Since the new handy-dandy health care plan is now Constitutional, and thus the law, and since it’s unlikely to be repealed (for a lot of reasons) before it becomes fully operational in 2014, maybe it’s time to get out a pencil and figure out how to surf the new rules as inexpensively as possible. I find it impossible to believe I’m the only one thinking like this.
First of all, here’s the setup in graphic form;
OK, so let’s go through this for the circumstances here at 9thousandfeet;
In this household, the answer to the first box on the flowchart is “no”, so now we’re thrown into the box that asks if we have any current insurance. The answer there is “no” also, so there is a penalty “tax” for not having insurance.
OK, so how much of a hit is that? In 2014, if I read this right, it will be either $190 or 1% of the household income – whichever is greater. In our case here on the mountainside it would be around $350 therefore —give or take a few bucks. Now the tax increases over time, to a maximum of 2.5% of income beyond 2016, so if I’m reading this right, and our household income remains steady at its current level, the biggest tax penalty possible will be, roughly, approaching $1000. This is individual penalty, so for two people we’re looking at maybe $2000 or so. Maximum.
Now, incomes less that 133% of the official poverty level are eligible for medicaid under the new rules, but that won’t apply, since 35K or so is about 300% of that level. So that provision is inapplicable here. Here’s a graphic of how the poverty level/max cost thing is supposed to work;
Looks like the 9thousandfeet.com household is in the 9.5% maximum out-of-pocket insurance premium cost. There may be years when we’re in the 8%-9% range, especially the way things have been going lately, but that’s the ballpark.
Referencing the guesstimates from the figures at the bottom of the first chart—
Premiums for health insurance purchased through exchanges would vary by age. The CBO estimates that the national average premium in 2016 will be $4,000-4,500 for an individual and $12,000-12,500 for a family.
—it seems unlikely in the extreme that the policy premium will be less that the maximum out-of-pocket expense, I’ll assume the cost to this household will be something a little north of $4,000 annually for a policy that would avoid the tax penalty. That’s the maximum, as I understand it.
So, as of now, under the new ACA rules, the annual out-of-pocket cost to this household for a policy that avoids the tax penalty will likely be close to the maximum, probably around $4,000+. And the ultimate maximum annual penalty for non-compliance (after 2016) will be around $2,000.
Keep in mind that the “penalty” is now a tax, and so long as it is paid there can be no wider legal implications—no criminal aspect to the situation at all—and without revision of the law, no further penalty whatsoever.
Now, as of Jan 1st 2014, insurers will be prohibited from discriminating against existing medical conditions, both with regard to issuing policies and charging higher premiums for them. This is a big deal, and what it means (again, unless I’m missing something) is that, arithmetically (this is an arithmetic post, not a moral one) this household would save money by paying the tax penalty so long as we’re all healthy, then (after Jan 1, 2014) just buying a policy if/when either of us gets sick so as to defray catastrophic costs. After that 2014 deadline, such a policy would (must, under the ACA provisions) cost the same as it would if we were not sick, and could not legally be declined.
Of course there’s always the chance of an accident, a car wreck or something, that could scramble the arithmetic dramatically. And anyone who makes that gamble and loses will be in a world of hurt just like so many people already are. But they would still get treated, and those costs would be absorbed by the wider economy just the way they are now.
What about people at income levels closer to the poverty line? I haven’t done the math for a bunch of individual cases, but looking at the chart above, the maximum tax penalty (at 2.5%) is lower than the maximum Out-of-Pocket premium payments at every level until you approach 133% of the poverty level, when medicaid kicks in. Assuming you live in a state that decides to expand the medicaid program to accommodate that, which is a whole other discussion.
So the bottom line here is that unless insurance premiums drop unimaginably, and so long as you don’t get in a wreck, you’ll likely spend less money by paying the tax penalty than you will on compliance. Given that, what will many people choose to do? Especially younger, healthier people who are already accustomed to flying without an insurance net? Sure, it’s a risk, but for those in good health and without much accumulated wealth at stake in a potential bankruptcy (that’s a lot of people) saving a couple of grand a year on a just such a gamble might look pretty good. Especially since they’ll still get emergency care if they need it, even if they can’t pay for it.
