You must either give netzapper $100, or give mathowie $200.

March 28, 2010 7:11 PM

I'm deeply confused. Other than in a strictly juvenile, we-won-you-lost sense, why and how is the recent US health reform legislation considered a success?

I understand that some good stuff is in the bill: no more preexisting conditions (for kids only?), lifetime payout caps, or drop-you-when-you-get-cancer. But it seems like ending these predatory insurance practices could have been achieved with a 15-page bill instead of the multi-hundred-page byzantine mess that was passed.

But the real thing I can't wrap my head around is the plan on insuring more people. The way I understand it is this: it is incumbent on you to procure health insurance (either through your employer, or by purchasing it yourself); if you do not procure insurance, you will be federally taxed at a punitive rate. If you cannot afford insurance, the government will financially assist you. I understand that this is legal, since it's built like a tax incentive, not like a mandate.

But why is this considered acceptable? If congress passed a law mandating that every citizen purchase a gross of oranges a month or face punitive taxes, we'd all consider that ridiculous and invasive. But the Democrats on the news keep talking about having secured us a new right; from here it looks like they've saddled us with another burden. I mean, the health reform mandate is not like car insurance, where you can choose not to operate a vehicle.

Meanwhile, what about people who can't afford it? I understand that for people who "can't afford" it, there will be financial assistance. But, what about the people who make $100 too much a year? There are lots of edge cases with existing needs-based assistance programs that leave people paying more than they can really afford, despite the formulas saying that they can afford it.

Please help me view this legislation as a positive thing. I really wanted cost control, tort reform, and a public option. I don't appear to have gotten any of that.

[Full disclosure, I'm a social libertarian. I'll pay taxes for public services, but other than that, don't tell me what to do.]

posted by Netzapper to law & government (50 answers total)

I can imagine this thread will get ugly in a hurry. But my sense is this: more people in the system drives down prices by forcing those who feel less likely to use insurance to still buy it, and promotes more competition among insurers to compete for customers.

It also prevents situations where a person with company-provided insurance gets catastrophically sick, driving the whole company's premiums up, which forces the company to either ditch the employee or their health insurance policy.
posted by drmarcj at 7:18 PM on March 28, 2010 [1 favorite]

And all this with no mechanism in place to control the cost of insurance. There isn't even, to my knowledge, an employer mandate.

There are both, actually. Employers with more than a certain number of employees are also subject to tax penalties if they don't offer insurance, and insurance companies will be required to devote a certain percentage of premiums to actual care rather than administrative costs and profits (how much varies).
posted by dilettante at 7:21 PM on March 28, 2010 [1 favorite]

There are three interlocking pieces and they all have to go together.

1. Insurers must take all comers. No exclusions for pre-existing conditions. No caps. No rescissions if you get sick.

2. Because of #1, you must have a individual mandate. Otherwise everyone who is healthy will just wait until they are sick to get insurance because they can't be refused. If insurance companies must take all of the sick people, you need healthy people to even out the risk pool. The larger the pool, the lower the average cost for everyone.

3. Because of #2, you must have subsidies for those who can't afford the individual mandate.

That is the basic plan. All the rest is just details.
posted by JackFlash at 8:23 PM on March 28, 2010 [163 favorites]

I understand that some good stuff is in the bill: no more preexisting conditions (for kids only?), lifetime payout caps, or drop-you-when-you-get-cancer.

This is why the bill's a victory to me, Netzapper. Above and beyond all else, it will prevent cases like this. To some libertarians, the insurance company's ability to do this is foundational to American freedom. I respectfully disagree.
posted by StrikeTheViol at 8:24 PM on March 28, 2010 [3 favorites]

Well, I don't think it should've taken a year and a freakin' half, and I do agree with some of your qualms, but the fact that I will keep my mother's health plan until the age of 26 is a blessing: I'll actually be able to travel before or after college. I have a heart condition, and as of right now I will be taken off of my mother's health plan when I am no longer attending college. However, that will change in six months.
posted by makethemost at 8:25 PM on March 28, 2010 [1 favorite]

It certainly would have been simpler to include a public option that everyone pays for with their taxes. You can get your own private insurance, but if you don't want it or can't afford it, the public system is there for you, like schools. The reason that forcing people to buy insurance isn't like forcing people to buy oranges is this: when coupled with a prohibition on denying people coverage based on pre-existing conditions, mandatory insurance is the only way to make sure that insurance is also affordable.

If you don't force healthy people to buy insurance, but also prevent insurance companies from discriminating against those with pre-existing conditions, then healthy people could choose not to buy insurance until they got very sick, simply paying out of pocket for routine, occasional, low-cost medical services. When they did get very sick, the insurance company would not be able to turn them down for coverage, so instead the insurance company would be faced with a whole lot of very sick people who it has to insure profitably. The only way to do that would be to jack up rates massively. Then you've got a situation where people are either priced out of insurance when they do get sick, or the government has to step in and subsidize it massively. In other words, without mandatory insurance for healthy people, healthy people would have an incentive to flee the market, companies would not be able to spread the risk across a broad pool of people, and rates would go through the roof. Not a sustainable system.

