ObamaCare’s Relentless Creation of Second-Class Citizens (6)

By lambert strether of Corrente.

And we go to Happyville, instead of to Pain City. –Thomas Pynchon, Gravity’s Rainbow

In this continuing series, we’ve been looking at how ObamaCare, through its inherent system architecture, relentlessly creates first- and second-class citizens; how it treats citizens, who should be treated equally, unequally, for whimsical or otherwise bogus reasons. It’s all in the luck of the draw! If you live in the right place or have the right demographic, you go first class to Happyville. If you don’t, you go in coach to Pain City.

If Social Security were implemented like ObamaCare, citizens in Libby, MT would get a bigger check, because; you couldn’t get a Social Security payment if you were debanked, and didn’t have a checking account; you’d get one kind of Social Security from the government if you were poor, and several other kinds of Social Security from private companies if you were not; you’d get a bonus Social Security check if you worked on Capitol Hill; you’d be encouraged to collect your benefits if you were in the right demographic, but otherwise not; your benefits would depend on your projected income, which would be checked by a private credit reporting agency; and your check would vary wildly from state to state, and even from county to county. Who could possibly support such a crazy system? Well, Democratic hacks — Obama being a putative Democrat — but we’ll get to that in a subsequent post. First, I’d like to show how non-English speakers can be discriminated against in some offerings on some Exchanges. Next, I’ll look at some of the challenges that the Navigators will face when helping citizens consumers declare their income.

First, and amazingly, Obama decided in late July to allow private firms — “web broker entities” like ehealthinsurance.com — to integrate their offerings on the Federal Exchange in the 36 states that aren’t running their own exchanges.* Of course, since we have, as of this writing, 42 days until the Exchanges open, it’s a little early to ask what the integration is actually going to look like [snort]. For example, will the “trade dress” for all pages look the same? If not, will the private or the public branding dominate? And so forth. However, it does seem to me that there’s one real potential difference. CMS mandates that a “Privacy Notice Statement” be displayed on the ehealthinsurance.com pages, so that “The Exchanged” citizens consumers can know what information the Feds are collecting about them and what can be done with it. Here is the relevant clause:


(2) Openness and Transparency. In keeping with the standards and implementation specifications used by the FFE, Non-Exchange Entities [i.e., web broker entities like ehealthinsurance.com] must ensure openness and transparency about policies, procedures, and technologies that directly affect Consumers, Applicants, Qualified Individuals, Enrollees, Qualified Employers, and Qualified Employees, and their PII [Personally Identifying Information].

a. Standard: Privacy Notice Statement. Prior to collecting PII, the Non-Exchange Entity must provide a notice that is prominently and conspicuously displayed on a public facing Web site, if applicable, or on the electronic and/or paper form the Non-Exchange Entity will use to gather and/or request PII.
i. Implementation Specifications.
1. The statement must be written in plain language and provided in a manner that is accessible and timely to people living with disabilities and with limited English proficiency.

So, there won’t be a Spanish version of the Privacy Notice Statement? Healthcare.gov has a complete, parallel version in Spanish. Why isn’t eheathinsurance.com being held to the same standard? I guess if you’re English speaking, you get to go to Happyville. And if you’re not, who cares about privacy? I mean, your information is only being processed by DHS, HHS, the IRS, credit reporting agencies, and the Peace Corps, so how could there possibly be an risk of a privacy breach and a trip to Pain City?

Next, more challenges for the Navigators. The administration released $67 million in grant money on August 15, leaving a more-than-ample grand total [snort] of 47 days to hire and train them to help enroll people. Here’s a description of what Navigators will do:

“These navigators will help consumers apply for coverage, answer questions about coverage options and help them make informed decisions about which option is best for them,” [HHS Secretary Kathleen] Sebelius said from Tampa, Fla., during on a conference call with reporters.

Ideally, navigators will use a variety of math and logic skills to walk people through the somewhat confusing [ha ha]* process of buying insurance. For example, navigators will help people estimate their family income for 2014, important in determining eligibility for federal tax credits to help pay the cost of coverage.

(Yes, you got that right. The subsidies are calculated against projected income.**) We’ve already written about the ethical dilemma ObamaCare puts navigators in: If estimating their income a little high would help the citizen client consumer escape Medicaid, should Navigators advise them to “merely miscalculate” their income on the high side? Accidentally on purpose? Nudge nudge wink wink? Or not?

