ObamaCare to Crapify Health Insurance at 26% of Employers with “Cadillac Tax”

I haven’t written about much about ObamaCare’s “Cadillac Tax” mostly because it seemed (as we shall see) such an obvious union-busting measure that there wouldn’t  be much of interest to say. However, a recent Kaiser briefing on how many employers will be affected by it has generated a lot of coverage, and, as it turns out, the Cadillac tax — not that anybody could have predicted this — turns out to be insanely complex, based on a crazypants neo-liberal economic assumption, and will screw over a lot more working people than originally thought. (There’s actually some pressure on the Hill for reform or repeal, and not just by the usual suspects, but I won’t cover the politics of it here).

So, what is the “Cadillac Tax”? It’s an excise tax; a tax you have to pay when you purchase a particular type of good.[1] Excise taxes are often “sin taxes,” as on liquor or cigarettes, since drunkeness and cancer sticks can be seen as the sort of public harms that governments should use their taxing power to discourage, and I suppose, to a neo-liberal economist, an “overly generous” insurance plan is indeed a sort of sin. From the Vox explainer:

The Cadillac tax — which doesn’t go into effect until 2018 — places a 40 percent tax on health benefits above a certain threshold, encouraging employers to offer less expensive insurance or, if they don’t, pay a big fine.

How complex is the Cadillax tax? Despite Vox’s explainer, insanely. (HCPT, “High-Cost Plan Tax,” is the official acronym for the Cadillac plan tax structure.) From the Kaiser briefing:

[T]o avoid the perception that this was a new tax on employees, the HCPT was structured as a tax on the service providers of the health benefit plans providing benefits an employee: insurers in the case of insured health benefit plans; employers in the case of HSAs and Archer MSAs; and the person that administers the benefits, such as third party administrators, in the case of other health benefits. While it is generally expected that insurers and service providers will pass the cost of the tax back to the employer, doing so may not always be straightforward. Because there can be numerous service providers with respect to an employee, the excess amount must be allocated across providers. In some cases, it may not be possible to know whether or not the benefits provided to an employee will exceed the threshold amount until after the end of a year (for example, in the case of an experience-rated health insurance plan), which means that service providers may need to bill the employer retroactively for the cost of the tax they must pay.

In other words, the Cadillac tax is an obvious horror show, and that probably accounts for employer reaction. Forbes:

Universally, when queried, purchasers say they will take whatever steps are needed to avoid paying this 40% tax.

How many employers will be hit by the Cadillac tax? (Oddly, or not, I haven’t been able to find a study that shows how many workers will be hit.) The complexity makes that hard to determine, but 26% in 2018 — tomorrow, in corporate terms — is what the conventional wisdom seems to be, according to the Washington Post. Kaiser describes the process:

Our estimates suggest that a meaningful percentage of employers would need to make changes in their health benefits to avoid the HCPT in 2018, and that this percentage grows significantly over time unless employers are able to keep heath plan cost increases at low levels.  In fact, 19 percent of employers already in 2015 have a plan that would exceed the HCPT threshold when FSA [Flexible Spending Accounts] offers are considered; these firms would need to reduce their current plan costs over the next several years to avoid the tax. We estimate that by 2028, 42% of employers would have plans where costs would exceed the threshold for some or all employees. To the extent that health plan premiums continue to grow faster than inflation – a likely scenario – the share of employers affected by the HCPT will grow and eventually reach 100 percent. To avoid the tax, an employer would have to keep plan costs below the threshold and contain growth in costs over time to no more than inflation.

(Towers Watson (a professional services firm) estimates 82% by 2023; that is, more and faster.) Note that the Cadillac tax approaches 100% of employers because it’s calculated not on the basis of the insurance plans’ cost, but on the cost of living (!); the cynical might imagine that designing a tax that ultimately applies to all employers is a complex and obfuscated scheme to get employers to stop offering any health insurance at all.

Why does the Cadillac Tax even exist? Let’s look at the legislative history. From Health Affairs:

When the excise tax was passed by Congress in 2010, the policy rationale was two-fold:

First, the tax was designed to slow the rising cost of health care and put pressure on employers to restructure employee health plans by increasing cost sharing on the part of employees. This would encourage employees to consume less health care, resulting in lower medical spending in the long-term.

Second, the tax was intended to raise significant revenue to pay for other key components of the ACA, including subsidies to help low- and middle-income families afford coverage through the health insurance marketplaces. Before the President signed the ACA in March 2010, the Joint Committee on Taxation (JCT) and Congressional Budget Office (CBO) scored the tax’s revenue impact and estimated that it would raise $30 billion in additional federal revenue in its first two years (2018 and 2019).

So, two rationales: First, to put pressure on employers to slow costs; second, to raise revenues. Both, in fact, depend on how employers will react to the tax, as we shall see. (Those of use present at ObamaCare’s creation will recall how important CBO scoring was, politically, and you can see that the Cadillac Tax would have been one of the many moving parts that went into making ObamaCare “revenue neutral”).[2]

What is the crazypants neo-liberal assumption behind the Cadillac Tax? Let’s consider how the revenue from the Cadillac Tax is to be raised, from a contemporaneous SAGE study:

These revenue estimates from CBO actually combine both direct and indirect revenues. The direct revenue is simply the 40% excise tax collected from private health insurers. The indirect revenue is the increase in federal income and payroll taxes that will result from the relatively higher wages accompanying a switch to plans with lower actuarial values and  the  outright  dropping  of  coverage expected to occur in response to the net price increase. … In their analyses, the CBO and JCT [Joint Committee on Taxation] assume that workers ultimately pay for their health insurance benefits through lower wages because total compensation (i.e., the sum of wages and benefits) should remain unchanged in competitive labor markets. (If this wage/ benefit trade-off does not actually happen in a one-to-one manner, then the estimates of indirect revenue raised by income and payroll taxes will be overstated.)