It's certainly unfortunate that the political predilections of Americans precluded a public option. But you're forced to buy insurance on a house and car so that the government doesn't have to pick up your tab if your house burns down or you kill someone in an accident; forcing you to buy insurance is a way to control costs in the system and ensure that everyone is contributing to it. It's like a very indirect form of taxation; think of it as doing your part now so that when you do get sick, as we all will, you will have affordable insurance available to you.
posted by Dasein at 8:26 PM on March 28, 2010 [5 favorites]

could have been achieved with a 15-page bill instead of the multi-hundred-page byzantine mess that was passed

Part of the reason it is so long is because of the various pilot programs Atul Gawande talks about in this interesting New Yorker article.

And another reason is because the text was large and the margins were HUGE. See here (it's the reconciliation bill, but the formatting is the same).
posted by sallybrown at 8:28 PM on March 28, 2010 [4 favorites]

But why is this considered acceptable? If congress passed a law mandating that every citizen purchase a gross of oranges a month or face punitive taxes, we'd all consider that ridiculous and invasive. But the Democrats on the news keep talking about having secured us a new right; from here it looks like they've saddled us with another burden. I mean, the health reform mandate is not like car insurance, where you can choose not to operate a vehicle.

The reason this is different from oranges is because when an uninsured citizen gets really ill, they don't do the polite thing and just die. They decide to go to the emergency room where they receive care. They then get billed for it, and quite frequently, they are unable to pay that bill. Guess who pays for it? You do. You ALREADY do. I see nothing wrong with a tax disincentive that also tries to recoup at least some of this expense.

Moreover, there are all sorts of reasons why public health is more like the fire and police department than it is oranges. Health care can be seen as a public good.

The government is we not they. Even if there weren't a laundry list of differences between healthcare and oranges, if we decide that the government should mandate healthcare, then government mandates healthcare. We elected a president who's major platform was healthcare reform. He enacted healthcare reform in the form of a far more centrist plan than what he (or I) personally would have wanted.
posted by drpynchon at 8:30 PM on March 28, 2010 [20 favorites]

There are lots of edge cases

There always are, no matter where you place the edge.

Between regulating the health insurers and providing assistance to people who can't afford the premiums we appear to have picked up at least 30 million people, and the people in the sweet spot -- the ones who won't qualify for assistance but can't afford the new lower premiums -- are fucked. A lot of the bill is about how to make that bracket as small as possible.

And before you get too far up in arms, think about that 30 million number. Sure the bill is by no means perfect, but roughly 30 million uninsured people will be able to afford insurance. Not to be snarky, but what have you accomplished lately?
posted by Tell Me No Lies at 8:34 PM on March 28, 2010 [6 favorites]

I have been living with a preexisting condition and an inability to buy health insurance for years. I have never wanted to be anything other than a healthy, productive member of society. However, not being able to buy insurance has kept me from doing many of the things that healthy, productive members of society do. Such as getting yearly physicals, Pap smears, regular blood work, etc. etc. Earlier this month, I had a very very scary life threatening freak medical event. Very likely, it wouldn't have happened if I had been able to get physicals. So, instead of paying for a physical once a year where the Doc would have been all "Wow! So this hormone is way off and is gonna cause some major problems, let's fix that" I had to go to the ER. The cost savings for me getting a physical instead of emergency care is more than 10 fold. And that's cost that the taxpayer is carrying in the form of increased costs across the board and funding to have more emergency care available than we need. Rightly, it's far more expensive to see a doctor in the middle of the night than it is during office hours. Not only that, but ER costs are subsidized for indigent patients.

A personal anecdote about almost dying because of simple routine care isn't a hard number. Here's an article that talks about numbers. There's a nifty graph of our cost savings, and two PDFs with more specific details. Note that a lot of the reforms don't kick in for several years and are actually quite complex. A 15 page bill isn't going to set up an insurance collective.

The reason we fought so hard isn't just about cutting costs, though. The reason we fought so hard is that this bill is a stepping stone and a place to start building towards everyone having health care. We fought for this bill because we're a civilized society that cares about people who are not us, and how they fare. And because of that, we want to make things better for them. Even though this is just an incremental step in the right direction, it's still a step in the right direction. We can't let the perfect be the enemy of the good and hold out for the very best perfectest thing ever. Hopefully, in a few years it will seem unbelievable that I almost died because of not having access to routine medical care. Right now, I don't know anyone that would be shocked by it.
posted by stoneweaver at 8:35 PM on March 28, 2010 [28 favorites]

if you do not procure insurance, you will be federally taxed at a punitive rate

The initial penalty for not purchasing insurance will be $95 or 1% of annual income, whichever is greater, when the penalty goes into effect in 2014; the penalty will rise to $695 or 2.5% of annual income, again whichever is greater, by 2016. (Per Wikipedia.) Obviously, people can disagree about what constitutes "punitive", but in the context of current federal income tax rates the penalty really isn't that great.
posted by asterix at 8:35 PM on March 28, 2010 [8 favorites]

The only people who called this juvenile were the Republicans.

As for your question, 31 million more people out of 310 million will now be insured. This is a large proportion of Americans left without insurance.

