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  •  adding to that... (1+ / 0-)
    Recommended by:
    NormAl1792

    ...one reason healthy care is so expensive is because there's a massive hidden tax subsidy that encourages shifting compensation into health care plans (because it is untaxed). i don't remember the ultimate resolution, but there was some stuff done on this in ACA, but there's still a huge problem. I don't really have a specific point other than it's just another example of how a convoluted tax code distorts preferences and economic action. a big part of the reason, i suspect, is that it's always easier to write a tax credit/cut than to spend money, so lawmakers look to the tax code to shape policy and reward supporters.

    •  The ACA did not help that, frankly. (1+ / 0-)
      Recommended by:
      VClib

      Speaking as an employer, we have continued to see premiums rise.  And, from a purely economic perspective, it would be much more advantageous to our business to pay the tax rather than subsidize health insurance.  We want to continue to provide good health insurance coverage for our employees, but the ACA is not making that easy.

      Here's just one example.  For a young and healthy employee, a comprehensive policy of the kind required by the ACA with low deductibles and little out of pocket expenses makes no economic sense.  They are much better off financially with a very very high deductible policy -- the kind that covers mainly catastrophic health care -- and to pay the costs of things like annual visits out of pocket, ESPECIALLY when they could combine that kind of catastrophic coverage with a HSA.  The out of pocket costs are generally far less then the premiums.  The ACA is going to effectively do away with that option, and the employee contribution for those employees is going to go up significantly.

      The ACA did two things, I think:  (1) it taxes "Cadillac" plans (which is going to provide a further financial disincentive for us to continue to provide the kind of coverage we have been providing); and (2) it says that we have to put on the paycheck the amount we are paying that employee in non-taxable income in the form of health care premiums.  Most of our employees believe that is a prerequisite to taxing those benefits as income.  

      •  George Will wrote a column yesterday (0+ / 0-)

        about the hidden consequences of the ACA tax in conjunction with community rating/guaranteed issue rules.  I didn't look into it, but he said Roberts said the tax could not be penal, ensuring it remained a choice vs. a mandate.  Thus people would pay the tax, and then jump in when sick.  Meaning the healthy pay higher premiums.

        It was a pretty strong argument at face value, and I say that about once every election cycle with George Will.

        This must, Lambert thinks, have momentous — and deleterious — implications for the functioning of the ACA. The problems arise from the interplay of two ACA provisions — “guaranteed issue” and “community rating.”

        The former forbids insurance companies from denying coverage because of a person’s preexisting health condition. The latter, says Lambert, requires insurers to price premiums “solely on the basis of age, smoker status, and geographic area, without charging higher premiums to sick people or those susceptible to sickness.”

        The point of the penalty to enforce the mandate was to prevent healthy people — particularly healthy young people — from declining to purchase insurance, or dropping their insurance, which would leave an insured pool of mostly old and infirm people. This would cause the cost of insurance premiums to soar, making it more and more sensible for the healthy to pay the ACA tax, which is much less than the price of insurance.

        ...

        So, Lambert says, the ACA’s penalties are too low to prod the healthy to purchase insurance, even given ACA’s subsidies for purchasers. The ACA’s authors probably understood this perverse incentive and assumed that once Congress passed the ACA with penalties low enough to be politically palatable, Congress could increase them.

        But Roberts’s decision limits Congress’s latitude by holding that the small size of the penalty is part of the reason it is, for constitutional purposes, a tax. It is not a “financial punishment” because it is not so steep that it effectively prohibits the choice of paying it. And, Roberts noted, “by statute, it can never be more.”As Lambert says, the penalty for refusing to purchase insurance counts as a tax only if it remains so small as to be largely ineffective.

        http://www.washingtonpost.com/...

        "Small Businesses Don't Build Levees" - Melissa Harris Perry

        by justmy2 on Tue Jan 22, 2013 at 07:21:19 AM PST

        [ Parent ]

        •  I agreed with Will on that as well (2+ / 0-)
          Recommended by:
          slinkerwink, VClib

          The financial incentives in the ACA are perverse.  

          The ACA provides a financial incentive for a business (1) to keep the number of full-time employees under 50; (2) to reduce employees from full-time to part-time whenever possible; and (3) to cancel health insurance and pay the tax instead.  

          And the more employers chose option (3), the more expensive health insurance will become for those of us who do provide it.  

          •  Yes, end employer-based health insurance (3+ / 0-)

            which accomplishes little other than to depress wages and drive up healthcare costs by keeping employees blind to the true costs of their care.

            Once we reach a critical mass of people on the exchanges, single-payer or single-payer-lite (public option) will be a breeze.