Be that as it may: Projecting income is critical to the workings, if I may call them that, of ObamaCare, since you get thrown into one or another eligibility bucket based on income. And just to make sure that you, unlike banksters, don’t indulge yourself in the moral hazard of getting too much medical care — which is not, we are to understand, anything at all like the moral hazard of getting too much bailout money, for the simple reason that we aren’t getting any bailout money*** — the Exchange is going to validate your income, and Obama outsourced a portion of this task to Equifax.

Here’s how (projected) income is going to be validated. From Benefits Pro (because the CMS FAQ is just too long), the Exchanges will validate income using these sources in this order:

  1. IRS tax filing data.
  2. Social Security household income data.
  3. Wage information employers report to Equifax [but only if income cannot be verified from IRS and SS data]

If the IRS, the Social Security Administration and Equifax cannot provide data to substantiate the income information a consumer has supplied, the consumer will have to provide an explanation, or additional documentation of income, officials said.

If consumers cannot supply the requested documentation, an exchange will base eligibility decisions on IRS and Social Security data.

If IRS data is unavailable, the exchange will cut off access to the tax credits, officials said.

An exchange will have some flexibility when it comes to asking for extra documentation from individuals not in the Equifax wage database and who report income more than 10 percent below the income levels suggested by IRS and Social Security data.

(“[A]sking for extra documentation” means making some poor schlub go through a massive and time-consuming bureaucratic process to get something — health care — that should be theirs by right.) This whole process strikes me as the classic error many programmers and system designers make, called the Street Light effect: The drunk looking under the streetlight for the keys he lost in the park “because the light is better here.” People who have IRS tax filing data, or Social Security household income data (disability, for example), and/or wage data are (I would argue) those who are most likely to already have insurance. They are more likely to be covered by employer insurance, or more likely to be covered by Medicaid or other government services. They are, in other words, disproportionately people who don’t need the Exchanges in the first place.

Let’s look again at that last paragraph and see if we can imagine the sort of person it might apply to:

An exchange will have some flexibility when it comes to asking for extra documentation from individuals not in the Equifax wage database and who report income more than 10 percent below the income levels suggested by IRS and Social Security data.

People who are in this situation are (I would argue) those who have had resort to informal means of making a living (System D) as a result of permanently high disemployment in the Long Depression, or downward mobility. For example, suppose I’m a painter (of houses), and my income is right on the line between the Medicaid bucket and the Exchange bucket: $15857 (138% of the 2013 Federal Poverty guidelines plus one dollar, to put me in Exchange Happyville instead of Medicaid Pain City. And suppose I project, because of some fluctuation in the real estate market or I want to spend an extra month up at my camp, that I’m going to make $1600 less next year than this year, which is 10% of my income. But because I’m self-employed, I don’t have any pay stubs for Equifax, I’ve got much higher odds of being asked for “extra documentation” than people who need to the Exchanges less than I do! And what does the Navigator do? Explain the tradeoff between risking a ton of onerous paperwork and a more expensive policy?

How does that make any sense? Well, I grant it makes sense to think that the public assistance office should be run out of the local police department — that’s how the Prussians did it, after all — but it doesn’t make any sense at all when you believe that health care is a right. And it doesn’t make any sense at all when you compare the income verification song and dance and jumping through hoops process to the simplicity of single payer Medicare for All.

Now, I’m not saying that the situation I’ve described will happen to millions of people; and ObamaCare really will help some people, as any system of its size could not fail to do. What I am saying is that ObamaCare, by virtue of its system architecture, cannot treat people equally who deserve to be treated equally; in this case, people with no Equifax data are more likely to go to Pain City, even though their need to help is likely to be greater, while people with Equifax are more likely to go to Happyville, even though their need is likely to be less.

NOTE * Rick Perry is looking pretty good right now: Not only did TX not spend a dime on an Exchange, TX won’t be facing competition from a private company, which is what will happen to states like CA and CT, as soon as ehealthinsurance.com greases enough palms lobbies hard enough. Making Rick Perry look good is a heavy lift, but Obama managed it. And why the Feds don’t just run the datahub, write the subsidy checks, turn the IRS into a collection agency, and privatize everything else, I can’t imagine; but heck, maybe that’s the plan, and that explains why we’ve never seen the Federal Exchange, not even a mockup [whistles theme from Twilight Zone].

NOTE ** But don’t worry! If you estimate too high, the Feds will claw it back any excess on your next tax return!

NOTE *** Unless you consider the opportunity to pay less for a defective product — health insurance — a bailout, of course.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. allcoppedout

    This form of rationing through bullshit bureaucracy is very common Lambert. I felt sick-anger reading your piece – we’ve done something similar to our disabled in the UK. I’m reminded of Indian guys with typewriters outside ‘supplication bureaux’ there. You have to pay them to knock out your case.

