Coach Power'T's Thread for Knowledge Absorption.

[NM11046]

This thread is a good example of how many smart, rational, educated and informed people we have - as well as those who are open to learning. Good stuff! Thanks for starting it.

[Scratchtown]

So would I be right to say/think that the penalty that is in place if you opt out is actually a safeguard for the people paying premiums to keep their premiums where they are?

 

Meaning, if the penalty didn't exist that would make premiums even higher, correct?

Where does that penalty money go to?

 

 

[funhusker]

So would I be right to say/think that the penalty that is in place if you opt out is actually a safeguard for the people paying premiums to keep their premiums where they are?

 

Meaning, if the penalty didn't exist that would make premiums even higher, correct?

 

Where does that penalty money go to?

 

 

To my my understanding. I believe the funds are used to help subsidize the rates for people who qualify. Which allows more people to afford insurance and be insured. Theoretically, this would bring down the cost for everyone.

[RedDenver]

So would I be right to say/think that the penalty that is in place if you opt out is actually a safeguard for the people paying premiums to keep their premiums where they are?

 

Meaning, if the penalty didn't exist that would make premiums even higher, correct?

 

Where does that penalty money go to?

Yes, the penalty is keep people from waiting to buy insurance only when they are sick. That's not how insurance works and would crash the system by skyrocketing the prices (premiums, deductibles, co-pays, etc.), so it is a safeguard.

 

I'm not exactly certain, but I think the penalty money is used to subsidize the insurance premiums, particularly for the sick whom the insurance companies are losing money on.

[Danny Bateman]

So would I be right to say/think that the penalty that is in place if you opt out is actually a safeguard for the people paying premiums to keep their premiums where they are?

 

Meaning, if the penalty didn't exist that would make premiums even higher, correct?

 

Where does that penalty money go to?

 

 

Under current law (the ACA) the penalty exists to be able to enforce the mandate. If you say everyone has to try to buy insurance, but you don't have any penalty for not doing so, the mandate has no teeth and lots of people just won't buy insurance.

 

As El D stated, one of the criticisms is that the penalty isn't harsh enough and lots of healthy younger folks just take the hit and don't buy insurance because they don't need it.

 

If there was no penalty, premiums would definitely go up because most (if not all) healthy people wouldn't have insurance and that would leave sicker insurance pools, which mean increased premiums since they're more expensive to cover.

 

Choosing some type of incentive/penalty to encourage people to buy in is one of the many challenging aspects towards pushing towards universal coverage.

 

Here's a short primer on what happens to the penalty money. TL;DR: RedDenver was pretty much correct.

[Landlord]

Plenty of us also (myself included) take the hit and don't buy insurance because we can't afford it, and even if we could the stuff within availability is essentially worthless. As far as I understand, the IRS also doesn't have any legal ability to enforce those penalties other than ask if they can please have your money.

[funhusker]

Plenty of us also (myself included) take the hit and don't buy insurance because we can't afford it, and even if we could the stuff within availability is essentially worthless. As far as I understand, the IRS also doesn't have any legal ability to enforce those penalties other than ask if they can please have your money.

Out of curiosity, what would it take for you to sign up for a policy? As discussed in several threads, a lot (definitely not all) of Obamacare's failures are found in people opting not to sign up and not contributing to the "system". How stiff would the penalty have to be, or how much better would the policies have to be before you felt inclined to sign up?

[JJ Husker]

Personally, I think the penalty should be the full cost of premium. Then a person would be crazy to not participate. But, as LOMS situation proves, they need to address the costs so people can afford it. I've been down this road with LOMS before and I'll admit I don't know his particulars but it seems that the ACA is structured primarily to help subsidize lower income folks. I am skeptical when someone says they can't afford it. I understand premiums are ridiculously high but people under 400% of poverty level get subsidies, and at some point it basically becomes free. I can't imagine that it is cheaper for a relatively young single person to pay the penalty instead of buy coverage. But like I said, I don't know anyone else's particulars. I do know in my situation, family of 4 with no subsidy, it is gd expensive, like about $20k per year and that's a silver plan. Gold costs more and bronze are cheaper but basically worthless.

[Moiraine]

Personally, I think the penalty should be the full cost of premium. Then a person would be crazy to not participate. But, as LOMS situation proves, they need to address the costs so people can afford it. I've been down this road with LOMS before and I'll admit I don't know his particulars but it seems that the ACA is structured primarily to help subsidize lower income folks. I am skeptical when someone says they can't afford it. I understand premiums are ridiculously high but people under 400% of poverty level get subsidies, and at some point it basically becomes free. I can't imagine that it is cheaper for a relatively young single person to pay the penalty instead of buy coverage. But like I said, I don't know anyone else's particulars. I do know in my situation, family of 4 with no subsidy, it is gd expensive, like about $20k per year and that's a silver plan. Gold costs more and bronze are cheaper but basically worthless.

I think he said he is in the gap where they don't provide it, in his state. Which is what I talked about in my post. I believe it was only Republican states that opted not to cover the 100%-130% poverty range. So only the people at 130% poverty level or higher could get subsidies in those states. (They couldn't have extra people actually benefitting from something a Democrat came up with, imo).

