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The inequality baked into Obamacare (and health insurance in general)

Neomalthusian

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Huge inequalities exist when it comes to health insurance, and it's not between "the 1%" and the working poor. The richest and poorest Americans tend not to pay much for their own health care as it is. The real inequality concerning health insurance is between very similar families across the country, whose small arbitrary technicality-level differences are what determines whether they pay jack squat for health care or whether they pay out the nose.

Example #1: Two virtually identical different families of five live in Anchorage, Alaska, each of which has annual household income of $180,000. One parent of one of the families has a Deputy Commissioner job with the State of Alaska and brings in $100,000 a year. Her spouse runs a business that brings in the other $80k. The other family co-runs a business that brings in $180k per year. The family whose primary breadwinner works for the state pays less than $1,000 per year for all the health care the family needs. No premium sharing, and relatively tiny deductible expense despite having three children and a spouse on the plan. Platinum health benefits. The other family has to pay over $40,000 per year just in premiums for a "silver plan."

Society "values" (if you will) each of these families the same. Both are "worth" $180,000 in gross income to those families, according to what society wants to pay them for their work. When two families have the same household gross income but one has to pay over 40 times the amount of money for health insurance coverage than what another family pays, just because one spouse happens to have employer-sponsored health coverage, that is the real inequality here, and that inequality is vast and mind-bending considering the otherwise sameness of these respective families.

Example #2: Two virtually identical couples (same ages, same city) living in a small-medium sized Alaska town are expecting their first child. One couple brings in $45,000 annually and the other brings in $55,000. The couple that brings in $45,000 qualifies for Denali KidCare and pays nothing for the transportation to where babies are delivered 3 weeks before the due date, paid lodging, reimbursement for meals, other transportation, free hospital stay (C-section delivery). Nothing. Medicaid pays for all of it. Their out of pocket expenses are virtually zero. The couple that brings in $55,000 does not qualify for Denali KidCare but has employer-sponsored health insurance. Which is great for them because they too need a C-section delivery. But they also for travel, lodging, pay $3,000 of deductible expenses, and another $2,000 of co-insurance expense (because their delivery was also by C-section). So here again you have two very similarly situated families whose health care costs differ wildly (relative to their income) based on arbitrary and small differences. One family has it made, the other is absolutely crap out of luck. This is the real inequality as it concerns health care.

If I am the family that makes $55,000 and has to pay a fifth of my annual after-tax income to have a child, why should I be enraged about how many billions of dollars Jeff Bezos has? Should I join the Democratic Party and just incessantly whine about how rich the rich are? We could confiscate 100% of Jeff Bezos' wealth and it would fund the nation's health for 11 days. The real unfairness is that someone who earns just a tiny bit less than me pays nothing while I pay dearly. Or if I'm the business owner who pulls in $180,000, I am pissed that because my income happens to derive from my own business that I created with my partner, I have to pay over a fifth of my annual income just on premiums while the family next door that makes the same as we do pays virtually nothing, all because one of them happens to work for the State.

That is the real inequality, and it's extreme and it's arbitrary and it's indefensible. The thing I think single payer would do address THIS inequality, the real inequality as it concerns today's health care, is make the de facto funding of the nation's health care relative to income, by involving a corresponding income tax. Some will still whine, but they will be paying a relatively similar percentage of their income on health like everyone else with an income does, which is about as fair as it gets. What we have now is lightyears from fair as far as cost goes.
 
Society "values" (if you will) each of these families the same. Both are "worth" $180,000 in gross income to those families, according to what society wants to pay them for their work. When two families have the same household gross income but one has to pay over 40 times the amount of money for health insurance coverage than what another family pays, just because one spouse happens to have employer-sponsored health coverage, that is the real inequality here, and that inequality is vast and mind-bending considering the otherwise sameness of these respective families.

That's not really true here. If a family is getting $180,000 in salary/wages paired with a $50K or $60K health plan, then their "worth" as judged by their compensation package is $230K or $240K. So these are not equivalent situations.