Let’s parse that “indirect revenue” from “the increase in federal income and payroll taxes.” Why is that going to happen? Vox explains:

[According to Bradley Herring, a health economist at Johns Hopkins University:] There’s a vast body of economics research [Oh, OK] that shows workers bear the cost of more expensive health plans with lower wages. These papers suggest there’s a lump sum amount that companies spend compensating workers. It goes into either wages or benefits — so when benefits get more expensive, wages go down.

“If you think this through, once the Cadillac tax is imposed, employers will do things to increase the deductible or change the drug formulary to try and lower costs,” Herring says. “They’ll offset that by raising the wages of workers.”

You got that right. When employers cut benefits, they raise wages. And that’s why the income and payroll taxes are going to rise, so CBO can make its numbers. Is that craziest, most not-real-world, pencil-necked neo-liberal economist idea you’ve ever heard? And the Cadillac tax is based on that assumption! Vox once more:

“I mentioned this when I was presenting at the American Bar Association,” says [Herring]. “And if you want to know how to get a room full of lawyers to laugh, have an economist tell them that the Cadillac tax could raise their wages.”

And not only lawyers are laughing.  From the International Association of Fire Fighters:

The CBO assumes employers will simply give raises with the money saved; history and common sense tell us a different story. The Cadillac tax won’t lower costs; it will shift them to workers. That’s why it should be repealed.

And from another “strange bedfellow” fighting the Cadillac Tax, in Business Insurance:

In a letter sent to federal lawmakers, the Alliance to Fight the 40 organization says there is little, if any, evidence to support a key assumption behind the tax: that it will raise billions of dollars in new federal revenue as employers cut benefits to avoid the tax and instead boost employees’ wages.

“It is economic theory, not hard evidence, supporting the claims that employers will make up lowered health benefits with higher wages,” the letter said.

It seems far more likely that employers will simply crapify the plans and leave wages where they are. I mean, that’s how — at the very best — how the game has been played for the last forty years, right?

How will your health insurance plan be crapified? What happens when the Cadillac Tax means your plan is “too generous” or “too robust” or “too expensive”?

Before answering that, we should point out that the whole “generous” framing is distorted; “power concedes nothing without a demand” is as true for the provision of health insurance by employers as it is for anything else. These plans were negotiated:

For years, many workers, including firefighters, have negotiated to secure quality health care in lieu of raises. For many Americans, the exclusion from this tax is one of the only real tax breaks they enjoy.

In other words, the “too generous” trope assumes that unions negotiate luxuries, and not necessities, for their members. How much sense does that make? And that’s before we get to the union-busting aspect, which, for the Obama administration, is a feature, not a bug. Los Angeles Times:

Unions have spent decades negotiating better health benefits for their members as alternatives to wage increases, only to find their hard-won benefits tipping over the Cadillac thresholds.

And if the unions can’t deliver wages, and now they can’t deliver benefits — or prevent existing benefits from being taken away — what exactly do they deliver? So who is to determine what is “generous”? Workers, or pencil-necked< neo-liberal economists? Who never mention whether CEO health insurance -- or top 20% health insurance, for that matter -- is "too generous"? That said, let's turn to the crapification. From the Kaiser briefing:

The potential of facing an HCPT assessment as soon as 2018 is encouraging employers to assess their current health benefits and consider cost reductions to avoid triggering the tax. Some employers announced that they made changes in 2014 in anticipation of the HCPT, and more are likely to do so as the implementation date gets closer. By making modifications now, employers can phase-in changes to avoid a bigger disruption later on. Some of the things that employers can do to reduce costs under the tax include:

  • Increasing deductibles and other cost sharing;
  • Eliminating covered services;
  • Capping or eliminating tax-preferred savings accounts like Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), or Health Reimbursement Arrangements (HRAs);
  • Eliminating higher-cost health insurance options;
  • Using less expensive (often narrower) provider networks; or
  • Offering benefits through a private exchange (which can use all of these tools to cap the value of plan choices to stay under the thresholds).

For the most part these changes will result in employees paying for a greater share of their health care out-of-pocket.

Mission accomplished! In short form, from Our Future:

As early as 2013, employers indicated that they were preparing for [the Cadillac Tax] by simply cutting benefits – which is exactly the response most common-sense observers would expect.

On top of the general crapification, there are two knock-on effects. First, the effects are unequal; and second, more and more plans will be affected. On the unequal (hence unfair) implementation:

There also are no adjustments for geography, so plans in regions with high health costs – such as the Bay Area – more likely will be hit “simply because of where they’re located,” says Laurel Lucia, an ACA expert at UC Berkeley’s Center for Labor Research and Education.

Wow, ObamaCare random with respect to jurisdiction, age, income, or personal circumstances? Who knew? Business Insurance:

[W]hile Congress’ original intent behind imposing an excise tax [assuming good faith –lambert] was to target only “overly rich plans,” the [Alliance to Fight the 40] letter notes that the tax “will hit modest health plans that are expensive simply because they are offered in high-cost areas; or because they cover large numbers of people whose health costs are typically higher than average — women, older and disabled workers and families experiencing catastrophic health events,” the letter said.

Finally, the Cadillac tax will increasingly hit all plans, not just “overly generous” ones. Remember how the tax is figured on the cost of living, not the cost of the insurance? Here’s how that works out in detail. Forbes:

Beginning in 2018, the portion of any annual health insurance premium that exceeds $10,200 for individual coverage and $27,500 for family coverage will be taxed at 40%. For example, for a family plan with an annual premium of $30,000 the employer would be required to pay a 40% tax on the amount above $27,500 ($2,500) or $1,000. Although after 2018, the thresholds will be adjusted annually for the Consumer Price Index (CPI), the number of new individuals who find themselves having to pay this large surtax will grow rapidly, since the MCPI (Medical Consumer Price Index) is projected to increase faster than the overall CPI. This was not anticipated by policy makers, and as a result the assumptions that few plans would hit the threshold or that this excise tax would impact only the wealthiest Americans is looking equally inaccurate.

