Category: Health Insurance

73 Million Would Lose Employer-Based Benefits if Tax Exclusion were Eliminated

0Allison Percy of the Congressional Budget Office has published estimates of what would happen if employer-based health insurance was taxable to employees. Currently, employer-based health insurance is excluded from both income tax and payroll taxes for Medicare and Social Security. According to Percy, 73 million would lose employer-based benefits by 2017, of which 54 million would get their coverage from Obamacare exchanges. The number of uninsured would increase by 12 million. Percy also shows the distribution of this effect by household income. This is an important estimate for post-Obamacare reform, because Percy’s model simply taxes the value of employer-based insurance without returning any of those tax dollars to the people as a tax credit for the purchase of individual health insurance. (Of course, some of those 54 million getting health insurance from Obamacare exchanges will have lower premiums because their health insurers receive subsidies in their names.) Those of us who advocate reforming the tax code to give individuals tax credits for health insurance have always been beaten back by anxiety over losing employer-based benefits. Percy’s conclusions help us understand how much money we would have to allocate to tax credits to overcome the loss of employer-based benefits after including them as taxable income.

Gallup’s Estimates of Uninsurance No Cause for Applause

Gallup has just released its latest health-insurance survey, which reports that the proportion of uninsured Americans continues to be only 13.4 percent, the lowest since the survey began in 2008. This is the survey Obamacare cheerleaders love, although it significantly overstates the proportion of insured people when compared with other, longer standing, and scholarly surveys. I’ve addressed this previously and will not re-hash my case.

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Insurers are Starting to Pay for Cross-Border Treatment

In the New Republic, Adam Teicholz and Glenn Cohen discuss insurers whose provider networks run across the border:

conceptBefore dawn on a Wednesday in January, Cesar Flores, a 40-year-old employed by a large retail chain, woke up at his home in Chula Vista, California. He got in his car and crossed the border into Tijuana. From there, he headed for a local hospital, where he got lab tests — part of routine follow-up to a kidney stone procedure. He had his blood drawn and left the hospital at 7:30. He arrived home before 10.

But Flores’s situation isn’t medical tourism as we know it. Flores has insurance through his wife’s employer. But his insurer, a small, three-year-old startup H.M.O. called MediExcel, requires Flores to obtain certain medical treatment at a hospital across the border. In part due to cost-pressures generated by the Affordable Care Act, other sorts of plans that require travel have the potential to expand.

Insurers Propose Adding a Copper Plan to the Health Insurance Marketplace

health-insuranceAHIP, the trade association for insurers and some Members of Congress are proposing to allow consumers another insurance option in the health insurance Marketplaces. The proposed Copper Plans would pay half of medical expenses (actuarial value of 50%), compared to 60% for the Bronze Plans and 70% for the benchmark Silver Plans. My only concern about adding another tiered plan is that still does not provide insurers with enough flexibility. Insurers need the flexibility to experiment with value-based insurance design, Health Savings Accounts, selective-contracting (i.e. narrow networks) and cost-sharing arrangements not currently allowed under the PPACA. But, the busybodies who think they know what’s in consumers’ best interests are critical of the proposal. According to Kaiser Health News:

Insurers and some U.S. senators have proposed offering cheaper, skimpier “copper” plans on the health insurance marketplaces to encourage uninsured stragglers to buy. But consumer advocates and some policy experts say that focusing on reducing costs on the front end exposes consumers to unacceptably high out-of-pocket costs if they get sick. The trade-off, they say, may not be worth it.

Professor Reinhardt Gets Hobby Lobby Wrong; But Health Insurance Right

At the New York Times, Professor Uwe Reinhardt, a frequent commenter at this blog, uses the Supreme Court’s Hobby Lobby decision to criticize employer-based health benefits:

The ruling raises the question of why, uniquely in the industrialized world, Americans have for so long favored an arrangement in health insurance that endows their employers with the quasi-parental power to choose the options that employees may be granted in the market for health insurance. For many smaller firms, that choice is narrowed to one or two alternatives — not much more choice than that afforded citizens under a single-payer health insurance system.

Professor Reinhardt gets full agreement from this corner for that paragraph. However, he also comes to an unfounded conclusion about the Supreme Court’s majority, namely, that it believes that “…firms buy health insurance for their employees out of the kindness of their hearts and with the owners’ money. On that belief, they accord these owners the right to impose some of their personal preferences — in this case their religious beliefs — on their employee’s health insurance.”