  2. Goin' South

    And remember that clearing the exchange bureaucracy entitles you to deal with the ever-compassionate health insurance company bureaucracy. And that’s a gateway to the Big Health bureaucracy.

    It looks to me like Pain City no matter what.

  3. John

    You know what the Right is screaming about now?

    That Obama said last week “health insurance is a right not a privilege”.

    At the same time they are screaming “no it isn’t a right” they are pointing out Obama didn’t say healthcare.

    What a country.

    1. Doug Terpstra

      Obama meant to say: “Buying health insurance is mandatory; health care is for the privileged.”

  4. Chromex

    It gets worse
    Remember the exemption for complying with requirements for employers until 2015?
    That does not apply to ALL employers. Only employers with over 50 employees.
    I run a nonprofit that has 26 employees. We offer health insurance . We are not exempt. The requirements are far more burdensome for small employers but the reason we are not exempt ( besides sheer idiocy) is because we do not HAVE to offer it. The obvious disinceintive is simply for us to discontinue.
    The effect is to negotiate with employees to throw them on the exchanges.It seems like the govt should encourage us to continue what we are doing rather than discourage us but what do I know?

    1. Goin' South

      A feature not a bug.

      Get rid of employer-provided health insurance is the goal. While employer-provided health insurance is a bad system, the replacement is not Medicare-for-all that makes sure everyone is covered at all times but a system designed by medical insurance companies that guarantees that many, including those who used to get employer-provided insurance, will be left in the lurch. They’d rather negotiate with employees individually than with companies where they might have to give a little price break.

      Obamacare = the death of the neoliberal Democratic Party.

      At least there’s some good news.

  5. Carl

    “But because I’m self-employed, I don’t have any pay stubs for Equifax, I’ve got much higher odds of being asked for “extra documentation” than people who need to the Exchanges more than I do!”

    I think you mean to say, “less than I do.”

    Being a “house painter” self-employed person living on that income cusp, I’m likely off to Pain City, inside one big red-line. Only question: which dilapidated neighborhood?

  6. Benedict@Large

    Regarding the interface with the credit reporting company mentioned in a previous post in this series …

    I just thought I’d point out that if you have to go thru a credit reporting agency to enroll in ObamaCare, and you have a few past due bills you’ve been dodging? Well, once you try enrolling in ObamaCare, even if you’re not successful in enrolling, your little mailbox is going to fill up like it’s the week before Christmas, only those won’t be Christmas cards filling it. They’ll be dunning notices, as every single credit vulture descends on you like you’re fresh carrion.

    Welcome to ObamaCare. If you weren’t sick before, you will be by the time you get through signing up.

    1. nycTerrierist

      Terrifying prospect.

      Calling Dr. Lambert Strether: would you consider
      doing a post on this?

      1. Lambert Strether Post author

        An Optimist would look a Equifax’s The Work Number and say, well, it’s just paystub data. That’s the most conservative interpretation possible, so I decided to show that there were problems even with that.

        To your larger point on the merger of government and the FIRE sector, well, yes.

        1. nycTerrierist

          Much appreciated, that you’d consider such a post.

          I’m not an optimist.

          I wish Foucault were around these days, if only to say ‘I told you so’.

          The convergence of ‘systems of control’ (FIRE, health care)
          was predicted by Foucault/Deleuze – or at least, that’s what I took away from my encounter back in 1992 with this prescient piece by Deleuze: ‘Postscript on Societies of Control’:

        2. Ms G

          “The Work Number.”

          Whoa – excuse me?!

          I followed the link and here’s what Equifax tells its customers (users of our data) — in case someone’s employer data is not on The Work Number’s database:

          “Need to verify employment on a consumer not on the database? Not a problem! In this instance, a researched verification can be immediately initiated and completed by our team of verification specialists who can quickly connect with the right resources to perform fast and fully documented verifications on your behalf – a complete solution for all your verification needs.”

          Some product: “researched verification” — “the right sources” — “fast and fully documented verifications” — “your verification needs.”

          I had NO idea. Did anyone else? Do I get to demand this set of data from Equifax on my annual free report request? If not, why not? Anybody know?!

      2. Code Name D

        I can see all sorts of nightmare scenarios here. One can fill out the forms to the best of their ability. But it’s the stuff they have no way of knowing about, or have any control over, that can trigger a perjury investigation. Hell, you might not even know there is a problem until MIB’s show up wondering why form FWTF-10566-long wasn’t correctly filled. In the mean time, who dose one do for insurance? Will they get a waver while this stuff gets worked through? What if the person actually needs this care, and can’t afford to not be covered? Can this be fixed with the right paper work, or is it going to take a judge? Will this take weeks to work out, or years?