And so, at least for most of us poor shlubs, we’ve walked all round the barn to end  up exactly where we started. Forbes again:

Already, 80% of people with a $5,000 deductible pay essentially all of their healthcare expenses out of pocket in any given year. And if deductibles grow even greater in the future, the barriers to care will rise for an increasing number of Americans who won’t be able to pay the high out-of-pocket expenses required. And when they develop major medical problems for which care is essential, they will face the difficult choice of paying for the needed care and having to default on their mortgages and other financial obligations, or not obtaining the medical treatments required.

Conclusion

So, a race to the bottom that starts out affecting “overly generous” health insurance, and ends up affecting more and more of the rest of us. Typical. I doubt this can be fixed by Congress this year or next, since the Democrats will not be able to admit that Obama has ever made a mistake in any aspect of his sorry administration, and Republicans have no choice but to throw red meat to their base by trying to repeal it all together. Pass the popcorn.

Notes

[1] Of course, health insurance is a product that ObamaCare mandates you purchase, so taxing it seems a little meta (even if employer-based insurance doesn’t come under the mandate).

[2] Note that the whole “revenue neutral” requirement ruled out single payer tout court, no doubt by design. Single payer is not revenue neutral for the government; it nets out positive for society precisely by using government’s purchasing power for public purpose.

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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.

108 comments

    1. Lambert Strether Post author

      Well, if it’s “overly generous,” it’s a Cadillac plan. And they are most definitely include hourly workers, in the contracts that their unions bargain for.

      1. willf

        The term itself is problematic. It would be nice to find a way to talk about this issue that doesn’t use Luntzian framing to denigrate the (as you note) hard won benefits of union negotiations.

          1. craazyboy

            I’m starting to think that the more people that hate O Care, the better. Maybe they’ll be forced to concede it’s a massive failure, scrap it, and finally acknowledge that maybe the industry can’t just charge any price it wants. Like all other single payer countries do.

            I hope Cadillac plan applies to Congress too.

            1. bh2

              The insanity and miles-long complexity of O-care can only have been intended to assure single-payer inevitably becomes the accepted alternative.

              1. Lambert Strether Post author

                Nope. The history of ObamaCare shows that ObamaCare comes from RomneyCare, which in turn derives from a Heritage Foundation plan designed explicitly to head off single payer. I’ve heard this talking point before; it’s a fantasy with no evidence to back it up.

          2. Ormond Otvos

            Lambert, your article suffers from excess bias already. The Cadillac term, as well as your thoughtless random slams at Obama, disqualify your opinion.

            Single payer is the obvious solution, so that people can get necessary medical treatment without playing the fakeonomics game that health care is a commodity.

            You’re falling for the line that people waste health care, that they willingly get sick as a choice at times. That’s not even silly, it’s just mindless parroting of industry lines.

            I’d suggest a thorough rereading (I assume you know about it) of pnhp.org, the site for single payer.

      2. Rich Weinstein

        The plan does not have to be overly generous. The cap on the Cadillac Tax grows at CPI but premiums grow much faster than CPI. It won’t be long before ALL plans are Cadillac Tax plans. This technique is similar to boiling a frog… except we’re the frog. The Cadillac Tax intentionally wipes out company plans.

        1. Ormond Otvos

          This is what gerrymandered health care implies: that there will always still be that sensible urge toward a national health plan.

          Health care is a right, and should be removed from capitalist controls on it. Profiteering from ill health is a savage’s greed.

          1. craazyboy

            hahahaha. Ya, healthcare industry and pharma take over the United States of America is the National Health Plan.

            Warning..Warning OObot Alert!

            Reading this stuff makes me sleepy…same as listening to NPR, which I only did once, then decided to stay awake while driving.

  1. allan

    Jonathan Gruber respectfully disagrees:

    By my calculations the excise tax in the Senate legislation will raise U.S. worker wages by a total of $223 billion over the next decade, which would mean about $660 in extra annual earnings per employer-insured household by 2019. Moreover, the vast majority of those wage increases accrue to middle- and lower-income households; 90 percent would go to families with incomes below $200,000.

    `Benefit cuts => wage increases’ should be called Gruber’s Theorem in his honor.

    1. CHromex

      $660.00 in extra annual earnings =$4,000.0 in xtra medical bills per average family= likely net loss of over 3K in purchaing power. Most earning under 200K.
      Way to go Gruber

    2. Pitchfork

      “By my calculations…” It almost sounds like a joke, something a stock scientist or mathematician character would say. Oh wait, it’s already a meme. “By my calculations… you’re screwed, peasant!”

  2. Praedor

    Hell, even without the “cadillac tax” in effect, just plain old ACA, my healthcare has already been crapified. Before Obamacare, the wife and I had health insurance from our university that we both liked. It worked. It was based on the co-pay system and the co-pay was never onerous. Since ACA, however, the healthcare plans at the university have gone to shit. To keep health insurance that was at all similar to what it was pre-ACA would cost us an arm and a leg, and no, our wages are not high (by a LONG shot). Instead, we’ve been stuck with a deductible shitpile with a deductible high enough to really hurt ($3000) PLUS shitty coverage on top of that. Last year I thought that since I’d gone through my deductible for some back injury treatments, that a subsequent procedure would be rather cheap (to me). HAH! Got hit with THOUSANDS of dollars in bills leaving me to wonder just what the FUCK is the deductible for! Can’t WAIT to see what happens after the cadillac tax goes into effect. Will the shit I’ve got now hit that threshold? What knock-on effects will there be? What will be the neoliberal trickle down?