Structurally, it is the government asserting that they have a say in what is offered to the populace in terms of health insurance. The position is radical, given the economic power of the health insurance industry.
posted by Ironmouth at 8:36 PM on March 28, 2010

if you do not procure insurance, you will be federally taxed at a punitive rate

I am self-employed with a family, and I'd probably choose one of these "punitive rates" over some of the premiums we're been quoted for quality coverage (before we found we qualified for my wife's alumni group). I think I saw a 2.5% penalty somewhere... if that's true, then for a typical family making $50K taxable income that's $104/month... your average suburbanite probably pays more for that on DirecTV packages. I'm not sure, however, whether the punitive rate still buys any kind of coverage or buys into a "deadbeat's coverage pool", but I haven't seen anything yet to suggest that mandatory coverage is going to drive anyone to the poorhouse unless they're already overextended.
posted by crapmatic at 8:42 PM on March 28, 2010

Why is is a bid deal? Because for the first time in U.S. history, universal health care is now the law. This is a radical concept for the U.S. The law doesn't do enough to reduce costs, but it is a start.

Remember that Social Security was a radical concept when it started in 1935 . But it didn't cover agricultural employees or railroad employees or women or provide disability insurance or dependent benefits. But it was a start.

Likewise Medicare was a radical concept, but very modest when started. It had limited support for the indigent. It didn't provide prescription coverage. Federal employees weren't covered. But it was improved over time.

Universal health insurance is just a start, but you need that radical foot in the door before you can improve it. History shows that social welfare programs become more popular as people begin to recognize the benefits. There's no going back.
posted by JackFlash at 8:47 PM on March 28, 2010 [6 favorites]

Yeah, the penalty is far from punitive. In fact, I would argue that it's the best deal in the whole plan. Some years I've paid more than 20% of my salary to insure my family. For 2.5%, I can pay out of pocket for routine things and grab an insurance plan that cannot reject me the minute it looks like I or one of my family members has to go to the hospital. 2.5% of my income is a tiny price for the right to get insurance whenever I want.
posted by Pater Aletheias at 8:50 PM on March 28, 2010 [2 favorites]

Just to reframe a point that others have made, but to address it directly to your post: You say you like the fact that insurers can't reject people for a pre-existing condition, but you don't like the fact that everyone has to buy insurance.

These two things have to go together. Otherwise, healthy people would wait until they got sick to buy insurance, because they'd know the insurance company couldn't reject them. Insurance companies would have only sick people for customers, and rates would be prohibitively high, which would defeat the whole purpose of insurance, which is to spread the costs associated with suffering among the suffering and non-suffering alike.

The hand-in-hand nature of the individual mandate to buy insurance, and the prohibition on rejecting those with preexisting conditions, is reflected in the fact that they both go into effect at the same time, in 2014. The prohibition on rejecting kids with preexisting conditions goes into effect sooner (possibly because children are already required to be insured, though I don't know for a fact that's true).
posted by palliser at 8:50 PM on March 28, 2010 [3 favorites]

I'm not debating, I swear. But ya'll have already mentioned a couple of things that raise even more questions.

But my sense is this: more people in the system drives down prices by forcing those who feel less likely to use insurance to still buy it, and promotes more competition among insurers to compete for customers.

How is this unlike utility deregulation? Despite everybody needing electricity, there was no economy-of-scale decrease in energy costs when utilities were deregulated; prices went up instead, because that's what the market would bear.

What mechanism is in place to keep insurers from leaving premiums just exactly where they are, and then relying on the government subsidies to make up the difference for people who can't afford those rates, taking the decreased actuarial risk as profit?

But you're forced to buy insurance on a house and car so that the government doesn't have to pick up your tab if your house burns down or you kill someone in an accident...

Yes, but there's nothing mandating that I buy either a house or a car. I can opt out of those costs by renting instead of buying, or by walking instead of driving. (And, actually, other than one's mortgage issuer, I don't know of anyplace that mandates homeowner's insurance.)

And before you get too far up in arms, think about that 30 million number. Sure the bill is by no means perfect, but roughly 30 million uninsured people will be able to afford insurance.

I'm not up in arms. Just baffled.

As for the 30 million uninsured. What's the breakdown of people who can't afford it versus people who don't want it?

Why is is a big deal? Because for the first time in U.S. history, universal health care is now the law. This is a radical concept for the U.S. The law doesn't do enough to reduce costs, but it is a start.

No, no, I see how this is radical. But, calling this "universal healthcare" seems like calling a poll tax "universal suffrage".
posted by Netzapper at 8:53 PM on March 28, 2010

Yes, but there's nothing mandating that I buy either a house or a car. I can opt out of those costs by renting instead of buying, or by walking instead of driving. (And, actually, other than one's mortgage issuer, I don't know of anyplace that mandates homeowner's insurance.)

Again, experience confirms that people don't actually opt out of healthcare in the US. They seek it when they get really sick, while avoiding it earlier on in the course of their disease before things got out of hand. They do quite frequently opt out of paying for it. If this is truly baffling to you, go hang out at any local ER and it will become abundantly clear.
posted by drpynchon at 8:59 PM on March 28, 2010 [7 favorites]

Otherwise, healthy people would wait until they got sick to buy insurance, because they'd know the insurance company couldn't reject them.