Health benefits aren't just a cherry on top, they're a huge piece of a compensation package. If the family with no ESI was instead getting the health benefit you quoted in place of equivalent wages, then their salary in your example would likely be more like $120K + their health plan (ignoring the tax implications of wages vs health benefits that make the latter relatively more valuable).

Point being, these families don't make the same thing. The family making $180K with no health benefit makes less. So that's the inequality you're identifying here. One makes less than the other.

But the real problem you're identifying is that too often ESI appears "free" to people so they often don't understand (1) their own "value" as measured by their total compensation, and (2) how much health insurance actually costs them. The very fact that one could be under the illusion that these two families make the same thing--because zero value is inexplicably being assigned to the health benefit provided to the first family--is testament to this misperception.


Example #2: Two virtually identical couples (same ages, same city) living in a small-medium sized Alaska town are expecting their first child. One couple brings in $45,000 annually and the other brings in $55,000. The couple that brings in $45,000 qualifies for Denali KidCare and pays nothing for the transportation to where babies are delivered 3 weeks before the due date, paid lodging, reimbursement for meals, other transportation, free hospital stay (C-section delivery). Nothing. Medicaid pays for all of it. Their out of pocket expenses are virtually zero. The couple that brings in $55,000 does not qualify for Denali KidCare but has employer-sponsored health insurance. Which is great for them because they too need a C-section delivery. But they also for travel, lodging, pay $3,000 of deductible expenses, and another $2,000 of co-insurance expense (because their delivery was also by C-section). So here again you have two very similarly situated families whose health care costs differ wildly (relative to their income) based on arbitrary and small differences. One family has it made, the other is absolutely crap out of luck. This is the real inequality as it concerns health care.

This is just a general argument against any kind of means testing for a government benefit. You can pick on Pell grants, Section 8 housing assistance, whatever you want. Someone below a threshold can get it, someone above it can't. You could turn that into arguments for why all college or housing or whatever should be assisted or free for everyone (and obviously some have) but the reality is that resource constraints generally mean some lines will be drawn. And yes being just on the wrong side of that line is going to be unfortunate. But sometimes that's just the way it goes.
 
That's not really true here. If a family is getting $180,000 in salary/wages paired with a $50K or $60K health plan, then their "worth" as judged by their compensation package is $230K or $240K. So these are not equivalent situations.

Health benefits aren't just a cherry on top, they're a huge piece of a compensation package. If the family with no ESI was instead getting the health benefit you quoted in place of equivalent wages, then their salary in your example would likely be more like $120K + their health plan (ignoring the tax implications of wages vs health benefits that make the latter relatively more valuable).

Point being, these families don't make the same thing. The family making $180K with no health benefit makes less. So that's the inequality you're identifying here. One makes less than the other.

But the real problem you're identifying is that too often ESI appears "free" to people so they often don't understand (1) their own "value" as measured by their total compensation, and (2) how much health insurance actually costs them. The very fact that one could be under the illusion that these two families make the same thing--because zero value is inexplicably being assigned to the health benefit provided to the first family--is testament to this misperception.

I acknowledge your point about the zero value my example assigned to the public employee's health insurance benefit, and I agree with what you're saying. As a brief side note, if you were to enter negotiations with a public sector union over wages and benefits, they will pretend the value of health insurance is zero to the extent that they can attempt to argue for higher wages. "That's not money in their pocket though," I have literally heard union reps say dozens of times.

But anyway, the intent of painting this example as unfair was to isolate the 400% subsidy cliff in the law. A family a hair under the cliff pays 9.5% of AGI on premiums, and the family that earns a hair over pays over 20% in some cases, particularly high-cost states. There aren't so insanely many people that get wrecked by the 400% cliff that fixing it would create some fiscal nightmare, but the impact on those few is bad enough that it's basically a pointless glitch that we might as well fix. Why not make the subsidy 11% of AGIs over 400% of the FPL?

This is just a general argument against any kind of means testing for a government benefit. You can pick on Pell grants, Section 8 housing assistance, whatever you want. Someone below a threshold can get it, someone above it can't. You could turn that into arguments for why all college or housing or whatever should be assisted or free for everyone (and obviously some have) but the reality is that resource constraints generally mean some lines will be drawn. And yes being just on the wrong side of that line is going to be unfortunate. But sometimes that's just the way it goes.