    Our pay will NOT be going up in any case. It has been YEARS since anyone but some useless administrators got any kind of pay increase. Pay increases, such as they are, for the real staff have been in line with the interest you can make on a savings account at a bank. Whooopie!

    Eat shit Obama.

    1. reslez

      My employer offered a co-pay style plan until 2 years ago (ACA hello!) and now exclusively offers a high-deductible plan with a Health Savings Account. And yes, the deductible only applies to some charges, there are actually multiple deductibles, so you end up forking over a slice of your paycheck for potential access to care, but the insurer never pays a single thing, they only negotiate what you pay. And yet the threat of medical catastrophe and being driven into bankruptcy for a single incident (a vehicle accident, for example) looms over all of us. The neo-liberal world sheds no tears, it only counts money.

      And the HSA is its own kind of scam, with all sorts of mysterious fees and an inducement to put this money into suspiciously high-fee mutual funds… the privilege for which is yet another monthly fee.

  3. Jess

    As a member of the Writer’s Guild (who is fortunately old enough to be on Medicare) I can’t wait for all the Obot pretend-progressives who are on the guild’s health plan to start screaming bloody murder when the impact on “multi-employer” plans such as the Guild’s whacks them right where it hurts. They were so smug about the ACA back when it was passed (because Obama! Yay!). I warned ’em, but they shrugged it off. Can’t wait to have the last laugh.

    1. Pat

      As another entertainment union veteran, but not unfortunately eligible for medicare yet, just got a notice from our benefits office that our self run plan was being merged into the international’s plan. Our local worked hard at keeping the minimums low and the benefits as high as possible, even after large numbers got hit by AIDS and cancer. I’m quite sure some of this was done because we are already above the Cadillac tax premium level (see previous remark). This will improve our community rating but limit our ability to actually do the moves to do the best for the membership. I fully expect to find that the minimums rise a great deal and the benefits decrease. And that most of our membership won’t begin to understand why their co-pays have gone up and what has covered has gone down. And wait until it still gets hit by the Cadillac Tax in less then three years. I said a lot when this when ACA was all coming down. I’m going to keep my mouth shut now as I haven’t made the minimum in two years, and it would just be considered sour grapes.

      And yes, I’ll try not to be I told you so when this move turns out to be just delaying the unavoidable. But I refuse to not ask if they haven’t realized that NO, Obama did not improve health care in America, and if not when will they get that they are only going to have less and less access to care as the costs get costlier and shifted to them.

      1. Ormond Otvos

        So, naturally, being an intelligent and thoughtful person, you’re working towards single payer, right? Strange you never mention it…

    2. NotTimothyGeithner

      The Obots will blame you for not clapping, not Obama or anyone who conned them. The one thing people hate more than con men is being conned themselves. The bright, wonderful people who snicker at Palin can’t be had. They are just sports fans for the most part except for a sport even more harmful than the NFL.

      If they hit rock bottom, they might recognize the connection.

      1. Jay M

        When the shit trickles down, you get blood poisoning, particularly if you are on a shunt. So, neo-liberalism certainly lives up to its promises.

  4. Sean

    I love the fact when I don’t have a job (like now), I get penalized for not buying a product I actually can’t buy because the “marketplace” closes in March.

    Also, how am I going to pay these premiums without income? How do I pay my taxes without a job?

    Neoliberalism has to die. Somehow. Or else it will kill us all.

      1. OIFVet

        The ACA a double-reverse alchemy: turning “gold” into “crap” for some workers, and “crap” into “gold” for all insurers. Except for the part where “crap” stayed “crap” for most, with the added mandate to inhale the stink.

    1. jrs

      Something I have noticed about the job market, more and more employers for full time jobs won’t pay for health insurance until your about 3 months into the job. So what are people supposed to do for those 3 months? Live without health insurance? Risky, but more importantly what about the penalties? Could those kick in if you don’t have healthcare for 3 months? Does the ACA require continuous coverage to avoid penalty? Use Cobra from a prior job? It’s insanely expensive. Private marketplace outside the exchanges? Might work depending.

      Another thing about the job market is those full time jobs are becoming rarefied things, contract work is increasing. But even with one of those lucky full time jobs, the provisional with no benefits thing for 3 months is bound to cause problems.

  5. oho

    perhaps in 2016 the nearly-always-thrown-under-the-bus Democratic foot soldiers finally wake up to the mistreatment that they’ve suffered at the hands of the Progressive Policy Institute/DLC/corporatist crowd .

  6. Eric Patton

    I really don’t understand why Lambert has to be so biased in his coverage of ObamaCare. Everyone knows the program is surpassed in its awesomeness only by sliced bread.

    Shame on you, Lambert.

    /s

      1. OIFVet

        I should have saved some of the amazing kome ramen I enjoyed earlier today, lots of wet noodles for ya! Thanks for staying on this beat Lambert, Obamacare is the gift that keeps on taking…

        1. Ormond Otvos

          So the reactionaries managed to negotiate the ACA down to where it was almost, but not quite, a net negative, and now they’re holding up the bad parts they insisted on, ignoring the good ones, like access to health care for chronic conditions and previous flaws in health.

          Confirmation bias alert.

          1. OIFVet

            now they’re holding up the bad parts they insisted on, ignoring the good ones, like access to health care for chronic conditions and previous flaws in health

            What “access”? Take the narrow networks and the very high deductibles that are the mainstay of the “exchange”, and what you call “access” is no better than what came before Obamacare. Many people still can’t afford to go see a doctor because of that $6k annual deductible plan, the only one they could afford, and if they do have a serious health event they can’t even know ahead of time if all of their medical team is in their plan, or will they end up paying for out-of-network providers. So you can easily throw another thing Obamacare failed to fix: bankruptsies due to medical costs.