How Many Uninsured? Between 33 and 55 Million

The Centers for Disease Control and Prevention (CDC) has released its latest estimate of uninsured persons in the U.S. in 2013: Between 33 and 45 million. Why so wide a range? CDC analysts appreciate the difference between lacking insurance today and lacking insurance long term:

jqvssymz80sqrusry_syzg (2)In 2013, 44.8 million persons of all ages (14.4%) were uninsured at the time of interview, 55.4 million (17.8%) had been uninsured for at least part of the year prior to interview, and 33.4 million (10.7%) had been uninsured for more than a year at the time of interview.

This context has been absent from much of the discussion of ObamaCare’s effects. The most popular estimate of the uninsured nowadays seems to be the Gallup-Healthways Well-Being Index. I discussed the March release, but decided not to cover the June release until the CDC estimate came out. Here’s why:

How Many ObamaCare Enrollees Were Uninsured? Between 24 And 87 Percent

Sarah Kliff has compared recent estimates of how many ObamaCare enrollees were previously uninsured. The range? 24 percent to 87 percent.

Kliff notes that “when you dig into the methodology, as health wonks are wont to do, you start to notice that the surveys happened at different times, with different people who were asked different questions.” Fair enough, I would add that there is a big difference between someone who was uninsured for a few weeks before signing up for ObamaCare, and someone who has been uninsured since, for example, losing his job in the 2008 recession. The surveys do not really help us here.

The whole question of measuring the uninsured is one I wrote thoroughly about way back in 2006, and is probably due for an update. The gist is that even government-sponsored estimates of the uninsured, such as the Census Bureau’s Current Population Survey and the Centers for Disease Control and Prevention’s National Health Insurance Survey, are challenging to reconcile. So, we should not be too hard on private-sector analysts who give it a shot.

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Source: Sarah Kliff, Vox.

75 Percent of ObamaCare Premiums Are Paid By Taxpayers, Not Enrollees

We’ve previously described how expensive it is to bribe people to buy health insurance. Now, the Administration has proved it, releasing a report of “affordablility” in the ObamaCare exchanges. ObamaCare enrollees find ObamaCare affordable because they are not paying for most of it:

HHS officials said the average monthly premium before tax credits costs $346 a month, and $82 when the subsidies are included. The biggest savings, 80%, was achieved by second-tier silver-plan purchasers, who averaged $69 in monthly premiums with credits and $345 without them.

The report says 94% of silver-plan buyers received tax credits, and 87% overall got subsidies.

Buyers of first-tier bronze plans saved 76% on average, paying only $1 less on average for their subsidized policies — $68 a month — than did silver-policy holders. HHS says 73% of bronze plans were subsidized. (WSJ)

Yet More Good News on Private Health Exchanges

Array Health Solutions reports more evidence that private health insurance exchanges are at the beginning of an explosive growth spurt. We’ve been excited about the rise of private health exchanges for a while, as a way to bridge the gap between employer-based health benefits (a status quo with incredible inertia) and individually owned health benefits (which is a much better arrangement for both employers and individuals). Our argument is described here.

Array surveyed insurance experts. The key findings:

  • More than half of insurer respondents said they will use a private single-insurer exchange as a sales channel this year;
  • More than 75% of respondents believe most insurers will offer private single-insurer exchanges by the end of 2016;
  • Insurers will sell to all market segments via private single-insurer exchanges;
  • Employers are expected to move their sponsored health benefits onto private exchanges by 2016;
  • Insurers will expand their offerings on private exchanges beyond core medical, dental, and vision.

Three Million Enrolled in Private Health Exchanges; Will Challenge ObamaCare Exchanges By 2017

This blog has been very interested in the rise of private health insurance exchanges, sponsored by large employers. Accenture, a consulting group, reports that the number of Americans already enrolled in private exchanges is three million, and set to meet or beat enrollment in ObamaCare exchanges by 2017:

As exchanges allow employers to offer an expanded set of products across multiple carriers, the amount and complexity of data being managed also grows. While some employers previously offered only a few plan options (typically less than three) for medical insurance, often with no carrier choice, now they may be managing five or six medical plans from three to five carriers — not to mention the additional products and carriers for dental, vision, life and other types of voluntary or ancillary insurance.

It is a huge challenge, but one that employers will have to meet if they hope to preserve the ability to offer health benefits in an environment where the government has given itself such a significant advantage over both employers and individuals. Proponents of private exchanges expect to see jumbo employers, with over 100,000 workers, start signing up for private exchanges this fall.