It's not an argument against means testing, it's an argument against benefit cliffs created by arbitrary hard lines in income levels. Bad policy is "sometimes just the way it goes," but bad policy can be repealed or improved. I'm not advocating repeal, it would be too easy to smooth over some of these arbitrary and often rather unnecessary trap doors that we allow to exist in a lot of our benefit eligibility criteria.
 
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But anyway, the intent of painting this example as unfair was to isolate the 400% subsidy cliff in the law.

Then your comparison should be of two families of different incomes, neither of which has an offer of ESI. One at or below 400% FPL and one above.

Why not make the subsidy 11% of AGIs over 400% of the FPL?

That sounds fine!
 
Then your comparison should be of two families of different incomes, neither of which has an offer of ESI. One at or below 400% FPL and one above.

That would work too, but it also isn't that outrageous to scrutinize the platinum generosity of Alaska's insurance benefit for government employees relative to what those without ESI face. Especially when mixed with the state's budget woes, it creates an anti-business, anti-entrepreneurial environment to not have government employees feel their share of the pinch. That shouldn't be compatible with the state's supposed conservatism.

That sounds fine!

I've been ringing the bell about it for a long time. So much other noise about health insurance and the ACA yet complacency or apathy about some of these specific little pitfalls.
 
That would work too, but it also isn't that outrageous to scrutinize the platinum generosity of Alaska's insurance benefit for government employees relative to what those without ESI face. Especially when mixed with the state's budget woes, it creates an anti-business, anti-entrepreneurial environment to not have government employees feel their share of the pinch. That shouldn't be compatible with the state's supposed conservatism.

But these are completely different concepts. Shoveling compensation into overgenerous insurance is endemic throughout the employer space. It has been for decades. The tax code makes a $1 of employer-provided health insurance more valuable to the employee than $1 of wages. The result is very generous health insurance plans. And given that Alaska is an extreme, extreme outlier when it comes to health costs, I can't imagine anything more valuable than health benefits in that state. So I'm not particularly surprised health benefits are an even bigger lure there.

That has nothing to do with the 400% FPL cutoff for exchange subsidies.

I've been ringing the bell about it for a long time. So much other noise about health insurance and the ACA yet complacency or apathy about some of these specific little pitfalls.

Making the subsidies more generous has been on lots of people's lists for a long time. There's just no prospect of that happening, other than the accidental bump to people under 400% FPL Trump provided for CY18. Extending the subsidies to higher incomes certainly isn't happening as long as the GOP controls anything.
 
Huge inequalities exist when it comes to health insurance, and it's not between "the 1%" and the working poor. The richest and poorest Americans tend not to pay much for their own health care as it is. The real inequality concerning health insurance is between very similar families across the country, whose small arbitrary technicality-level differences are what determines whether they pay jack squat for health care or whether they pay out the nose.

Example #1: Two virtually identical different families of five live in Anchorage, Alaska, each of which has annual household income of $180,000. One parent of one of the families has a Deputy Commissioner job with the State of Alaska and brings in $100,000 a year. Her spouse runs a business that brings in the other $80k. The other family co-runs a business that brings in $180k per year. The family whose primary breadwinner works for the state pays less than $1,000 per year for all the health care the family needs. No premium sharing, and relatively tiny deductible expense despite having three children and a spouse on the plan. Platinum health benefits. The other family has to pay over $40,000 per year just in premiums for a "silver plan."

Society "values" (if you will) each of these families the same. Both are "worth" $180,000 in gross income to those families, according to what society wants to pay them for their work. When two families have the same household gross income but one has to pay over 40 times the amount of money for health insurance coverage than what another family pays, just because one spouse happens to have employer-sponsored health coverage, that is the real inequality here, and that inequality is vast and mind-bending considering the otherwise sameness of these respective families.