            Confirmation bias my a$$, I spent literally days of my life (the “time tax” Lambert talks about) trying to find the least awful plan my mother could actually afford, on a malfunctioning “exchange” offering very little useful info on the various plans’ provider networks. It’s an overpriced PPO plan that I found. It has a 6,500 deductible, but it has one semi-decent feature: large provider network. Everything else about it is awful, so it is simply a catastrophic plan, at best. For some chronic conditions my mother does have it is useless, she refuses to go see a doctor because she can’t afford the out-of-pocket costs and refuses to allow me to pick up any of her costs. You call that access? You are a bloody Obot apologist, and that makes you an awful person. Yet here you are blaming me and others here for having the gall to point out the load of crapiness that is Obamacare. Go eff your righteous self.

            1. jrs

              FWIW those who have talked about personally experiencing increased access in my experience have mostly been those with expanded Medicaid who are not actually dealing with the exchanges. Medicaid is a mixed bag and often partly privatized as well, but I don’t think it has the huge deductibles (there are clawbacks but not everyone cares). Of course they could have just expanded Medicaid without even bothering with the entire rest of the ACA and it would just be straight expansion of an existing government program.

              1. OIFVet

                Right, Medicaid. For those who actually work there is no Medicaid, just some subsidies for lower middle incomes and no subsidies at all for some with higher income (in Chicagoland, the cutoff for subsidies based on the second lowest Silver plan premium is just under $40k, which is hardly “high income”. For them, crappy plans are the norm. Then there is the shrinking pool of providers who will accept Medicaid patients, and the clawbacks that can become an issue for some later on. Some may benefit, but those are mostly the ones with comfortable incomes and preexisting conditions. For the rest, “access” is a theoretical concept at best.

                I take this very personally because of my prior family history. My father died at the ripe old age of 62 for lack of access. For him it was a choice between paying the mortgage or paying a high medical bill (preexisting condition). He could have never have afforded to pay the Obamacare premiums and their high deductibles, and he wouldn’t have qualified for the expanded Medicaid. What would one do, give up his income to qualify for Medicaid and lose his home in the process? Obamacare does absolutely nothing for those hard working lower middle class incomes, but here is this bloody Obot talking out of his a$$ about stuff he has no experience dealing with. So eff him and his effing hobby horse he rode in on. People like that are part of the effing problem, but he has the gall to lecture us about this travesty. Eff him, it’s been years since my dad passed but it still hurts given the circumstances and what they reveal about the priorities of our elites. I simply couldn’t let this douchebag spout his damned nonsense about the great “access” our oh-so-benevolent Barry has so graciously provided for a few people.

    1. hyperpolarizer

      Someone here needs to visit Big Orange on a semi-regular basis, and try and talk sense to the Obot cheerleader squad over there. The awesomeness of ACA is regularly praised to the rafters. Myself have said, since the beginning, that the outcome of ACA would be that many people who had had zero coverage would get not very good coverage, as would many people who had had reasonably good coverage.

      1. NotTimothyGeithner

        The Great Orange Satan has been a cess pool since 2007, I believe Lambert said it’s been longer than that. Discussion and argument is held in disdain. The reasonable people are arguing with the wind. After a while, stopping is the only solution. The Obot types need to hit rock bottom.

        Take a gander at the comments under a Brady and Goodell article over at ESPN and swap in Obama and the GOP. Except for middle school science and the courts being on Brady’s side, the comments are virtually the same as Kos.

        Meteor Blades desperately needs to be picked up by someone. She could transform into a top blogger instantly.

  7. Dugh

    Thanks for the detailed overview of yet another ACA golden turd.

    “If you like your healthcare plan, you can keep your healthcare plan.”

        1. jrs

          Having to resort to the ACA to hate Obama is reaching anyway (although one might hate the ACA). The dude drone murders American teenagers. Enough said.

        2. OIFVet

          Oh sure, drag out all the tropes in the Obot arsenal. Yeah, I hate him and there is plenty of justification he has provided. But I hate myself even more for donating a lot of my hard-earned money to his 2008 campaign. Unlike you Obots however, I refused to be fooled again. That’s the true source of Obot bile, the fact that some of us refuse to stop doing our own thinking rather than swallow the Obot cool aid.

  8. Pitchfork

    If you have unexpected bills because of ACA-crapified insurance, just send a copy of your bills to Obama, or Nancy Pelosi or Johanthan Gruber or anyone else who voted for the damn thing. Just send it, as Lamber suggested, with delivery confirmation/signature required — that way somebody has to deal with it.

  9. Oldeguy

    Regular readers of NC are no doubt already aware that the Rube Goldberg monstrosity known as Obamacare, far from being an effort “to finally bring healthcare to all Americans” , was an enormous scam to keep alive a reimbursement driven, grossly inefficient, criminally ill administered by insurers that should have gone the way of the passenger pigeon decades ago, giganormously over-priced national disgrace.
    The Iraq War was Bush 43’s Anti-Legacy; this is Obama’s.

    1. Ormond Otvos

      It’s the best Obama could do in this atmosphere of hate, reaction and sheer peevish anger.

      Insurance has no business in health care. I agree that much was bargained away. It barely passed, but in its bones is the rising of national health care.

      We, the Americans, are so blind to our own place in crapifying the world.

      But Lambert can’t see it. Too invested in economics wizardry.

      1. jrs

        In an environment of … oh never mind who even knows what the environment is, when polls have shown people favoring single payer. Maybe it should be fixed to: considering all of congress is bought and sold it’s the best they could do and still make good for campaign donors. There fixed it for ya.

      2. OIFVet

        It’s the best Obama could do in this atmosphere of hate, reaction and sheer peevish anger.

        Obamacare passed by reconciliation. All the “hate and reaction” couldn’t stop it from passing. You know what else could have passed through reconciliation? Single payer. Except neither Obama nor the democrats were interested in passing it. A fact Obots so conveniently overlook. Which makes you an awful person.