            (-2.38, -3.28) Independent thinker

            by TrueBlueDem on Tue Jan 22, 2013 at 07:54:23 AM PST

            [ Parent ]

            •  There is one little problem with that, noted by (2+ / 0-)
              Recommended by:
              coffeetalk, VClib

              the CBO --

              coverage on the exchanges is very expensive to the government, about 50% more than Medicaid.

              But -- good to see that you agree with my continuing assertion that the CBO headline is false, that ACA will increase the deficit, not decrease it.

              If you don't think that you agree, dig more deeply into the CBO report and you'll find that they expect only about 4 million people to lose employer-provided health benefits.

              If that goes up greatly, projected deficit reductions disappear, and that's even though subsidies are based on the second lowest cost "silver" plan in an area. Silver plans cover only 70% of health care costs, a concern when those costs are rising as they are.

              Maybe that's the pain we have to endure to reach the gain, but I think some people are going to be unpleasantly surprised next year.

              LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

              by dinotrac on Tue Jan 22, 2013 at 08:13:52 AM PST

              [ Parent ]

              •  Well, ideologically I'm fine with that (0+ / 0-)

                No deficit hawk here. Breaking up our inefficient patchwork system and centralizing healthcare even further around the public purse will speed reform dramatically.

                (-2.38, -3.28) Independent thinker

                by TrueBlueDem on Tue Jan 22, 2013 at 08:23:30 AM PST

                [ Parent ]

                •  Which would be great if people only suffered (0+ / 0-)

                  ideological illnesses, injuries, and bankruptcies.

                  It probably is good to get people yelling and screaming, though. If we really want our economy to do its job, we can't keep weighing it down with exorbitant costs for sub-standard care.

                  LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

                  by dinotrac on Tue Jan 22, 2013 at 08:41:31 AM PST

                  [ Parent ]

                  •  I don't see how this hurts individuals (0+ / 0-)

                    as much as it does the government coffers. With subsidies, expanded Medicaid, and guaranteed issue, personal bankruptcies should drop noticeably. The red ink shifting from the bank accounts of the ignored masses to the federal budget is the bitter pill for what ails us. I'm hopeful (without reason given recent history) that the ACA is the beginning of a long arc towards more progressive taxation, as well.

                    (-2.38, -3.28) Independent thinker

                    by TrueBlueDem on Tue Jan 22, 2013 at 09:06:37 AM PST

                    [ Parent ]

                    •  I'm not sure that it does, not sure that it (1+ / 0-)
                      Recommended by:
                      TrueBlueDem

                      doesn't.

                      Don't know about that expanded Medicaid.  CBO estimated that 6 million (not sure about that number, but I think it was 6) would be forced off Medicaid, and only half of them would purchase insurance on the exchanges.

                      Whether bankruptcies will go up or down will be dependent on

                      1) the cost of care,
                      2) benefits available to people prior to ACA and after.

                      The silver plan only covers 70% of costs. 30% can be a pretty big number. Mind you, lots of people have insurance that leaves them on the hook for 20%, so the net may be a wash if more people are buying insurance, and especially if people opt to apply their subsidy to a gold plan instead of silver.

                      My real hope is not that the government simply picks up the tab, but that some real health care reform happens, care that encourages making and keeping people well instead of piling up prescriptions and procedures.

                      LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

                      by dinotrac on Tue Jan 22, 2013 at 09:21:53 AM PST

                      [ Parent ]

                      •  Well, then you should certainly... (0+ / 0-)

                        ...hope that government picks up the tab. Because given the huge financial disincentives currently in place for preventative care, that's the only way it's going to happen.

                      •  Absolutely agree (0+ / 0-)

                        Cost containment is just as big of a reason for government-funded healthcare as ease of access. It's time to generate the mother of all "large groups" and negotiate fair prices and practices with providers and manufacturers.

                        (-2.38, -3.28) Independent thinker

                        by TrueBlueDem on Tue Jan 22, 2013 at 10:52:14 AM PST

                        [ Parent ]

                    •  Remember, one half of the states are not expanding (0+ / 0-)

                      Medicaid to include beneficiaries up to 133%, and one-half aren't setting up state exchanges.

                      Regarding it not "hurting individuals."  Are you aware that the typical catastrophic policy in the Mass Health Exchange was running $800 plus per individual (seniors) several years ago.  

                      If the federal exchange has premiums anything near that high (accounting for regional pricing), many senior couples will be priced out of the market.

                      The subsidy cuts off at annual income of $46,000 for couples.

                      Not to be contentious, but how many couples do you know who gross that meager of a 'household income,' are in the position to shell out $1600-$2000 per month for health insurance premiums?  Very few, I'm sure.

                      It's going to be a mess, I'm afraid (for some folks).

