By Michael Olenick, a regular contributor on Naked Capitalism. You can follow him on Twitter at @michael_olenick
Buried on CNN’s website is a story about an early Obamacare success, Jessica Sanford, a court reporter in Washington State. Jessica was so elated to receive an initial quote for $198 for a gold plan that covered her and her son she wrote to Obama, who quoted her.
Later, it turned out that thanks to software mistakes she actually faced a much higher premium for a worthless bronze plan. Now, Jessica says convincingly, she will have to remain uninsured. That’s because the state website provided estimates showing that she would receive a subsidy but she has since gotten a letter that says the opposite. So she has said she will pay a tax penalty that she believes will be $95.
I hate to be the bearer of even worse news but she’s the penalty is actually 1% of her income, which means she must make at least a frothy $62,040 a year (400% above poverty for a family of two). Clearly this woman is rolling in dough – a regular Donald Trump sans the bankruptcies – and deserves to pay jacked up prices for lousy insurance to subsidize those less well off than she is.
This is the sorry state of the Affordable Care Act, the ultimate betrayal of the self-employed middle class who are supposed to magically produce income to single-handedly support those who are uninsurable. As I demonstrated in prior articles this promise, when objectively judged, borders on sadistic. Politicians must have looked towards the student loan system for inspiration and forgotten to tell the public this was their goal. In that system students from families of about the same “rich” income bracket – in Jessica’s case a high-flying $62,000 a year for a family of two – are forced to take out loans so those slightly poorer can go to school for free, or to skip school altogether. There is another alternative that would require the genuinely rich to pay taxes like the rest of us but that’s obviously a non-starter.
One surprising reaction to my prior piece on Obamacare, or even to the article about Jessica, is the visceral response to people who qualify for a low subsidy or none at all. “Cry me a river for families making four times the poverty level,” was one literal response. These comments, presumably from those who are either flat-broke or who have employer provided care that does not require subsidies for those uninsurable, seem to be bringing out the very worst in us. Forget Republican screeches of class warfare when anybody questions why Lloyd Blankfein pays the same 15% tax rate on carried income that wages slaves do on social security and self-employment tax alone; this is the 50% against the other 49%. More than that, the 1% will look on amused as these awful overpriced plans seem almost calculated to bring about a Republican landslide in the next election.
ACA proponents argue unconvincingly that the law exempts people from the mandate who cannot afford it. Let’s check that out: this exemption is for situations where “the applicable individual’s required contribution .. for coverage for the month exceeds 8 percent of such individual’s household income…” 124 Stat. 247(A). So if a family’s premium for insurance uses 8% of their income, which is $533.33/month. for a family earning, say, $80,000, they are subject to the fine. Checking that figure against the 132 plan spreadsheet I prepared, a grand total of three have premiums just under that $533.33 level. However, these plans also carry deductibles that average $11,633 and out-of-pocket maximums that average the same. Therefore, these plans – which are so affordable that not buying one carries a penalty – cost $17,675/yr., which is $1,472/mo., before these plans start to pay anything. They’re really not worth much until families pay $18,675 per year with premiums, or $1,556/mo. I haven’t heard Obama nor anybody else explain how demanding 23% of gross household income is affordable, and at this point I don’t expect to.
I noticed the President’s decision to allow people to keep non-ACA plans so, before he changes his mind, we applied to purchase one. I had many options, with an online configurator that changed premiums in response to my decisions and my family’s health. After adjusting everything we ended up with a plan that costs just under $400/mo., less than the cheapest ACA plans with better coverage. Ordinary maternity is not covered, but the “low-cost” ACA plans only pay just $1,040 of $7,450 so the lower premium more than makes up for the difference. Doctors visits are covered with a $35 copay and no deductible, as are ordinary generic drugs, an inexpensive “upsell” you’d think the ACA would have managed (OK, looking at the website maybe you wouldn’t think).
ACA supporters – among whom I counted myself until I saw the policies – oftentimes cite the “better” coverage but the facts of the real policies just don’t support this. Mandating residential drug treatment may help some people doing so at the cost of making more mundane medical events affordable is just not fair. Maybe I’m more old fashioned than I thought but jacking up the price for a visit to cure strep throat, to subsidize a person’s seventh stay in drug rehab, seems unethical.
Perhaps the meanest comment I read from the kneecap-cracking make-them-pay pro-ACA crowd was in the New York Times comments area where somebody suggested those who do not purchase ACA plans should be turned away from emergency rooms. This streak of vindictiveness from ACA supporters, who I assume are “liberal” Democrats, makes the Tea Party look outright empathetic. Maybe it’s easy to decimate the budgets of anonymous families, like those psych experiments where people kept pressing a button to shock anonymous test subjects. We’re inching steadily closer to a Dick Cheney mindset with hardly a peep in the national discussion.
Instead of using political capital to push through Medicare for All, charitably ssuming that’s what the political class wanted, it’s become clear what we got instead is using insurance buyers as financial human shields. We’re foaming the runway again, this time for a healthcare industry that costs more and delivers less than in every other advanced nation and plenty of so-called developing countries. We were led to believe that the political cost of the ACA was high, that Obama spent a lot of progressive chips to get it. Yet we ended up with something that is arguably worse than the current system.
In the wake of the financial crisis anything seemed possible. Obama enjoyed nearly endless political capital assuming he had the cojones to wield that authority. In this he failed miserably, assuming he at least intended trying to fulfill some campaign promises in good faith. Obama could have passed virtually anything and we ended up with this convoluted, unfair, dishonest, and divisive mess. Medicare for All is clearly better than the ACA but, based on what we’re seeing, there is a legitimate question about whether the current 2013 era system is better than Obamacare. It is time that Democrats honestly open this debate before Republicans gain such a large majority that their voices no longer matter.