  10. Praedor

    The biggest flaw with ACA or any other scheme ALLOWED to be considered by the Dems or GOP is that they always start with the question, “What’s good for business?” instead of, “What’s good for patients?” Starting off with the conceit that any healthcare setup MUST be good for business, first and foremost, automatically creates crap. The ONLY question that should be considered with designing or changing the healthcare system is, “What’s good for patients?”

    What will see people, regardless of economic class, receiving the healthcare they need to lead happy and healthy lives? It is totally irrelevant if a healthcare system design hurts insurance companies, private hospitals, etc. Healthcare isn’t there to provide profits for CEOs and shareholders, it is there to provide HEALTHCARE. The poorest poor should receive the exact same level of care as the richest crook. The poorest poor should receive equal cancer treatments to the richest hedge fund looter, should receive knee replacement surgery equal to that of George Soros. Period. Any doctor that wants to be a doctor to get rich should lose his/her license to practice medicine. The Hypocratic Oath says nothing about getting rich, driving the finist Mercedes, or living in the Hamptons.

    1. PrairieRose

      “Hypocratic” Oath, Praedor? An unintentional Freudian slip, no doubt, but the best one I’ve ever seen.

    2. ian

      “The biggest flaw with ACA or any other scheme ALLOWED to be considered by the Dems or GOP…”

      I’m curious what the GOP had to do with it. God knows they have their problems, but none of them voted for it.

  11. Cat Burglar

    “These papers suggest there’s a lump sum amount that companies spend compensating workers.”

    The Wages Fund Theory rides again!

    1. Jay M

      these guys have never heard of reducing expenses and creating competitive advantage–just ask the adjuncts, ha ha!

  12. Oregoncharles

    Since you didn’t get to the politics, a quick review:

    The ACA passed WITHOUT ONE SINGLE REPUBLICAN VOTE. The big, bad Rethugs were irrelevant, and had been all along. This is absolutely something the Democrats did, all by themselves, complete with botches and knives in the back for their supporters – who in some cases still support them.

        1. OIFVet

          Hmm

          Be careful, this expression of false befuddlement can easily become a permanent facial feature, which couldn’t possibly help the overwhelming sense of idiocy that you radiate.

        2. Lambert Strether Post author

          Of course I don’t. That’s a long-discredited talking point propagated by career “progressives” as a STFU to single payer advocates in 2009 and 2010; I’m surprised to see it resurrected here, since there was never a shred of evidence they were serious about it. ObamaCare was first implemented as RomneyCare and RomneyCare derives from a market-based Heritage Foundation plan explicitly designed to head off single payer. So, “hmmm,” back at ya.

  13. Oregoncharles

    Addendum: “since the Democrats will not be able to admit that Obama has ever made a mistake in any aspect of his sorry administration,” – no, it’s worse: it was Democrats in Congress that did this, with Obama’s connivance. They would have to admit, in an election year, that they made a frightful botch when they had control. So why would anyone give them control again?

  14. Eureka Springs

    Friend of mine, union labor, merchant marine on large cargo ships. She cannot refuse her cadillac insurance… Union demands they all play. Otherwise she could pay half to get the same crappy (nothing cadillac about what she has now except the cost) coverage elsewhere.

  15. RUKidding

    Thanks for the update (I think). I have my story similar to others, above. Work for a small state public local district govt. Our health insurance is still sort of “ok,” but definitely crapified from a couple of years ago. Higher deductibles; more obscure as to what you are eligible for even when within your “network.” Have to call the Insurance provider Every. Single. Time. I go to the dr to double and triple check what’s covered and what’s not. It’s a real chore, although thankfully I’m healthy and don’t have to visit doctors often.

    I’m lucky. I’m single and in really good health. Take no medications. I can’t imagine what it’s like for busy working parents with kids. Nuts.

    But I still see Obots at sites like Kos singing the praises of ACA to the high heavens and beyond. I’m not sure why. I certainly haven’t benefited from it. If someone else has… well, then I’m glad for them, I suppose.

    1. Ormond Otvos

      Many, many people have benefitted, mostly those who finally got access to the healthcare system.

      You guys never think of the underclass.

      1. Lambert Strether Post author

        I’ve never denied some people benefit; I just find it odd that the people who raise that point always stop there. Why aren’t they outraged that people benefit because of the luck of the draw, when all should benefit equally? I certainly am.

  16. greensachs

    —the barriers to care will rise for an increasing number of Americans who won’t be able to pay the high out-of-pocket expenses required.——- And when they develop major medical problems for which care is essential, they will face the difficult choice of paying for the needed care and having to default on their mortgages and other financial obligations, or not obtaining the medical treatments required.—

    There is a reality that is altogether being omitted from the above truthful, yet pathetic narrative.

    Many, are altogether avoiding treatment or trying DIY remedies. Even if there’s an effort for partial diagnosis and/or treatment, again, many cancel or no-show the follow ups. Together, all of these, make U.S. “healthcare” a word with very little meaning. Hope, becomes your default coverage.

    Welcome to the Neo (new) liberalism…the “free” (manipulated, fixed & phony) markets.

    …the market based Hopium, which the last two administration have prescribed so unconditionally, is stamping out and forcing downward our humanity.

    1. tegnost

      They will give up the notion that the “poor people have all the money and they’re hiding it from rich people because they’re selfish and they don’t understand how the rich need the money or they wouldn’t be rich anymore and thats mean spirited” over their dead bodies

  17. Russell Scott Day/Transcendian

    I did put my comments on my Face Book Page when I shared the link. What I said was that I had assumed that with the Congress we have the broad spirit of the legislation would be retained, with stressors and crapifications.