This result is so bizarre on its face that I went back in a couple of times to see where I screwed up. Didn’t find anything, but I’ve been seriously distracted with phone calls and emails about the fire preparation protocols after the big meeting. No, we’re not on fire, but we are working on what to do if we catch on fire—where to assemble so you can be counted and so on. Anyway, if I’ve missed something that makes nonsense out of the thrust of this piece, let me know and I’ll slink away in embarrassment.
I’m kind of slow today. Maybe I’ll excuse myself because it’s Sunday — upon reflection, that must be it. But, excusable or not, I find that I ended my diatribe about the “free rider” argument without making the point I had set out to make.
This is simply that the whole purpose of original in-your-face language was to shame non-union workings into kicking in for the benefits the union had manifestly won for them. But no amount of shaming can provoke me or Madame’s son into buying insurance we can’t get or afford.
exactly. now you’re maybe getting a clue as to why some of us don’t bite the bullet and sweat to pay those premiums every month at and let the rent go hang.
I said i have had no insurance for 30 years or so. But it’s not like i haven’t been sick. On time i had a lymph node swollen in my neck to the size of a baseball. (I think it was probably from slicing myself with a rusty jewelers saw). Friend had the same problem, cost her $1100 in tests at UCLA med center. I said fuck it, no chance i can even think about it. Day or 2 later the swelling went away. Few years ago i had an abcessed tooth, i get them every now and again. Waited 3 hours in the clinic, they closed without seeing me, i said fuck it. Tooth fell out, and that was the end of it. This has happened a few times, but luckily you wouldn’t know to look at me as they aren’t my front teeth. So i get by.
But at some point i’m going to run out of luck and break a bone or something that won’t take care of itself. So either i have catastrophic insurance, or that’s when i just pack it in and croak. I’m not willing to get hounded for the rest of my life for a bill i can’t pay. And i’m not willing to pay for insurance to the exclusion of rent.
Amy,
I got my clue when my wife bled out on the floor. I don’t really think I need a whole lot more of them.
Actually, i didn’t even have you in mind there. I had in mind Criticalthinkrr and all the others who call us uninsured deadbeats. They somehow are under the impression that we’re hoarding wads of cash that we refuse to use to buy insurance with, and prefer to show up at the ER at their expense.
btw Natty, congrats on your new law. I saw on the news tonight that you have a new taxi vomit law. Cab drivers can now charge a $50 fee if someone vomits in their cab.
http://www.cnn.com/2012/06/29/us/new-laws/index.html
Bluth -
Sorry if it’s in here but i can’t find it – do you have a link to that Jim Wright piece? That guy is reading my mind.
The dire economy has finally caught up with us here – it really is like breaking rocks to try to keep on top of living costs here, and most friends i know are in the same boat. $20 is a really big deal here now to most of us. Seems that everyone has to borrow to make their rent each month these days, and if you get $20 ahead, you get knocked back $40. No wonder everyone who can is still bailing out. I think we still have the highest population flight in the country. It’s really depressing.
Porn,
the link to Stonekettle is here. When it comes to a three-alarm rant, almost nobody does it better than Jim Wright (though they can run on a bit).
Just to re-cap in the cold light of a grey Monday morning: in my view the entire object of health care reform ought to be to erase the very notion of ‘free-riding’ from the discussion. It’s a foul idea, and the nub of everything objectionable about the right on almost every level: scratch a rabid ragehead and what you get, no matter where you scratch him, is mouth frothing fury about how they are leeching off of us. As Nat said a day or two ago, we all know who they are and who us is.
My point was to try to suggest a way to turn their fury around on them and throw it back in their face. Which I think I didn’t get across very well. No one would sell me any useful insurance in the U.S., either, so if I lived there I’d be in the same boat as other so called ‘free-riders’. When I visit I can buy travel insurance against a car crash or something of the sort, but I know those policies are worth very nearly as much as the three sheets of paper their small print is printed on.
