Monday, October 21, 2013

Kind of a big "oops"

Last week, the conservative "think" tank Heritage Foundation released a report of a study they had completed about Obamacare and its costs.  If you have been paying attention, you might recognize that yes, this is the same Heritage Foundation that actually designed the reforms that we now call "Obamacare" back in the mid-1990s.  Twenty years on, they recognize that their patrons have goose-stepped considerably toward the right-most extreme, so their past advocacy of these reforms--to borrow a Nixon-era phrase--is "no longer operative."

The thrust of the Heritage report was that among people who use the new health insurance exchanges to purchase their health care coverage, most will pay more than they would than if that Kenyan Communist Fascist Socialist Muslim (black!) Dictator hadn't hypnotized the Congress into passing the ACA in the first place.

And the right-wing echo chamber trumpeted that report up, down, and sideways.  Because of course.

This morning, however--once people had time to read and fully digest the report, and check out its methodology and the assertions of fact on which Heritage relied--it turns out that there was a glaring error in it.

They left out the tax-credit subsidy that will offset a significant portion of the premium cost for people who buy through the exchanges.

Under the ACA, if you purchase health insurance through an exchange, and your adjusted gross income is less than 400% of the federal poverty level for your household size, then you will receive a tax credit that offsets a portion of your premium cost.  The amount of the credit depends on your income; the lower your income, the more you'll get, on a sliding scale.

For the math-impaired, that means that if you make less than four times the poverty level, you'll get some tax credit.

That 400%-of-poverty-level doesn't seem like it would be a lot of money, but it turns out that it is, actually.  For 2013, the poverty level for a family of four is $23,550, so 400% of that is $92,400, just for reference.  Two thirds of all Americans have family-unit income below that line, 400% of the federal poverty level.  In Arkansas, it's three-quarters.  Even in the best-off state, New Hampshire, it's 53%.

When you factor in the subsidy, it turns out that most people who buy through the exchanges will pay less, some drastically less, than without the ACA.

Leaving that factor out wasn't the "oops," though--they did that on purpose.  Heritage claims it was trying to measure insurance companies' pricing activity in the marketplace, not whether the actual cost to consumers would be higher or lower.  It didn't make that clear in the report, however, and that was the "oops."

And it's kind of a big one, because people who are legitimately trying to make health insurance decisions don't care what the "list" price is, any more than they care what the sticker price is on a car they want to buy.  They care what the actual cost is.

I know of one retailer that routinely sells jewelry at 80% or 90% off the "list" price, because of the psychology of the apparent deal.  Never mind that no one actually pays the list price.

It's true that some people will pay more, post-ACA.  That's what happens when fair-market controls are placed on a formerly unfair market.  But the people who will pay more are the younger, healthier people--the ones the insurance company wants to insure.  Those people will still get the benefit of competitive pressure on prices.

* * * * *

Speaking of "oops," there was another one on Fox last week.  (Not just one, but this was a big one.)  Noted college dropout and professional television ideologue Sean Hannity interviewed three couples who were supposedly getting screwed by Obamacare, whose stories "aren't being told by the liberal media." 

A couple from North Carolina claimed that Obamacare has kept them from growing their construction business and forced them to cut hours to keep their employees part-time.  Another couple--where they are from wasn't specified--complained that their insurance company was canceling their current insurance and replacing it with a (presumably more expensive) ACA-compliant plan.  A third couple, from Tennessee, complained that their insurance agent had notified them that their premium would increase by 50-75%.

Now, at this point, I have to interject that if I had something to complain about, I would probably not go on national television to air my complaint.  But if for some reason I decided to do so, I would do two things.  First, I would make sure that I didn't have a better method of getting relief for my complaint.  Second, I would make sure that I had performed at least--at LEAST--a cursory examination of the applicable facts.

Eric Stern, writing for, decided to do a bit of fact-checking, tracking down and interviewing the three couples.  I think you know where this is headed.  After all, it's Fox News ("Relatively Fact-Free Since 1996"), and it's Sean Hannity ("Limbaugh, Minus the Pills and Ex-Wives").

It turns out that the construction business the first couple runs has a grand total of four employees.  The substantive requirements of the ACA start to kick in at 50 employees. The only requirement the ACA has imposed on that couple's business is to inform their four employees that "" exists.  So the ACA has had ZERO impact on this business, except to make it somewhat more likely that if their employees get sick, they will go to the doctor instead of toughing it out until it becomes an emergency.  On a positive note, I can think of four people who today can say "My boss is an idiot" and definitely mean it.

Stern learned in his interview that the second couple's present insurance costs $13,000 a year, carries a $2500 deductible, and doesn't cover one of their children or the woman's unspecified pre-existing condition (although they could spend $7000 more a year for the latter coverage if they chose).  But it turns out that they had not even checked the exchange website to see if they could get coverage for less!  (She heard the website was down, which is a fair complaint, but still.)  I have not decided whether I am surprised or not surprised, but my eye-rolling muscles were fully engaged when I learned about that fact.

Stern did the shopping for them, using the figures they'd provided, and even without a subsidy, they could buy a plan through the exchange that would cover all four family members and the wife's pre-existing condition, with the same deductible.   The cost?  $6,700 a year, just over half what they currently pay.

And the third couple?  They pay about $10,000 a year for insurance and expect it to go to $15,000 to $17,500, according to their insurance agent.*  What about the exchange price?  Don't know, don't care, hate Obama, won't look.  But Stern looked...$3,700 a year, without any subsidies and the same coverage.

* - This is not the first instance I've heard of insurance agents talking up how expensive the health insurance plans are about to become.  Makes me wonder if there isn't a bit of fearmongering going on among those people, in part because they make a good commission on insurance plans they sell directly but make nothing if their customers go to the exchange.

So Hannity's batting average is way worse than even Dan Uggla's.**  But, then again, you already knew that.

** - Dan Uggla was paid $13.1 million by the Atlanta Braves this year to hit .179, nearly 30 points lower than the next-lowest position player with at least 502 plate appearances. He collected $164,336.78 in salary for each of his 80 hits. Miguel Cabrera, who led the Majors this year, collected $108,808.29 for each of his 193 hits.

If you have a principled objection to Obamacare, I suppose it's OK for you to follow your heart and spend money you don't have to spend just to make a point.  (Actually, when people spend more than they have to spend for coverage, that is a form of subsidy for the rest of us, which makes it even more likely that the ACA will succeed.  Chew on that for a bit.)  The problem is when your principled (or unprincipled) objection to Obamacare leads you to unprincipled actions, like lying to people about its impact on you, or sticking your fingers in your ears and yelling "la, la, la" at the top of your lungs rather than hearing that the facts are other than what you've been told or what you assumed they would be.  Worse still is a deliberate, calculated effort to mislead people in order to stir up anger against the President.

(This whole thing reminds me of the conservative rationale for eliminating the estate tax--the family farm that was lost because the patriarch died and they couldn't pay the estate taxes without selling the farm.  Trouble is, they couldn't find anyone that had actually happened to.)  

I have long held that it is perfectly fine for anyone to hold an opinion I disagree with.  All I ask is that people inform themselves as best they can, with real information from real sources, analyzed critically.  Because, really, if you're not doing that, what does it matter what you think?

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