  18. Bridget

    “And if the unions can’t deliver wages, and now they can’t deliver benefits — or prevent existing benefits from being taken away — what exactly do they deliver? ”

    Not a whole hell of a lot…..and the more you progressives are able to deliver benefits via government fiat, the less unions will have of value to deliver. Which, in the normal course of human behavior means, unions will ever and ever more aggressively act to deliver less and less of value, until they collapse of their own lack of consequence.

    1. sd

      At which point, child labor, indentured servitude, and slavery will become legal again. That’s ultimately the point. Free labor for the free market.

    2. jrs

      If I actually noticed ANY progressives actually able to deliver much via government fiat this might be persuasive. The best we get is fighting over preserving some remnant of 50 (medicare) to 80 (social security) year old programs. And even those do not exist in their original form (Social Security age has been raised, Medicare crapified). In fact it’s not proven that progressives, even real ones like maybe Sanders, can delivery much AT ALL WITHOUT a strong union movement in the country. I mean sure I’d like to think so but I’m not sure it’s the case.

      The unions not being able to deliver higher wages has nothing to do with government benefits being so high they aren’t needed. Yes Walmart wages are subsidized with food stamps, but it doesn’t mean there’s suddenly no poverty and poverty among people who work. Even with foodstamps people are barely getting by. So what unions can deliver in the real world now: higher wages. It’s not just increasing the wages on the bottom and up, although yes that, it’s that we’re at the point that EXISTING minimum wage laws are not even enforced. Even fairly low minimum wages are being evaded even after court judgements are issued against the employer for breaking the minimum wage law, even in perfectly blue states. So really government laws alone are enough? Really? Laws are NOT sufficing. They should at least threaten to unionize!

      And then after people are paid sufficiently (it really does come first) unions can deliver reduced hours. 4 weeks paid vacation like the rest of the world, paid sick time like the rest of the world, real enforcement of overtime laws for everyone, and a 30 hour work week (not like that much of the world, but on unions agendas in the 1930s – we COULD HAVE lived in that world if they had won! Can you even imagine how very different life would be?) And then let’s really have lives and not just work lives.

  19. Moneta

    Chances are the US will not get to “universal” health care without some form of redistribution. That means the rich will need to share some of their health care with the poor. Therefore, Cadillac plans will lose some of their lustre… If they want to cling to Cadillac plans, the better off might have to cut their golf club membership fees…

    One of the big problems now in the US is that many in the top 10-20% want more fairness but they do mot want to redistribute the pie. They still think they do not need to because the pie can just get bigger if their leaders do their job right.

    The thing is that the US is still consuming a disproportionate share of global resources and if this gets redistributed globally over time, the pie will not be getting much bigger in the US and the rich will need to cut their consumption if they want more fairness.

    I guess it all depends on the US maintaining the unfair global distribution of resources and somehow managing to redistribute more fairly internally. IMO, the 2 are not compatible.

    1. Moneta

      Just curious…. when you read Universal, did it send shivers up your spine?

      Every time I see “single pay”, it reconfirms how far Americans are from any kind of redistribution or fairness.

  20. LAS

    Economically, this kind of insurance transitioning was happening well BEFORE ACA (Obamacare). Expensive health insurance plans were going out of existence due to adverse selection anyway. Adverse selection was driving them out of existence before ACA (Obamacare). Read “Paying for Health Insurance: The Trade-Off Between Competition and Adverse Selection” by Cutler and Reber.

    I think you attribute to ACA changes that are really due to healthcare economics. The ACA makes a nice target but it is not the root of what’s happening.

    1. jrs

      If it’s happening anyway why literally penalize employers that offer good insurance? No, I’m not buying it. While I agree it may have already been a trend to some extent this simply has to have an effect and magnify it, 40% tax hits do change employer behavior.

      1. Ormond Otvos

        The best plan is single payer. The big loser is insurance plans.

        Fairness doesn’t result in insurance company skyscrapers and multimillion dollar salaries.

      1. allan

        Actually, as the article says, Wyoming has very expensive health care (who knew?), much more expensive than in a place like Denver. Low population density makes it hard to get economies of scale.

        Being one of the most conservative states, Wyoming has vindictively scr*wed the state’s poor by refusing the Medicaid expansion in the ACA.
        The irony of the state’s better-off citizens suffering under another one of the ACA’s provisions
        was what I was pointing out. An accident of history, or intelligent design?

          1. allan

            The people who voted for a governor and legislators who would have poor people suffer and die, rather than receive some semblance of medical care, largely at Federal expense?
            Yes, I mean them.

  21. jrs

    What will the effect be on MEDICAL BANKRUPTCIES of everyone having crapified insurance that covers less and less when they need it? See Obamacare promised to reduce a lot of things like medical bankruptcies but like I said it was short term.

    As for crappier plans increasing the wages that are taxed, I could see this possibly happening, but not in the way they intend which is by wages magically increasing in a lackluster, almost entirely non-unionized, flooded with even skilled immigrants labor market. I could see it happening if the healthcare plans are all super cheap ones as income that is health insurance is tax exempt and wages are not. So if salaries stayed exactly the same but the employee part of the premium dropped as only cheap crap plans were on offer, the employee would magically pay more taxes. For instance I pay nearly $300 a month as an employee for my part of my health insurance in order to have a half decent PPO (and they want to switch more burden to employees – F@#$ them!). But if only the narrowest network HMOs with high deductibles and no HSA were on offer, I might not pay that as the cost of the plan might be low (or not given runaway costs). So I would have more take home pay that is taxed, but crappy health insurance that doesn’t cover me when I need it (what a deal, for the IRS I guess, not for me).

    The tax that initially hits mostly the rich and eventually hits everyone could be said to be true of the income tax itself but much more so has been true of the AMT. The thing was never adjusted for inflation at all since the mid 1970s! So now we literally have two tax systems in this country. But this is another rant, how bad the tax system is in this country. Don’t wonder at all why people vote Republican! Although of course I don’t think Rs have any answers either. But anyway the sneaky is not new and they knew EXACTLY what they were doing. Unintended consequences? Don’t make me laugh.