And thanks to Nat for a history of the term. I’m sure it’s been used in biology for at least as long, but I might be mistaken about that. Having been forced against my will, back in my twenties, into that category myself, I probably developed a thicker skin about it than I should have done. But Nat is completely correct, it’s a term designed to create divisions between the virtuous and the damned. Which is of course how the bastards always rule: set half the group you mean to control against the other half and then while they are tearing themselves up collect go and collect 200 billion dollars.
Which makes them the ultimate free riders, of course. In the biological sense of the word: they do none of the heavy lifting, obey none of the laws that they don’t wish to obey, create nothing, just shift around money and influence bought with money. But Oh, I hear a voice cry out, they take risk! But they don’t. They have saddled the many with all their risks and kept all the winnings to themselves.
So, absolutely, doom to those free-riders, and a doctor when we need one, whether we have the money in or pockets this week to pay for it or not, for everybody else.
Bluthner, et al. –– Have you read the exceptions to the pre-existing condition coverage requirement, that are listed on the HealthCare.gov site that Natasha linked to yesterday? The grandfathered policies that will be exempt from that rule will probably comprise far more than the non-exempt.
Madame,
If one has a condition that is not covered under a grandfathered policy, surely the thing to do would be to ditch that policy and buy a new one? (Begging the question, of course, as to how much that policy will cost.)
Or am I missing something?
Bluth -
Read that Stonekettle article and comments, thanks. Like you posted, it seems that the bill is going to need immediate attention to get into workable form. I’m assuming Obama is going to win another term – if so, what can the chances possibly be that the bill actually gets fixed to workable form? With a Republican House?
Probably not going to see Medicare for all in my lifetime. Or any other.
As to the term “free rider” – i don’t take particular offense to it as is, and was unaware of the union precedent. But they don’t get to call me that until it’s actually true. To date, it’s not, despite whatever sort of existential case anyone wants to make to the contrary.
Interesting. I don’t really put much stock in stats or polls this early before the election, but Obama seems to have taken quite a nose dive in electoral college numbers. Gap has tightened, and more states seem up for grabs.
Bluthner –– If all an employer’s plans were written up before March 2010 then the employee with the pre-existing condition would have to change jobs, and would have to look for a job where the employer offers plans that were written up after that date, in order to have that condition covered or even to get insurance at all. It’s a loophole big enough to drive almost all existing insurance plans into. These people will have to buy individual policies and not benefit from a group rate. Screwed.
Madame,
Ah, I see. That’s crap.
Porn,
Nate Silver at 538 says the opposite about the electoral college. He has Obama at 300.4 to Mitt’s 237.6, up 15 since 22 June.
He’s usually pretty accurate, too.
Anybody see Fareed Zakaria on this?
Very informative.
But basically society has 2 choices. Rely on the free market so that only those who can pay get health care.
Or have a system that holds universal coverage as an ideal and tries to achieve that.
Number 2 is where we are now. In my view a public option – expanding medicare for everybody – was the way to go, but it was not to be and instead we got the ACA.
But number 2 means that somewhere along the line somebody is going to pay for people who cannot pay for themselves.
I had great insurance when I was diagnosed with breast cancer in 2009. This was not a question of personal responsibility, but good fortune in being able to work in an organization that provided it.
If I did not have great insurance, I think I would be dead. I had some pretty powerful drugs that may not have been available to me under “charity” care.
We all have our own stories, but that’s mine and that is why I would not be able to sleep at night if I did not have insurance.
Madame -
Are employees allowed to opt out of employer plans and get their own? they might get a better group rate by buying into an outside policy with an even bigger pool, no? And if the deductables and co- pays are less that the employer plan, may even save them money overall.
If i was an employee under an employer plan, i wouldn’t count on the employer not dropping the plan in the future.
Bluth -
He is usually right. He commits a lot more states there than other pollsters do too. Most of the others have more states up in the air.
Most polls have Obama up a few points in the general except the newest from Rasmussen, but i usually ignore them as they lean conservative anyway.