        And just what kind of stakes are we talking about when it comes to this perjury thing? Are we talking a strongly worded letter? Or will the Federal Marshals serve an arrest warrant? Hell, in Obama’s America, this might make you terrorists and win death from above.

    2. Goin' South

      This is a side benefit of Obamacare.

      “Health care for all” has morphed into “Health care for those who have neither creditor nor IRS issues.”

      For a country living increasingly off-the-grid, this will present more and more people with the option of leaving serious illnesses untreated or exposing themselves to the onslaught of those lovely collector bureaucracies. For a precursor of this, note how Social Security payments, once sacrosanct, can now be the target of various blood-suckers.

      The next step in this process will be the repeal of the various state and federal laws requiring certain hospitals to treat, at least in some fashion, all comers. Since we have “universal health care,” those evil folks off-the-grid (probably all terrorists anyway) can now be left to die on the streets and scooped into dumpsters.

  7. sierra7

    The more I read about Obamacare project the more I just shake my head in disbelief!
    Not really, (disbelief)because just following our history with health care relying on mostly “privatization” this was/is the probably only road that we could have eventually ended up.
    We really have no common sense; but, I do understand that we are suffering under a “credit” system, not a social profit one…..
    We are slowly descending into a unique form of human slavery; those at the bottom will be those in terrible, unpayable (lifetime) debt….
    Those in the middle will be trying not to drown in that same debt…
    ObamaCare will accelerate the process of declination……
    Having part of my family in a small (successful long term) business they agree that many with too few employees and being profitable, will enter the realm of just paying fines and opting out of all the complications of trying to even implement Obamacare in their companies…….(My family says they will not unless pushed hard against a bureaucratic wall…)
    Single-Payer was/is the only way to help stop the hemmoraging economy….and always has been….only too much political corruption has totally crushed that road……and we end up with the ridiculous health care program that is being implemented……
    (Privatizaion….making private profit….from all aspects of human sufferings is the hallmark of our economy….and privatizaion of profits from any other “corporate creations” to make the general population dependent is de reguer……..
    A very small percentage of the top will just go on like nothing is happening….until….until….
    They feel the pitchfork in their AS#!!!!!!
    We may be closer to that happening that anyone can imagine!

  8. LillithMc

    3 million poor will have no health care under red states that rejected the medicaid provisions of Obamacare. In California the state collects whatever is used in medicaid by filing judgments on property and assets. Being poor is a criminal liability. Many government programs for the poor are not used due to red tape.

  9. Norman Byler

    The thing that’s got me Puzzled is, If Obamacare is Sooo Wonderful, then Why is it not Good enough for Unions, senators, congressman, Presidents Family,and Democrat Corp?

  10. clarence swinney

    10,000 LIES IN 4000 HOURS
    A few years ago, Rush Limbaugh said “that media watch group FAIR(Fairness and accuracy in reporting) and found only 45 little errors.”
    I called FAIR and got the study. It was over 2 Lies per hour or over 10,000 Lies.
    You can label Rush As the 10,000 man.

  11. Elliot

    You might want to look into what happened in Libby, you might stop using them so unjustly in your examples.

    Hundreds have died and more will die, due to decades of malign coverup by WR Grace that was allowed, if not abetted, by the government. The entire town was polluted, including the interiors of houses (mesothelioma causing asbestos was used as insulation, as cushioning on the playgrounds, as garden ammendment). Men working in the mine had their lungs destroyed, and brought that death home on their clothes. It was known as early as perhaps the 1940’s that it was killing them, and they were lied to and nothing was done. Then they had to fight government stalling to get cleanup and coverage as a superfund site. There is no way any insurance company would take them on, either, since asbestosis is incurable, and generally a death sentence following a period of suffocation.

    Working in the mines or in the woods (often nearly as dangerous) is about the only well paying work available in that area of the state, and the people were used like garbage.

    Libby is very close and I know people who lost loved ones; the last thing people from Libby are is featherbedders or undeserving of help.

    1. Lambert Strether Post author

      I know Libby’s situation and I’m not trying to take anything away from them. Why do you think that I am? And why don’t you think everybody should be entitled to the same level of care as the citizens of Libby?

  12. Tom Wilson

    I think you should have reversed the two things here. You say to put me in Exchange Happyville instead of Medicaid Pain City, but probably depending on what state, it looks to me like you are likely to get a better/more comprehensive set of services at a more affordable level from Medicaid.

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