 

I agree that it should cost as much as the premium. That would have helped a lot with insurance costs overall but we would still have needed to address the cost of the care itself. It just would've slowed down some of the insurance cost issues.

[Danny Bateman]

LOMS brings up an interesting topic.

While the insurance markets nationally are mostly stabilizing, from everything I've seen, there are many places around the country where they aren't doing well with either 1 or no major insurers. What are those people's options? Have a job or pay whatever the lone insurer they have wants? What if they don't have one? Are they just hosed? I'm asking because I honestly don't know. Are you in one of these areas LOMS?

 

I'd like to get those people some help. But there's evidence insurers have been dishonest about their participation in the past. You've got a president who's playing chicken with the federal cost-sharing payments, which is literally being cited by insurers as a destabilizing force causing uncertainty right now. And Congress right now (re: GOP) is loathe to do anything to address the problems in those areas short of going 180 degrees in the other direction.

 

I guess my long-winded point is A) the markets are mostly stabilizing (despite rhetoric about "collapses" or whatever else) and B) there are still a substantial amount of losers in this ordeal who still badly need help because their regional options aren't good.

[Landlord]

I live in Chicago, and I'm happy to provide more details in the interest of transparency and also for helpful criticism.

 

 

Up until I got let go from my job, I was making 24k a year working 30 hours a week, and filled in the rest of my time with various/inconsistent freelance work that would average probably 3-8k a year pre-tax. The penalty two years ago was around $600 or so, don't remember what it was this year as my tax lady took care of all that stuff for me.

 

The times I've tried to look at the marketplace and find options for insurance, the cheapest plans I could find with subsidies included would still run me about $130-150 a month. That might not seem unreasonable, but making the money I did I was already not making enough monthly to pay for all of my bills that already existed (I usually had to choose not to pay 1-3 bills a month, usually my student loans or credit card, because I couldn't afford the entirety of them). So I was in a situation where I was trying to figure out a solution where I would have to come up with an extra $130 a month at minimum. I could have figured that out for something worthwhile, but there was absolutely no reason for me to try and figure that out when those plans have a $15,000 deductible -- especially when the penalty (which I have never paid because, as I mentioned earlier, the IRS has no legal ability to enforce) is cheaper than the cost of insurance. It'd just be throwing money away as long as I'm healthy.

 

 

 

 

In a way, I am a representative case study of my philosophy towards human nature and government policy - people will default towards what works best for them and forsake what's best for the majority if given the choice. If healthcare was completely government run and came out of my paycheck automatically through taxes, I'd never have a single care about it and I would naturally make the adjustments to have the money I need to, because it would not be perceived by my brain as losing anything. But, when that money is given to me and I receive it as hard-earned, it doesn't make a lot of sense for me to throw that into an 'insurance' policy that doesn't insure me for anything other than the most extreme and unlikely sorts of occurrences.

 

Edit: I am no expert on the intricacies of healthcare and am open to correction and rebuke on all of this. I'm a young, single, present-minded creative/artist living in an expensive city and that comes with it's own blind spots, unwise decisions and yolo sort of mentality that I fully acknowledge is not without it's fair share of deserved scrutiny.

[84HuskerLaw]

Landlord, your's is a perfect illustration of the fundamental problem with Obamacare and demonstrates it well. Actually, the only people who benefitted from Obamacare (it applies to each and every person in the country so don't get confused if you think you have some other policy, program or option - they are all regulated, constructed, priced and dictated by the Affordable Care Act (Obama/Pelosi, etall Care).

 

The prices (premiums and copays and deductibles) for virtually all policies and coverages have doubled in just eight years since Obamacare was passed (quite literally voted on by every Democrat without being able to read it or know what was in it).

 

Most of the 'uninsured' in this country are not covered by health insurance because they choose not to be - principally because the can't afford it and even if they could manage to pay the premiums, the out of pocket costs of the so called copays and deductibles are cost prohibitive. If you don't buy the insurance, you can atleast afford to go to the doctor for a check up and basic care if you find yourself battling a cold or flu or some little bump or bruise or sprain or whatever. You will find that those treatments are actually less expensive if you DON"T have insurance that if you do.

 

There are the 'pre-existing conditions' cases which are not insignifcant but the country could have created a simple health care coverage program for those with the pre-existing conditions so the insurance companies could be reimbursed for accepting the chronically ill or sick patients without sinking the entire ship that is actuarily sound health insurance.

 

But the biggest problem with 'health insurance' is that the entire notion of 'insurance' and getting health care are just not well suited for each other. Insurance is a concept or idea intended and really only fairly suited to spreading the risk of the rare but predictable occurrences across a large number of insureds. Like house insurance, the risk of loss if a fire burns down your house is low but the cost if such a rare thing happens is very high. Thus, if a large number of homeowners pay a small sum in to a pot (the insurance risk pool of policyholders), then the few unfortunate ones who have fires can be reimbursed for their loss less a small fraction of a deductible to eliminate the costs of handling 'penny ante' claims for the damage as a result of candle smoke fumes or some insigificant.