But couldn't a vesting period dissuade this practice just as effectively as an individual mandate?

Something like: no coverage for pre-existing conditions for the first 12 months of insurance. Unless you're healthy now, but know you're going to get sick next year, there'd be no incentive to shirk insurance coverage only to take advantage when you fall ill.
posted by Netzapper at 8:59 PM on March 28, 2010

What mechanism is in place to keep insurers from leaving premiums just exactly where they are, and then relying on the government subsidies to make up the difference for people who can't afford those rates, taking the decreased actuarial risk as profit?

After Pater Aletheias's comment, I can't help but wonder if the government penalty is setting a competitive ceiling for bids for healthy families to buy insurance. If insurance companies keep charging 20% of a middle-class salary to insure a family, the family will just pay the penalty plus out-of-pocket preventative costs, right -- and then pick up a policy as soon as someone gets seriously ill?
posted by palliser at 8:59 PM on March 28, 2010 [4 favorites]

But why is this considered acceptable? If congress passed a law mandating that every citizen purchase a gross of oranges a month or face punitive taxes, we'd all consider that ridiculous and invasive

Sir, I ask that you read about the Militia Act of 1792:

That every citizen, so enrolled and notified, shall, within six months thereafter, provide himself with a good musket or firelock, a sufficient bayonet and belt, two spare flints, and a knapsack, a pouch, with a box therein, to contain not less than twenty four cartridges, suited to the bore of his musket or firelock, each cartridge to contain a proper quantity of power and ball; or with a good rifle, knapsack, shot-pouch, and power-horn, twenty balls suited to the bore of his rifle, and a quarter of a pound of powder; and shall appear so armed, accoutred and provided, when called out to exercise or into service, except, that when called out on company days to exercise only, he may appear without a knapsack.

A pure and simple mandate to buy something. Signed by George Washington. This is the Second Congress.
posted by Ironmouth at 9:05 PM on March 28, 2010 [24 favorites]

What mechanism is in place to keep insurers from leaving premiums just exactly where they are, and then relying on the government subsidies to make up the difference for people who can't afford those rates, taking the decreased actuarial risk as profit?

I've been told by a political science professor that the mechanism is this:

Insurance companies will be required to spend 85% of your premium on you. If they spend less, they're required to refund the difference to you.
posted by spikeleemajortomdickandharryconnickjrmints at 9:08 PM on March 28, 2010 [3 favorites]

But why is this considered acceptable?

Near as I can tell, looking at the US from the outside, it's because it's the closest thing to proper publicly funded heath care that the Administration could actually get the numbers to support.

From an outsider's perspective, the US seems to have an absolute phobia about allowing taxation to fund anything except arms manufacture, and an absolute fetish for Private Enterprise as a universally appropriate organizational form. If somebody's not making a buck out of it, it's clearly un-American and Wrong.

It seems to me that what you've just achieved is a baby step in the right direction. Hopefully, at some future point, a majority of you will realize that instead of fartarsing about with publicly administered rebates for mandatory contributions to private health insurance, a straight Federal budget allocation to a public health funding pool would achieve the same thing at lower cost to the taxpayer.

What you've got now will certainly cost you less per individual than what you had a month ago, because it will make the funding pool bigger. But direct public funding for public health would cost less still, simply because less of it would be siphoned off into the pockets of private investors who contribute nothing of value to the overall process.

There is hope. If there's one thing the US appears to like even more than the idea of Private Enterprise, it's the idea of winning, and having achieved even this degree of reform makes the Democrats look like winners and their opponents look like petulant, whining losers. I'm predicting that this will translate to a swing to the Dems in the upcoming Congressional elections, which might actually embolden some of those who currently feel bound to pander to the rich and powerful. So, call your member. Write your member. Get your friends and neighbors to do the same. Keep on pressing for proper public health funding, and you might actually get it.

On preview:

Insurance companies will be required to spend 85% of your premium on you. If they spend less, they're required to refund the difference to you.

There you go. The public funding option would cost you (100 - 85) / 85 = 17% less.
posted by flabdablet at 9:12 PM on March 28, 2010 [5 favorites]

I'm a social libertarian. I'll pay taxes for public services, but other than that, don't tell me what to do.

And that's why this bill is a success. We have a democracy. Our elected officials in the majority party passed this bill. The majority got what it wanted. That's what a democracy is and does. I'm not being facetious, or snotty. If the majority of people don't like this, they'll vote others in and those others will change it.*

*Theoretically, of course. Just like with Social Security and Medicare, if people end up liking this turn of events, it won't go away.
posted by cooker girl at 9:13 PM on March 28, 2010 [7 favorites]

It wasn't a success (if you object to the word so much); it was a compromise. But when the other side is throwing a temper-tantrum and doing all they can to obstruct anything just to show they can, than a compromise is a success.

It's a bloody start. Maybe we might join the civilized world with this start.