                      Mollie

                      “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

                      by musiccitymollie on Tue Jan 29, 2013 at 12:18:14 AM PST

                      [ Parent ]

              •  I absolutely believe this (2+ / 0-)
                Recommended by:
                VClib, nextstep
                If you don't think that you agree, dig more deeply into the CBO report and you'll find that they expect only about 4 million people to lose employer-provided health benefits.

                If that goes up greatly, projected deficit reductions disappear, and that's even though subsidies are based on the second lowest cost "silver" plan in an area. Silver plans cover only 70% of health care costs, a concern when those costs are rising as they are.

                I think the number of people who lose employer-provided health benefits is going to grow significantly.  As I said above, the ACA provides financial incentives for employers NOT to provide health benefits.  
                •  It's not news for anybody who actually looks at (1+ / 0-)
                  Recommended by:
                  VClib

                  the numbers.

                  Unfortunately, it's a lot easier to spout headlines.

                  And, honestly, I got caught a bit myself. Though I always realized the disincentives to employers, I didn't catch the 70% coverage part until quite recently.

                  One red flag in the last CBO report that was missed by many -- maybe intentionally -- was that several million current Medicaid recipients would end up uninsured because they would choose not to buy insurance on the exchanges.  The interesting part of that discussion was the revelation that it would cut earlier deficit reduction estimates because the exchanges are much more expensive than Medicaid -- in spite of being keyed to the so-called silver coverage.

                  LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

                  by dinotrac on Tue Jan 22, 2013 at 08:38:21 AM PST

                  [ Parent ]

                •  Employers retain a strong incentive (0+ / 0-)

                  Employers have a strong incentive to offer health care benefits.  Offering health insurance ties the employee to the workplace.  They can't leave their job without risking their financial well-being, and in some cases their very lives.  The exchanges and must-issue clause will alleviate this somewhat, but it's still going to be true of employers who offer better coverage than the mid-level exchange plans.

                  Of course, this also only applies to employers who don't have freely interchangeable employees.  For unskilled workers who are easily replaced, the employer has little need to indenture the employee through this method - poverty already does the trick.

                  "And the President of the United States - would be seated right here. I would be here. And he would be here. I would turn - and there he’d be. I could pet ‘im." - Lewis Black

                  by libdevil on Tue Jan 22, 2013 at 10:41:12 AM PST

                  [ Parent ]

              •  You're spot on. That's the reason that the ACA (0+ / 0-)

                didn't go into effect until AFTER the presidential election.

                Mr. Mollie has been told that it's highly unlikely that his company will provide health insurance beyond 2013.

                Mollie

                “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

                by musiccitymollie on Tue Jan 29, 2013 at 12:10:53 AM PST

                [ Parent ]

        •  My guess is the George is on vacation (2+ / 0-)
          Recommended by:
          justmy2, tommymet

          and an intern wrote the column.

          How else do you explain this?

          It was a pretty strong argument
        •  I suppose a rough comparison (0+ / 0-)

          would be with states that allow auto owners to opt out of carrying insurance.  The question is the extent to which that changes the risk pool as many carriers now offer uninsured motorist coverage to owners who do carry coverage

        •  Who is "Lambert," please? N/T (0+ / 0-)

          Mollie

          “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

          by musiccitymollie on Tue Jan 29, 2013 at 12:06:46 AM PST

          [ Parent ]

      •  Why health care is tied to employment (4+ / 0-)

        in the first place seems wrong.

        "Onward through the fog!" - Oat Willie

        by rocksout on Tue Jan 22, 2013 at 07:37:21 AM PST

        [ Parent ]

      •  I don't disagree with some of that, but... (1+ / 0-)
        Recommended by:
        graphixart
        For a young and healthy employee, a comprehensive policy of the kind required by the ACA with low deductibles and little out of pocket expenses makes no economic sense.
        Speaking for myself, when I was a young and healthy employee (I'm still healthy, by the way) I checked out the high-deductible-plus-HSA plans. Only to find that none of them made financial sense, unless I literally never went to the doctor. Basically, two doctor visits in a year, plus one lab work-up, say for a culture for a sinus infection, and the low-deductible PPO plan was the same price (and the Kaiser HMO, which also qualifies for the ACA, was cheaper still.) Add the one (generic) maintenance drug that I'm on now, and the difference becomes stark.

        Everywhere I worked, I did the same calculation. It has never once made sense. They would have come out differently if I were paying 100% of the premiums of both plans, I admit, but not as much different as you think. The savings in a good year would have been on the order of hundreds of dollars, and the potential losses would have been one to two orders of magnitude greater.

        (2) it says that we have to put on the paycheck the amount we are paying that employee in non-taxable income in the form of health care premiums.  Most of our employees believe that is a prerequisite to taxing those benefits as income.
        That's one of the silliest 'slippery slope' arguments I've ever seen. If the government decides to tax those benefits as income, then they can do that at any time, and putting those numbers on an employee's check makes it no easier.