 

Healthcare and insurance don't fit and become unreasonably bureaucratic and therefore excessively costs to administrate and manage when you take away the similarities of the two examples. Health insurance at its best is only reasonably workable as for example a 'cancer' plan or a 'major medical' or such plan. Having a plan that pays for the first visits and the prescriptions and so on (a pay for everything and you just pay premiums monthly) is the very fundamental root cause of the massive and out of control inflationary spiral of healthcare and health insurance costs. There really is not an 'insurance' aspect to the idea as it becomes 'prepaid healthcare' administrative aid. The insurance company is nothing but a bill receiver/payer service provider. They tend to pay their employees well and as a result their services are not cheap.

 

Economically, Obamacare simply attempted by force of law to mandate that all people must purchase 'health insurance' on the terms and conditions that Obamacare mandated. It did not in any way mandate that all people have full access to healthcare. So, Landlord, you and millions and millions more Americans were being told you must buy an Obamacare health insurance policy (want it, need it, like it, afford it or NOT), so that you can pay tax (we'll call them premiums) so that the uninsured are somehow now insured. As you point out, what good is this kind of insurance which won't pay anything to help you because the deductibles are astronomically high and the premium is beyond your reach fiscally anyway. Like many, you don't make enough money to live (economically speaking - over the past decade we've seen nearly half the country find themselves in this very predicament).

 

There are plenty of available health care services in America to take care of everyone but for a bunch of folks, the prevailing costs of those services is beyond their immediate capacity. Often the bill for the first visit is more than the total available money of the patient at the time. Not so much because the services are grossly overpriced, although hospital charges are outrageous (driven up by a race to be the best, most modern, fancy facilities on the planet). All the government money being poured into healthcare has fueled the inflationary fires and spawned a facilities 'arms race' of sorts. Fancy buildings cost big money and those costs are added intio all those bills the providers send to the government and insurers (administrators). There are many more aspects but this is the short version of the fundamentals of Obamacare.

 

Any solution must involve a dramtic reduction in the availability of healthcare 'insurance' - quite the opposite of Obamacare in fact - along with any other non- patient controlled funding sources so that the consumer and the providers are restored to their more typical positions in the economic marketplace of product/service and purchaser/seller. Competition for patients between providers and public disclosure of prices for services are critical. At this point, it is almost impossible for you to go into the doctor or have some lab work done and find out how much the cost will be BEFORE the work is done. There is no free exchance of price and quality and service terms in the market so consumers are shopping blindly with someone else's money. It is to be expected that prices will soar out of control as they have. It is not rocket science - just basic economics - but the funamental laws of economics apply just as the laws of physics apply to rocket.

 

We need consumers incomes to rise and the costs of healthcare to fall. That requires better wages for workers (you get higher wages when the demand for labor exceeds the available supply so 'build that wall' for starters) and empower patients with pricing and other negotiating information on costs and services and stop the blank check and ex post facto billing process that makes services so costly and let the patient do more of the paying themselves.

[Moiraine]

Given the source I'm not reading all of the above post.

 

You say costs doubled in 8 years under Obamacare. That sounds bad and is (especially for a bill with the word "affordable" in the title) but has little meaning without knowing how much rates were already increasing.

[JJ Husker]

84HuskerLaw- I would agree that healthcare insurance differs from the other typical insurances. Most are structured for the rare occurrence whereas healthcare spending is virtually a given.

 

Where I disagree with you though is that you are blaming the rapidly increasing cost of care on Obamacare. The ACA didn't cause this situation and it's only contribution to rising costs were the inclusion of preexisting conditions, essential coverages, etc. Costs were wildly out of control before Obamacare and they still are.

 

Additionally the typical free market solution of competition and buyer choice simply does not work with healthcare. There can be no free exchange between buyer and seller when the alternative for the buyer is pain/suffering/death. That is the perfect setup for extortion and that is basically what we've had for a very long time. And saying that we need incomes to rise to combat this is not recognizing the economic implications. More disposable income simply means the markets will adjust to absorb it thus causing more inflation of costs. It's basically the same thing as increasing the minimum wage, for the most part it just drives up the cost of living for everyone. The free market does not and will not work where healthcare is concerned. That is why the medical profession typically pays such high incomes, hospitals and facilities are typically taj mahals, drug manufacturers typically have ridiculous profits and huge R&D budgets...yet we still have poor peoe who cannot afford care. This situation was not caused by Obamacare, it was caused by years of treating it just like any other good or service which it is not.

 

I hope that was sufficiently long enough.

[RedDenver]

Plenty of us also (myself included) take the hit and don't buy insurance because we can't afford it, and even if we could the stuff within availability is essentially worthless. As far as I understand, the IRS also doesn't have any legal ability to enforce those penalties other than ask if they can please have your money.

FYI the Supreme Court ruled that the penalty is a tax and can be collected, so I'm pretty sure the IRS can enforce the penalty just like any other tax. And there are some really strong additional penalties for not paying your taxes on time. Consult a lawyer before not paying that penalty.