{and these dumb sick people have a stupid habit of dying during the first 12 frigging months of have a 'preexisting conditions'.)
posted by Some1 at 9:14 PM on March 28, 2010 [2 favorites]

I would question whether or not you can produce a single instance in the last 100 years of a controversial issue being passed through congress into a simple, tidy, 15 page law. The nature of congress almost necessitates compromise, amendments, counter-amendments, and a great many extra pages. Sure, someone could have written a very brief bill that might do all of the same things--and more!--as the one that was just signed into law; that someone could most assuredly not get that bill passed in both houses of Congress completely unmolested. It's just how the sausage is made.
posted by willpie at 9:18 PM on March 28, 2010

But couldn't a vesting period dissuade this practice just as effectively as an individual mandate?

No, because there would still be healthy non-purchasers — incautious people just gambling on not getting sick or hurt — and you'd have neither their premiums nor their penalty dollars to offset the costs of treating sick or unlucky people.
posted by nicwolff at 9:24 PM on March 28, 2010 [1 favorite]

Okay, I'm starting to get it, I think.

No pre-existing conditions increases the actuarial risk to the insurers, so something must be done to cut their risks. So we increase the pool by requiring everybody to get insurance. I actually understood this argument before.

What I didn't understand before is that, then, to keep the increased insured base from being simply windfall for the insurance companies, we also set the penalty tax for non-compliance at an absurdly low amount. Everybody kept talking about penalties, and nobody was giving numbers. If I can both pay a nominal "penalty" and still get insured after my catastrophic car accident, then the insurance companies have a very strong incentive to set their premium price lower than the penalty price.

Insurance companies will be required to spend 85% of your premium on you. If they spend less, they're required to refund the difference to you.

I don't believe that's the case. If that were true, then insurance wouldn't work anymore. If I pay $1000 a year, and get back $850 every year I'm healthy, then my premium payments aren't offsetting the cost of claims for people whose bills are tens of thousands of dollars.

However, what seems more likely is that 85% of what a company receives in premiums must be spent on claims. If it is not, the part that isn't spent is divided up and refunded to all subscribers. (This, by the way, probably creates a perverse incentive or two.)

So, one last question: is there any mandate in the legislation on what constitutes adequate health insurance coverage? For instance, is it possible that all of the insurers simply start offering a catastrophic, $50k-deductible plan for the cost of the penalty; and then the first plan with reasonable deductibles still costs 20% of your income?
posted by Netzapper at 9:27 PM on March 28, 2010 [1 favorite]

There you go. The public funding option would cost you (100 - 85) / 85 = 17% less.

Well, no — our new system will cost you (100 − 85) / 85 = 17% more than a public funding option would, but the public funding option would cost you (100 − 85) / 100 = 15% less than this system. Math is fun!
posted by nicwolff at 9:32 PM on March 28, 2010

Insurance companies will be required to spend 85% of your premium on you. If they spend less, they're required to refund the difference to you.

I don't believe that's the case. If that were true, then insurance wouldn't work anymore. If I pay $1000 a year, and get back $850 every year I'm healthy, then my premium payments aren't offsetting the cost of claims for people whose bills are tens of thousands of dollars.

No, it is true, but think of it like this: insurances companies must spend 85% of what they take in from premiums on paying for the healthcare of their clients. That leaves 15% for overhead and profits. If they raise the premiums enough that they are no longer spending 85% of their premium income on healthcare, then they must refund everything beyond that 15% to their clients.

So, if P. Aletheias Insurance takes in $100 million in premiums, it has to spend at least $85 million on medical care. If it only spends $80 million, then $5 million gets divided among its customers as a refund. At least, that's how I understand it.
posted by Pater Aletheias at 9:42 PM on March 28, 2010

Pater Aletheias, that's what I said.

The company must spend 85% of the group's premiums on the group's healthcare, not 85% my premium on my healthcare.

What I was objecting to was the claim above that if my premium is not spent on me, then it must be refunded. This is ridiculous, since the whole point of insurance is for the premiums of current non-claimants to go toward paying the claims made by current claimants.
posted by Netzapper at 9:56 PM on March 28, 2010

So, one last question: is there any mandate in the legislation on what constitutes adequate health insurance coverage? For instance, is it possible that all of the insurers simply start offering a catastrophic, $50k-deductible plan for the cost of the penalty; and then the first plan with reasonable deductibles still costs 20% of your income?

In its definition of an "Essential Health Benefits Package" in section 1302 the Act includes "Requirements Relating to Cost-Sharing":

(c)(1)(A) 2014- The cost-sharing incurred under a health plan with respect to self-only coverage or coverage other than self-only coverage for a plan year beginning in 2014 shall not exceed the dollar amounts in effect under section 223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 for self-only and family coverage, respectively, for taxable years beginning in 2014.

And 223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 says:

(ii) the sum of the annual deductible and the other annual out-of-pocket expenses required to be paid under the plan (other than for premiums) for covered benefits does not exceed—
(I) $5,000 for self-only coverage, and
(II) twice the dollar amount in subclause (I) for family coverage.