        Indeed, one of the major ideas behind that (IIRC proposed by a Republican) was the whole 'free market'/'people should know what they're spending on health care' argument.

        I'm no ACA partisan, but blaming the ACA for the fact that providing health insurance is becoming more and more onerous for employers is like blaming your cell phone for your $800-a-month power bill.

      •  Well, it is a prerequisite to taxing that benefit (0+ / 0-)

        as income.

        As recommended by the Fiscal Commission under "Tax Reform."

        Mollie

        “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

        by musiccitymollie on Tue Jan 29, 2013 at 12:03:41 AM PST

        [ Parent ]

    •  one example of this was the killing of (3+ / 0-)
      Recommended by:
      coffeetalk, VClib, BrianParker14

      the consumer interest deduction under Reagan.  Banks immediately responded with home equity lines thereby allowing consumers to keep their consumer interest deduction hidden as a home mortgage.  Great for the banks as it moved unsecured credit into secured credit but lousy for the homeowner as such lines usually carried rates comparable to credit cards instead of traditional mortgages.

      Even when there is an attempt to correct a distortion of economic policy, it can result in new, unintended distortions

      •  Great example. (2+ / 0-)
        Recommended by:
        VClib, BrianParker14

        I remember when you could deduct consumer interest, and the rise in home equity loans when that was changed.  

        And home equity loans played a role in the bursting of the housing bubble, because many "underwater" homeowners are "underwater" not because of original mortgages, but because they had taken a lot of equity out of their houses in the form of home equity loans.  That all happened because for consumers, interest is not deductible unless it's secured by your home.  

        •  absolutely (1+ / 0-)
          Recommended by:
          coffeetalk

          We bought a condo at short sale.  The original buyer paid $61K.  We bought for 79K- but in the meantime, the owner took out mortgages totalling $150K and then walked away.  If they had kept their original mortgage, they would be in an equity position, instead, they kept the $90K  taxfree and the rest of us bailed out the bank for the loss.  Normally, the 71K  difference between the loan and the eventual sale price would have been taxable- but  current relief for under water houses makes that gain a free ride paid for by the rest of us.

          Many lost equity in the housing crash, especially if they bought at the peak.  But many also made out like bandits, if they mortgaged up their houses and took the cash.

          As my father used to say,"We have the best government money can buy."

          by BPARTR on Tue Jan 22, 2013 at 08:52:28 AM PST

          [ Parent ]

          •  Do you really believe that? (0+ / 0-)
            But many also made out like bandits, if they mortgaged up their houses and took the cash.
            Actually, that sort of thing was so microscopically, vanishingly rare that it surprises me to see anyone who actually experienced it firsthand.

            I went hunting statistics on that kind of thing last year, and was literally unable to find any numbers at all. Just a few spectacular news stories in a few places. (And incidentally, in at least some states the bank can sue someone for doing something like that, because it's either considered fraud or bad faith, and get their money back anyway.)

            •  well, yes, I do believe it. (0+ / 0-)

              We have purchased several condos at short sale and foreclosure in the past 3 years.  Most of the sellers 1) had a second mortgage which was eliminated by the sale- and for which they simply got to keep the cash and 2)  had not paid a mortgage payment for over a year.  As the purchasers, we saw the individuals' records.  In a typical example, the individuals had put 5% down on a 150K condo, but did not pay their mortgage or condo HOA fees for 12-15 months.  Rent for an identical condo is $1250/mo, so they saved  more than $15K in rent, living rent-free.  They also kept the second mortgage of 4$50,000.  that much more than covered their initial downpayment.

              We have seen this a number of times in the condos we bought.
              Were the banks largely responsible for setting up this scam, and did they steal from the rest of us when they sliced and diced the mortgages and sold them as derivatives?  Of course.  the banks stole far more from us than the individuals.  Andthey made "loans" on properties which should not have ever been given a loan regardless of the buyer's financial situation.  Did all those buyers who have actually profited from foreclosure set out to scam the system- I don't believe so. ( Unlike the banks who deliberately set out to screw the system.)

              None-the-less, many of the unfortunate who "lost their homes" actually made out better financially than if they had rented for the entire period.

              The rest of us paid for both the banks and the inidviduals.  
              By the way, every time a house sells at short sale, realtors start knocking on the doors of the houses nearby trying to convince the neighbors to walk away from their homes too.

              Those of us who pay our mortgages pay for everyone else.   I understand that this is a more nuanced view than most here have of the housing crisis, but I believe there is lots of blame to go around.

              As my father used to say,"We have the best government money can buy."

              by BPARTR on Thu Jan 24, 2013 at 09:54:57 AM PST

              [ Parent ]

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