Example #2: Two virtually identical couples (same ages, same city) living in a small-medium sized Alaska town are expecting their first child. One couple brings in $45,000 annually and the other brings in $55,000. The couple that brings in $45,000 qualifies for Denali KidCare and pays nothing for the transportation to where babies are delivered 3 weeks before the due date, paid lodging, reimbursement for meals, other transportation, free hospital stay (C-section delivery). Nothing. Medicaid pays for all of it. Their out of pocket expenses are virtually zero. The couple that brings in $55,000 does not qualify for Denali KidCare but has employer-sponsored health insurance. Which is great for them because they too need a C-section delivery. But they also for travel, lodging, pay $3,000 of deductible expenses, and another $2,000 of co-insurance expense (because their delivery was also by C-section). So here again you have two very similarly situated families whose health care costs differ wildly (relative to their income) based on arbitrary and small differences. One family has it made, the other is absolutely crap out of luck. This is the real inequality as it concerns health care.

If I am the family that makes $55,000 and has to pay a fifth of my annual after-tax income to have a child, why should I be enraged about how many billions of dollars Jeff Bezos has? Should I join the Democratic Party and just incessantly whine about how rich the rich are? We could confiscate 100% of Jeff Bezos' wealth and it would fund the nation's health for 11 days. The real unfairness is that someone who earns just a tiny bit less than me pays nothing while I pay dearly. Or if I'm the business owner who pulls in $180,000, I am pissed that because my income happens to derive from my own business that I created with my partner, I have to pay over a fifth of my annual income just on premiums while the family next door that makes the same as we do pays virtually nothing, all because one of them happens to work for the State.

That is the real inequality, and it's extreme and it's arbitrary and it's indefensible. The thing I think single payer would do address THIS inequality, the real inequality as it concerns today's health care, is make the de facto funding of the nation's health care relative to income, by involving a corresponding income tax. Some will still whine, but they will be paying a relatively similar percentage of their income on health like everyone else with an income does, which is about as fair as it gets. What we have now is lightyears from fair as far as cost goes.

I was going to post but I see that Greenbeard summed it up nicely. Healthcare insurance is compensation. So you are not comparing apples to apples.
 
But these are completely different concepts. Shoveling compensation into overgenerous insurance is endemic throughout the employer space. It has been for decades. The tax code makes a $1 of employer-provided health insurance more valuable to the employee than $1 of wages. The result is very generous health insurance plans. And given that Alaska is an extreme, extreme outlier when it comes to health costs, I can't imagine anything more valuable than health benefits in that state. So I'm not particularly surprised health benefits are an even bigger lure there.

That has nothing to do with the 400% FPL cutoff for exchange subsidies.

Politically and philosophically though, I think it does have something to do with the cliff. Personnel and labor relations in government employment take up tons of time and energy, state governments are extremely heavily unionized, and people, especially in conservative states, are justifiably opposed to perks and benefits for government employees that simply don't exist outside of government employment. To be a government employee should not necessarily entitle a person to privileges that are basically unavailable to anyone else in society performing similar tasks in a non-government job.

What "should" government jobs provide in health benefits? That is a subjective, political question, and what the voting public will (or should) agree to will likely depend on what they face as ordinary citizens. When the state is in a budget crisis, when health care costs are, as you say, an extreme, extreme outlier, and when the state is one of the most heavily unionized in the nation, ordinary citizens are appropriate to ruffle at the platinum level benefits their government employees receive while moderately well-to-do private sector citizens have to pay this: https://www.premera.com/documents/027605_2018.pdf

If there were no 400% FPL cutoff for the exchange subsidies, no one would be paying what the premiums actually cost here. The federal government would be ensuring no one is the victim of an arbitrary benefit cliff and has to decide to either pay a quarter of their income or more just on health premiums or go uninsured. And that would make the state's cowering to unions' platinum health benefit demands a little less inexcusable.

Making the subsidies more generous has been on lots of people's lists for a long time. There's just no prospect of that happening, other than the accidental bump to people under 400% FPL Trump provided for CY18. Extending the subsidies to higher incomes certainly isn't happening as long as the GOP controls anything.

I believe you, and am irritated at the lack of any coherent message from the GOP on the health insurance issue.
 
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