Further, section 1402 of the Act requires that lower-income customers' deductibles be lower still:

(c)(1)(A) IN GENERAL- The reduction in cost-sharing under this subsection shall first be achieved by reducing the applicable out-of pocket limit under section 1302(c)(1) in the case of--
(i) an eligible insured whose household income is more than 100 percent but not more than 200 percent of the poverty line for a family of the size involved, by two-thirds;
(ii) an eligible insured whose household income is more than 200 percent but not more than 300 percent of the poverty line for a family of the size involved, by one-half; and
(iii) an eligible insured whose household income is more than 300 percent but not more than 400 percent of the poverty line for a family of the size involved, by one-third.

posted by nicwolff at 10:01 PM on March 28, 2010 [2 favorites]

The drafters of the reform faced two political problems:

- Most people say they like the insurance they have, even if it's expensive. That might be because they haven't needed to draw upon it, or because they have a 'Cadillac' policy that's the product of extensive negotiation (in lieu of wages).
- The abortive effort at reform in 1993-4 suggested that radical reform can be shot down before it gets out of the blocks through the ability to spread fear of the disruptive unknown.

What they've ended up with is something like a watered-down version of the Swiss system, on a long lead-in, but with room for improvement. That might be the best structural reform you can get out of a developed country with a large, influential healthcare and insurance lobby, where the principle of universality is still up for debate; developing nations have more room to make radical structural changes, developed nations (like the Dutch or Australians) have more room to tinker with private insurance while maintaining universality and low out-of-pocket costs, because those insurers are already on a tight leash.

is there any mandate in the legislation on what constitutes adequate health insurance coverage?

The "exchanges" for private plans, considered by policy wonks one of the most important bits of the legislation, will have a baseline for qualification, and a standard rating system. The idea is that insurers will want plans to be on the exchanges in exchange for subsidies, risk equalisation etc., and will take those in exchange for regulation, and regulatory oversight will drive cost control and efficiency. Whether it works, and what will happen in the interim, remain open questions.
posted by holgate at 10:16 PM on March 28, 2010 [2 favorites]

This was what I was going to comment on your original post: Your understanding of what changes will come into effect seems pretty limited. For a realistic idea of all of the many health care-related changes that will be out there, read this timeline.
posted by ishotjr at 10:20 PM on March 28, 2010 [4 favorites]

I don't know much about the law. But I know a little bit about history.

Once you pass a big chunky piece of legislation, its easy to add, subtract and just change stuff. Think of this legislation as a big ass piece of marble. Its not much to look at now...but given the right artists, inspiration, and pressure, it can be turned into Michaelangelo's David.

This is only the beginning.
posted by hal_c_on at 10:34 PM on March 28, 2010 [7 favorites]

is there any mandate in the legislation on what constitutes adequate health insurance coverage? For instance, is it possible that all of the insurers simply start offering a catastrophic, $50k-deductible plan for the cost of the penalty; and then the first plan with reasonable deductibles still costs 20% of your income?

There are all sorts for requirements for qualifying plans. For example they must provide certain preventative care benefits like children's immunizations with no out of pocket cost. The maximum deductible is $2000 for individuals and $4000 for families, but there will likely be a selection of lower deductible plans. There is the Bronze, Silver, Gold and Platinum plans that must provide 60%, 70%, 80% or 90% coverage of health care expenses. There will be a lot of choices but with certain minimum basic requirements.
posted by JackFlash at 10:39 PM on March 28, 2010 [1 favorite]

Insurance companies will be required to spend 85% of your premium on you. If they spend less, they're required to refund the difference to you.

Individual states already have restrictions like this, so it's not new (some states only had 70% mandates, though). The large public insurance companies are already paying out above this 85% rate. So there's no change with this either legally or in the market.
posted by FuManchu at 10:56 PM on March 28, 2010

If I can both pay a nominal "penalty" and still get insured after my catastrophic car accident, then the insurance companies have a very strong incentive to set their premium price lower than the penalty price.

This is, ultimately, the thing that we're counting on, you know; that the market will behave rationally.

Unfortunately, I believe this might be a more likely scenario:

1. Companies spring up to offer $1-a-month insurance policies, or similar, covering the bare minimum that the government requires;

2. Legitimate companies make no effort whatsoever to offer policies that beat the fine, because of these bottom-feeders;

3. When holders of bottom-feeder policies get sick, the $1-a-month companies say "we don't cover that, sorry" and the policyholders try to obtain new policies from legitimate companies, at outrageous prices.

It really comes down to whether the market will insist on buying only decent policies...but I have known more than a few people in my life who carry the crappiest no-name no-coverage auto insurance policies to escape the fine and then express utter shock when it doesn't cover their accidents.
posted by davejay at 11:07 PM on March 28, 2010

nicwolff: your arithmetic is of course quite right. I had meant to say that you're paying 17% more than you need to, but the POV got lost somewhere in preview.
posted by flabdablet at 11:28 PM on March 28, 2010

Companies spring up to offer $1-a-month insurance policies, or similar, covering the bare minimum that the government requires;

The law requires that at a minimum the policies cover 60% of all medical costs that clients incur. In other words, your out of pocket costs can be no more than 40%. How are they going to do that on $1 a month?