    1. PeonInChief

      I too was wondering whether anyone had looked at whether ACA had any impact on medical bankruptcy. It’s likely that it may drag out the process, but that the total number of bankruptcies would stay the same or increase. What would push people into bankruptcy very quickly would be a bill from an out-of-network provider, one the patient didn’t even know was a provider, let alone out of network.

      1. Ormond Otvos

        In the absence of such studies of medical bankruptcies, one would be advised to have a tentative opinion, labeled as a guess.

        And the confounding factor, thank you Mr Biden, is the rewritten bankruptcy laws immediately preceding the ACA.

        1. PeonInChief

          Even before ACA, the bankruptcy “reform” required that people who couldn’t pay medical debt (or other debt brought on by a medical crisis) would have to figure out when to file bankruptcy–late enough to be able to write off all the debt, but not so late that the debtor had returned to work and was no longer income-eligible for discharge. Then, of course, the debtor had to pray that s/he doesn’t relapse within the 7 years before the debtor can go bankrupt again.

  22. jrs

    Btw a healthcare plan that impoverishes the middle class (who mostly do have employer provided insurance) to subsidize the poor (though Medicaid or lousy subsidized ACA plans) is a perfect way to divide and conquer most of the country, to set them against each other: “poor people and their ACA stole my health insurance!”. While the hospitals and health insurers and PHARMA make off like bandits. Now you could have a health plan that is more likely to unite people than divide them but they didn’t. Funny that.

    1. Ormond Otvos

      A very insightful comment. Politics is run by lobbies who are paid by corporations. No one likes to admit that we, the voters, enable all this crapification by having little knowledge or interest until the financial pain finally hits.

      Too late, then. Vote for Bernie.

    2. Brooklin Bridge

      While the hospitals and health insurers…

      The hospitals and health insurers, like Republicans and Democrats, are fast becoming one and the same. Remember, Republicans may not have voted for ACA, but they were absolutely holding their breath that it passed and had a conservative Supreme Court all ready (thanks Mr. Roberts) to get it over an otherwise insurmountable Constitutional hump.

      Insurance companies are buying up hospitals and medical practices like it was going out of style. Now that they have everyone in a barrel named mandated profligacy, it’s time to own the doctors too so as to control (reduce) what they produce as care; that is, keep the time honored principal of capitalism at work: monopolize, reduce product, raise prices, shift costs to tax payers, increase lobbying, propaganda, and manufacture of self destructive ideologies as substitute; offshore profits and repeat. Groaf, groaf, wonderful groaf.

      The Republicans and Democrats, like the hospitals and insurance companies, not to forget Pharma, are in this together.

  23. Davidt

    There is and has been a trend to shift more of health care costs away from “insurance” or “government” (Social Security) onto having the individual pay more out of pocket.

    Insurance companies have reduced payments to doctors, hospitals and we can be sure the drug companies. The drug companies have responded by raising the “list” price of drugs. This may be one of the reasons for the rapid rise of drug prices. Cost shifting from insurance companies to individuals. The question is where is that reflected in the price of insurance. Are the books of the insurance companies audited? Why the shift to individuals for increased medical costs. Most medical costs are not optional, they are controlled by the ordering physician. Hospital costs are worse. There is no way for an individual to control or influence most hospital costs.

    Why not only measure outcomes for doctors but also costs of medicines?
    My doctor claims he does not know the prices. This is a big problem.

    Who benefits, what started this, and why is this taking place?

    1. NotTimothyGeithner

      Ted Kennedy was the primary sponsor of the HMO Act of 1973 which ended the ban on for profit medicine. Even Dick Nixon thought the legislation sounded fishy. The health care system in this country was largely built by non-profit operators and small time independent agents (doctors). They would have been the primary distributor of pharmaceuticals and wouldn’t have had incentive to collude for fear of prison.

      Even now, I would contend insurers are a bit of a red herring compared to Big Pharma and the HMOs. They aren’t seeing honest bills either. Insurers are also tempted with the growth of the individual market instead of employer or government based Healthcare because an individual has no power. If an employee where my father was an attorney had a health insurance issue, he would call the relevant regulators who would take his call because there was a working relationship. If there was guff, they would sue anyone and everyone. They would act, but the woman who sells tea cozies at the community market doesn’t have a team of lawyers on hand in a private market place. Small companies had problems with insurance for similar reasons. If I recall, 93 Hillary care was very concerned with creating pools for the small operators.

      The doctors and nurses ideally learned about medicine. Accountants and actuaries handled the other side and still do, but now everyone works for share holders not non-profit boards. The guy with his name on the building will be well cared for, but the hospital didn’t exist to enrich him beyond advertising.

  24. paddlingwithoutboats

    So much of the rational behind this appears to be based on “taxing over rich” blah, blah to pay for the de facto lower economic players that I find it remarkable in the climate of raging opposition to “taxing over rich” through other vehicles like income taxes, changes in capital gains, “carrying earnings tax” and other games. It has to be based on the unspoken broad understanding of what functions as code words, secret handshake dialog. Which impels me to notice, again, dumbing down the culture, the education systems, defunding public systems and the glitz of consumer play works to keep the exclusivity in these actions. Success in politics and business are couched in knowing these secret undercurrent languages, rituals and display behaviors. So language, and grammar, as the current water cooler post to McSweeney’s demonstrates, is important. Indeed, naming a thing is the first step toward knowledge. Thanks for shining a light on the objective behind this and so many issues.

    Thanks for the great activity and strong thinking on the site, kudos.

  25. Jeff N

    (doing the math), assuming my company is paying half, then I am below $6k/year (for an individual)… phew!

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