ok, I am stupid. Why would anyone overstate their income. Wouldn’t they receive more benefits the lower their poverty level. ANYONE CAN ANSWER PLEADE
This is confusing to me too. Per Gabe you have to be at or above the poverty level to get any ACA subsidies, and the biggest subsidy is given if you are just over the poverty line, so that's the income people are reporting. I think if you are under the poverty line you get Medicaid instead. Maybe Gabe is saying people may be overstating their income to get ACA for free instead of Medicaid?
In states where Medicaid has been expanded, anyone whose income is under 138% of the federal poverty level is eligible. So the main reason to inflate your income here would be if you live in one of the states that hasn’t expanded Medicaid, some of which set eligibility for Medicaid well below the poverty level. A person just below the poverty level in those states wouldn’t qualify for Obamacare subsidies (because they are below the federal poverty level) or Medicaid (because they are above the threshold in their state), which is why they might inflate their income to appear eligible for Obamacare.
And also, you are by no means stupid for asking! I’m sorry that wasn’t made more clear in the piece.
You are smart and nice
Gabe, I'm not following your chart reading here:
" 6.3% of their income towards their premiums; the enhanced tax credits knocked that down to 2%."
Looks like the enhanced premium is 4% (we are comparing "final premium" right?)
And what is an initial v.s. a final premium?
Hi Michael, sorry if this was confusing -- the way to read this chart is to first look at the first three columns to see the original PTC scale, and then the last three columns for the enhanced PTC scale. So, for example, someone in the income tier that’s 150%-200% of the federal poverty level (FPL), would have had to pay between 4-6.3% of their income towards their premiums under the original tax credits. (The initial/final premium %s are the range for that income tier.) For that same income tier under the enhanced tax credits, someone would have to pay 0-2% of their income towards their premiums under the enhanced tax credits. So the max for that tier went from 6.3% in the original PTCs to 2% now. Hope that makes more sense -- sorry it was confusing.
Thanks Gabe. I was reading straight across the row. Looking forward to next Friday’s Snap post.
I’m curious Gabe why people are not paying their monthly premiums “because they’d rather have help”? Why do they need help? And are there any alternatives to receiving that help already in place that are underutilized?
This was great, thanks. The failure of Reps to have a better plan remains their biggest political weakness. Great notes on the subsidy cliff, which is all too frequent in many govt programs.
Forcing the healthy to pay for the sick might not sound so bad, but those being forced aren’t so happy. Forcing healthy young folk with healthy lifestyle choices to pay for richer, old, smoking drinking fat sick folk doesn’t sound so fair.
Forcing folk to pay for themselves, with lifestyle choice results changing their premiums is my preference, but is somehow quite politically unpopular.
Subsidizing the genetic less healthy seems like an excellent civilization benefit.
The system needs to minimize the responsible being forced to pay for the irresponsible, not easy.
The annual tax subsidy to employer provided health care is many times larger (10x?) than ACA subsidies. And this tax subsidy increases with income decile. Net of tax benefits and employer contributions, the highest earning deciles pay the least for healthcare in the US.
Wow - this is an excellent and thorough explanation. Thank you! Looking forward to next week’s SNAP piece.
Thank you for this in depth information, Gabe.
Gabe - Thank you for this concise explanation.⭐️
Most excellent explainer. Thanks. Forwarding.
Aloha. From the COCONUT WIRELESS. ..............................................
This is the best explanation I've read on this issue.