Really, it's amazing all of the supposed-clever arguments being presented as if no one had ever considered it. There is a reason that it is a 2000 page law. This is complicated stuff and while I agree that most congressmen are not very bright, they have very bright staff and they have thought about this stuff a lot and it wasn't just thrown together on a weekend.

You can read the law yourself. It's on the internet. It's a searchable PDF file with a table of contents. You don't have to just make up all sorts of nightmare scenarios in your fevered brain. You can educate yourself and find out the answers yourself. It's beginning to feel like a Tea Party with people carrying around MORAN signs.
posted by JackFlash at 11:38 PM on March 28, 2010 [17 favorites]

But why is this considered acceptable? If congress passed a law mandating that every citizen purchase a gross of oranges a month or face punitive taxes, we'd all consider that ridiculous and invasive.

I'll make a deal with all of the newly minted constitutional scholars out there who find an individual mandate unacceptable and unconstitutional.

First of all, you are obligated to retroactively impeach John Adams.

Secondly, if you say it's unconstitutional to mandate that citizens must purchase health insurance, then I get to say it's unconstitutional to force me to pay taxes to fund a war I do not support.

Indeed, if it somehow is ruled that the mandate is unconstitutional (it's not), then Social Security, Medicare, Education, Military - any federal government program that generates revenue from taxes on payroll (ie, nobody can opt out of paying) should therefore be deemed unconstitutional, as well.
posted by (Arsenio) Hall and (Warren) Oates at 4:46 AM on March 29, 2010 [6 favorites]

Is it Unconstitutional to Mandate Health Insurance?

Are The Attorneys General’s Constitutional Claims Bogus?
posted by gimonca at 6:32 AM on March 29, 2010

>Yes, but there's nothing mandating that I buy either a house or a car. I can opt out of those costs by renting instead of buying, or by walking instead of driving. (And, actually, other than one's mortgage issuer, I don't know of anyplace that mandates homeowner's insurance.)

True, but you can't opt out of having a body--flesh and blood that is prone to injury, can be subject to an accident or illness no matter how careful you are, and is absolutely guaranteed to deteriorate as you age.

You may opt out of homeowner's insurance by renting, but your landlord is paying it and you can bet that cost is included in your rent check. You may opt out of auto insurance by walking, but your taxes are still paying to fill potholes and build highways you don't drive on.

Thanks for asking your question by the way. I very much support the idea of universal healthcare but I've had trouble cutting through the vitriol, propaganda, and talking points surrounding the current "debate." This thread has been helpful, informative, and suprisingly cordial. If only this kind of discussion could happen more publicly, and at more levels...
posted by Alabaster at 6:57 AM on March 29, 2010 [1 favorite]

Netzapper--since you seem particularly interested in whether there are provisions in the Affordable Care Act (ACA) that will exert downward pressure on the premiums, I'll point out this piece that has gone unmentioned in the thread so far:

The level of the subsidies are tied to the second-lowest cost "silver" plan in the exchanges. That means that the more people who qualify for subsidies--and if the experience in Massachusetts is anything to go by, nearly everybody who ends up in the exchange will be eligible for some level of subsidy--there's a stronger and stronger incentive for insurance companies to offer the lowest- or second-lowest priced plan. If you're an insurance company and your plan in the exchange is $100/month more than that second-lowest-cost plan, there's an extremely good chance that you end up with a paltry market share, and the two lowest-cost plans grab nearly all of the market.

In reality, this will probably be most effective at cutting (or at least slowing the growth of) premium costs in markets where there are enough plans to actually have winners and losers--in other words, big urban areas where there are already at least five insurance companies serving the individual market.
posted by iminurmefi at 6:58 AM on March 29, 2010

sallybrown: "And another reason is because the text was large and the margins were HUGE. See here (it's the reconciliation bill, but the formatting is the same)."

I used to work in a library that was a repository for US Government documents and there are reasons for the way that these documents appear in PDF format. Going back as far as the congressional documents that we had in our collection, the Government Printing Office has been printing House and Senate documents from in the form of little booklets that are printed on ledger paper. Ledger paper is 11"x17" and the documents are printed two pages on each side and folded in half and stapled together in the middle to make a little booklet. This presents a problem when converting these documents to PDF, either you have what is essentially a 5.5" by 8.5" piece of paper in the middle of an 8.5"x11" piece of paper or you have to reformat the whole thing to fit on a different paper size. That would also be a nightmare because the page numbers wouldn't line up. So that's why you see huge margins on these PDF copies of House and Senate documents.
posted by jefeweiss at 6:59 AM on March 29, 2010 [4 favorites]

Section 1501 -- REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE begins with several pages of findings that clearly outline the legal foundation for the individual mandate. This is unusual for a bill and indicates that the authors thought very carefully about the constitutionality of the issue. They were anticipating a legal challenge and preemptively providing legal support. Supreme Court decisions often hinge on divining the hidden intent of Congress. In this case the authors were leaving no ambiguity. They cite demographic facts, economic justification, the interstate commerce clause of the Constitution and a previous Supreme Court ruling that insurance is subject to Federal regulation. There is no gaping hole for a constitutional challenge that Republicans imagine. This was carefully considered in anticipation of such a challenge.
posted by JackFlash at 8:14 AM on March 29, 2010 [1 favorite]

The US Government spends a lot of money every year promoting sexual abstinence, stopping people from growing and using marijuana, and has been spending obscene amounts of money conducting a profoundly unjust war in Iraq. I disapprove of these things, but I must pay taxes to support the government. It would be fine with me to have a single-payer health care system. Single-payer was eliminated early on, and the best compromise was a system in which employer of reasonable size is required to provide insurance, and everybody is required to get insured.

If someone is so unhappy with the requirement to carry insurance that they opt not to purchase any, it's fine with me if health care providers don't have to care for that person. Well, not really, because I'm a Social Democrat, and I believe that health care is a right. We all pay so that everybody gets insured, and everybody gets coverage, even the sick people who need it most, and at the insured price. How this is a Bad Thing is beyond me. I don't mean to snark, as the Ask.er expresses the question sincerely. Health care, insurance, single-payer, public option, cost-containment; it's all extremely complex. I've been trying to follow it, and I honestly have only a simplistic understanding of the issues. I believe this is the best plan that could be worked out, and I'm happy to have it signed into law.
posted by theora55 at 10:02 AM on March 29, 2010

It seems to me that, by requiring (sort of) everyone to get insured, the price of individual insurance goes down for the benefit of all.

After all, isn't individual insurance much more expensive than corporate because of the information imbalance involved? As in, people will get it or not get it knowing their risks, costing the insurance companies a lot? Even things like how safely they drive or how often they dive in shallow water affects their cost to insurance companies, but the insurance companies are unlikely to know every detail, no matter how thorough their surveys. Thus, it costs more to insure individuals than a company because only the costly individuals will get insurance. By mandating it, the pool is more even and they will (hopefully) be forced to drop the prices of individual insurance to stay competitive.

Also, because of the preexisting thing, people can switch insurance carriers now (or soon) if there is a better deal available so there will be more competition and hopefully that will lead to a better product at lower prices.
posted by R a c h e l at 12:32 PM on March 29, 2010

If you want to dig into the details more, I think the Kaiser Family Foundation page does a good job of giving a manageable but substantive amount of detail to really wrap your head around what actually passed (as well as various other proposals along the way)-- see this 13-page summary, for example.

So, one last question: is there any mandate in the legislation on what constitutes adequate health insurance coverage? For instance, is it possible that all of the insurers simply start offering a catastrophic, $50k-deductible plan for the cost of the penalty; and then the first plan with reasonable deductibles still costs 20% of your income?

One major component of the legislation is the idea of the Essential Health Benefits package ("A health insurance issuer that offers health insurance coverage in the individual or small group market shall ensure that such coverage includes the essential health benefits package required under section 1302(a) of the Patient Protection and Affordable Care Act.") It sets a floor for health insurance coverage in a variety of different ways, from limiting the "medical loss ratio" (requiring that 85%/80% of premiums be paid out on medical costs) to limiting cost sharing (as nicwolff addressed) to requiring that all preventative care be offered without cost-sharing to defining what needs to be included as part of an "essential health benefits package."

Regarding the last one, the Secretary of HHS is responsible for defining the essential health benefits package, but has a bunch of constraints and guidelines... to list just a few:

such benefits shall include at least the following general categories and the items and services covered within the categories:
(A) Ambulatory patient services.
(B) Emergency services.
(C) Hospitalization.
(D) Maternity and newborn care.
(E) Mental health and substance use disorder services, including behavioral health treatment.
(F) Prescription drugs.
(G) Rehabilitative and habilitative services and devices.
(H) Laboratory services.
(I) Preventive and wellness services and chronic disease management.
(J) Pediatric services, including oral and vision care...

and

The Secretary shall ensure that the scope of the essential health benefits under paragraph (1) is equal to the scope of benefits provided under a typical employer plan, as determined by the Secretary. To inform this determination, the Secretary of Labor shall conduct a survey of employer-sponsored coverage to determine the benefits typically covered by employers, including multiemployer plans, and provide a report on such survey to the Secretary.

and

a qualified health plan shall not be treated as providing coverage for the essential health benefits described in paragraph (1) unless the plan provides that—
(i) coverage for emergency department services will be provided without imposing any requirement under the plan for prior authorization of services or any limitation on coverage where the provider of services does not have a contractual relationship with the plan for the providing of services that is more restrictive than the requirements or limitations that apply to emergency department services received from providers who do have such a contractual relationship with the plan; and (ii) if such services are provided out-of-network, the cost-sharing requirement (expressed as a copayment amount or coinsurance rate) is the same requirement that would apply if such services were provided in-network.
posted by EmilyClimbs at 4:05 PM on March 29, 2010

I just stopped in to say that JackFlash's comment, the very third one in this thread, is the single best explanation of the new system that I have ever heard.

If the news networks had explained it that well, this entire year of controversy, yelling and general asshattery could have been avoided.

(Which, I suppose, explains why they did not.)
posted by rokusan at 11:32 AM on March 30, 2010 [1 favorite]