Some friends of mine have a new grandbaby. She was born with some kind of liver ailment that will require life-long treatment, though mostly she’ll be fine. The mother had planned to go back to work but now she’s thinking the baby might be better off not in daycare.
Except… the family health coverage is through the mother’s job. The father’s employment offers health coverage, but, see, they were foolish enough to have a baby with a pre-existing condition…and there’s that monstrous loophole. Screwed.
Amy, lotta people are going to be searching for pools where the plans were written up after March 23, 2010. What happens when those pools are full of people with pre-existing conditions?
I don’t know Madame. I have never bought insurance so i’m really pretty clueless as to how it works. For all i know i may have a pre-existing condition or 2 or 3 as well, i have no idea.
maybe the government will bail them out because they are too big to fail?
No, I don’t think so, either….
But honestly, i more afraid of having to pay for insurance (or penalty) and not being able to pay my other bills and expenses than i am of actual illness.
A friend of friends has recently died of breast cancer. She had it a long time ago, went into remission, then it came back with a vengence. I used to say to my friends that i didn’t see how she could fight so hard, i don’t think i have it in me. And she was well insured. You never know what you’ll do when the time comes, but as it stands, i don’t think i could do it.
Here we are in our little corner of the world, trying gamely to distinguish what will happen from what might happen, examining details and pointing to genuine shortcomings. It simply has to be done, and if it’s to be done on a wide enough scale, then it has to start small somewhere.
But we’re making a sacrifice, never doubt it, because we’re missing out on so much fun. On the one hand, I offer into evidence the Observer editorial of last weekend that praised the US for finally enacting universal healthcare. (I’m sure they felt they were making a point about Cameron and the NHS [even the idiotic US has come to its senses...] and thought they could gloss over the reality, but it isn’t very helpful, is it?)
On the other hand, there’s the delightful Michael Savage:
One year when I was on the high school debating team (’63 or ’64) the statewide topic was Socialized Medicine (because Medicare was in the works). And you had the Goldwater kids proclaiming the Death of America, of course. But the pro-Medicare kids had to know their facts, because that’s how you win debates, and the Goldwater kids had to frame their arguments in terms of those facts, because they too didn’t want to lose. Show me anybody in punditry or politics, either “side,” right here, right now, who wouldn’t have forfeited one of those debates in the first three minutes, and I’ll eat my hat. (As soon as I find it, that is; I’m pretty sure I have one around here somewhere.)
That travesty wasn’t even worth a fucking comment. Just a facepalm, not the least at the title including something like “the US welfare state”.
I’m still shuddering from the terrible juxtaposition of those two words: Goldwater kids.
Yeah, at least half the high school. And not just because we were hicks: Hilary ran the Goldwater Club at the richest high school on the North Shore (Tom Buchanan country).
They taught me so much. They allowed as how [Medicare/civil rights/voting for Negroes] were attractive ideas that they, themselves, might have found themselves falling for — were it not for their absolute commitment to Freedom. And I really did ask what this Freedom stuff was supposed to be made of, but all I got were sad (because we’d been friends since Kindergarten) Lord-he’ll-never-get-it sighs and shakes of the head. Almost everything else has changed since then but not that part.
Nat,
That’s the kernel at the heart of the center of ‘conservatism’ isn’t it: a categorical confusion of terms. What they call freedom the rest of the world calls luck.
Bluth,
I think Freedom has evolved a bit, though. I think that now perfect Freedom would be the complete absence of all federal spending that doesn’t go to them or to certain parts of the military. I think that most of them don’t hold out for pure Freedom anymore and will cravenly settle for constant, incremental increases to relative Freedom, which (due to our hyper-inflationary times) is best measured in terms of public sector jobs lost. .
Amy, sorry about your friend, but you honestly don’t know what you would do in the circumstances.
The desire to live is very, very strong.
Elana -
Sometimes, for some people.
Sometimes, for some people, the desire not to be destitute after losing everything to the health care industry is stronger than the desire to live.
Via Doonesbury: