Monday, July 8, 2013

Unaffordable Insanity - The Affordable Care Act

On July 4th I posted that business as usual in our politics has lead to insane outcomes that no one would have devised from scratch.  The so-called Affordable Care Act was my first exhibit and it continues to unravel.  Dean has a great take on the latest fiasco, delaying the employer mandates for a year.

The stated reason for the delay is that the administration couldn't figure out a way to implement the reporting requirements for the effected businesses. Going on 3-1/2 years after the law was passed and they still need another year to figure out how to work one of the key provisions of the law. In Washington D.C. this is known as the “Continuing to Implement the ACA in a Careful, Thoughtful Manner.” In Placentia, California, this is known as "incompetence".
And Dean notes that young voters are still on the hook whether they think they need insurance or not, big business, not so much.  You can file this under "Obama decides what the law is or is not."

But wait, there's more.  The WSJ takes down the administration for giving up on income verification to obtain subsidies for health exchanges, calling the decision a "Liar's Subsidy."
The White House seems to regard laws as mere suggestions, including the laws it helped to write. On the heels of last week's one-year suspension of the Affordable Care Act's employer mandate to offer insurance to workers, the Administration is now waiving a new batch of its own ObamaCare prescriptions.
. . .
In other words, anyone can receive subsidies tied to income without judging the income they declare against the income data the Internal Revenue Service collects. 
I guarantee you that the Democrat running for President in 2016 will be calling for an overhaul of the healthcare law and somehow blaming those rascawwy Republicans for sabotaging it, when in fact it will have collapsed of its own accord.  The far left is looking forward to this fail to take another run at a health care system fully funded by the federal government.  Fortunately, really bad budget numbers for Medicare should be kicking in right about then.  It will be an opportunity to shape the debate on sensible policy.

I have proposed sensible reforms before, with the ACA failing, time to resurrect our plan.  Since it is  a cut and paste, I am putting my policy prescriptions below the fold.

What You Should Be Reading 

  • The details of Snowden's revelations about the NSA.  The surveillance state is coming for your liberty at full speed with the power of big data behind it.  It is not a coincidence that the big name in databases, Oracle, got its start in the intelligence field.  Screed of Momus (best blog name, ever) has a great run down on the various reasons the government is highly motivated to continue its various spying programs and to keep expanding them.
  • Doo Doo Econ does the job I normally perform and analyzes the latest jobs data.  His conclusion? Despite the seemingly good numbers, the economy is still shaky.  I concur.

What You Should NOT Be Reading

  • Anything to do with trial of George Zimmerman.  A young man is dead under murky circumstances, that is tragic.  The shooter alleges self defense.  A jury will decide. Only the MSM has a desire to pour the gasoline of race relations on this story while they light the match. Screw them, don't pay attention.
  • Anything to do with the drama of Snowden's asylum.  That's the sideshow, which distracts from the very disturbing allegations he has made about the NSA.
  • Anything about our foreign policy with respect to Egypt or Syria.  There is little we can do and no good outcomes in sight.  I despise this administration, but honestly, the situation there is so convoluted I don't think anyone could tell the difference between comptent foreign policy and Obama/Kerrry plan.  Yachting, golfing are indeed the correct response.

Liberty Movement Health Care Plan (first published in 2011):

Here is the plan that John Mackey of Whole Foods proposed, my comments in italics.

  1. "Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts." Patients who have skin in the game and market knowledge will reduce costs faster than any government program.
  2. "Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits."
  3. Allow competition across state lines.
  4. "Repeal government mandates regarding what insurance companies must cover."
  5. "Enact tort reform."
  6. "Make costs transparent."
  7. "Enact medicare reform." Medicare policies that are mimicked by the private sector are strangling the medical profession.
  8. Revise tax law to make it easier to donate to those without insurance.

To expand on these points.

  1. The government could help lead this effort by reforming first Medicaid, by turning it into an insurance subsidy program for the poor. But the program would require those in the program to pay a high copay until a low catastrophic cap was reached. Such a system would create a market for a system where people have more incentive to shop for best value in medical care. This system could then be applied to Medicare.
  2. The next big issue is that health care is tied to employment. My first impulse is to forbid the offering of insurance through employment, but that would make a conservative social engineer, instead of a liberal one. Removing the tax advantage would at least set a level playing field. To date, the portion of employee compensation that comes in the form of employer health insurance isn't taxed as compensation. This ties employees to their companies and needlessly. You would think that liberals would be opposed to a scheme where tax policy gives corporations leverage over employees. However, I dislike schemes whereby the government imposes on employee relations, so I will settle for leveling the playing field.
  3. Interstate competition is not the norm in insurance. Surely the federal government has the right to "regulate" as in "make regular" this portion of interstate commerce, by insuring that any insurance offered for sale in a state would be available in the fifty states. Increasing competition will probably be opposed by the insurance industry, but freer markets benefit consumers.
  4. One size never fits all. So mandating coverage should be banned. Insurance is always tricky business, even homeowner's insurance, as Road Dawg can attest to. Along with no mandates will be the need to enforce clear language in policies and communications with policy holders. I am a libertarian, but not so naive as to believe that some insurance companies won't try to wriggle out of agreements to save money. Court is expensive for individual consumers, so regulation that enforces good practices of transparency and clarity will be necessary. But regulation should always aim for simplicity and this also needs to be part of a reform package.
  5. With regards to tort reform, we have seen positive results in Texas, where access to care increased after passage of reform.
  6. Cost transparency is important to enable process improvement and allow patient choice. Most people don't know the true cost of a medical visit, even after the visit is over. Here again, Medicaid reform could lead the way, by insisting that patients receive better notice and understanding of their bill.
  7. Medicare policies with regards to reimbursement are arcane and lead to huge misunderstandings on what is covered and unexpected bills. Transforming Medicare to save it for those who truly need it, into an insurance subsidy scheme, will get the government out of the rule writing business and free up insurance plans to compete.
  8. Allowing Americans to donate to those who need health care insurance might make little difference, but maybe not. I see lots of do-gooder millionaires wanting to pay more taxes. Maybe they could pay for poor people's insurance in the interim.

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