Thursday, October 17, 2013

Speaking quietly about Obamacare

As promised, here is the second post for reactions to the video of Dave Ramsey that is supposed to dismantle Obamacare using facts and math.  Unlike Ramsey, I will not exempt you from actual facts and actual math.  Nor will I use the philosopher trap of constructing hypotheticals that you will logically follow.  But I'm sure in doing so, someone will complain that I'm not using facts or that I am trying to yell over Ramsey.  I'm going to lay out the facts of a fairly moderate piece of legislation that people are getting worked up over.

It's a logical assumption that premiums will increase because insurance companies will no longer discriminate against those with pre-existing conditions.  People get scared because they're healthy and they don't want to pay the same as someone who is not.  But of course, to think that, you're ignoring the individual mandate which floods the health insurance market with millions of people who previously did not have health insurance.  Health insurance companies assume that the vast majority of them are healthy.  That's why insurance companies insisted on an individual mandate in the reform.  It's called increasing the risk pool.  Ramsey does not mention the impact of the individual mandate on increasing the risk pool.  This is strange, because, you know it's one of the giant sticking points of the law.  Also, the opponents of the law understand this.  That is why they're trying so hard to encourage younger healthier people to not sign up for health insurance because that will affect premium prices.  If the risk pool is not increased, then yes, premiums will substantially increase.

170.9 million people are covered by their employers and 101.5 million are enrolled in government health programs.  Those people will not see a significant change in premiums because of Obamacare.  While job-based health insurance rose for a single person about 5% last year, that's what you'd normally expect.  Also, your health insurance is unlikely to change if you're in this market.  You do not have to buy health insurance on the non-group market, so it doesn't matter what the cost is, because you won't be paying it.  You will only be buying coverage on the individual market if your employer does not offer health insurance and you don't receive government enrolled healthcare.  Premiums of health insurance have been increasing for whatever reason for years.  Since the Affordable Care Act was passed, it became more convenient to blame it on the Affordable Care Act.  But people forget that premiums increased by over 10% each year from 2000-2004, #thanksObama.  When we talk about premiums increasing, we're talking about people buying health insurance on the individual market.

Non-group coverage is currently or was fairly cheap.  This is partly because it allowed big gaps in coverage.  It also denies coverage to those with pre-existing conditions.  Obamacare prohibits these practices.  All plans include a basic set of benefits that has to cover at least 60% of the typical person's medical bills.  Insurers have to sell coverage to anybody who wants it, regardless of medical condition, without raising prices.

The sticker price of insurance for the non-group market is going to be higher in most instances.  But you have to remember that almost everyone is not paying sticker price for their insurance.  Another part that Ramsey forgets to mention is the health insurance subsidies.  Subsidies are available to anyone who makes less than four times the poverty level.  That's $46,000 for an individual and $94,000 for a family of four.  That is the vast majority of those people buying insurance on the non-group market.  Among those receiving subsidies, the average will be $2,600 per year.  The less you make, the more you receive in the subsidies.  Meanwhile, the more you make, the less you receive.  The subsidies act as discounts when you buy the health insurance.  The money for the subsidies are generated by taxes, on wealthier people, the medical excise tax, the real estate tax, taxes on cigarettes and tanning.

Older and sicker people will pay less because insurance companies cannot charge more.  People with relatively low income will pay less, thanks to subsidies.  People with higher incomes might pay more, since they don't have subsidies.  Younger people might pay more when they get health insurance because they were taking advantage of the old system of healthcare.  But we should note that premiums are already lower than what the Congressional Budget Office initially projected when the law was signed.  So, why is that?  I know you've been told that Obamacare is communism but, the truth is, it is simple market economics.  The insurance companies want to attract these people buying health insurance, and how do they do that?  By lowering prices and increasing competition.  But nah. Obamacre must be socialism.

Ramsey talks about how Obamacare will hurt you in your job.  They won't give you that raise.  They won't hire full-time workers.  All that.  To many that confirms the suspicion that Obamacare is a job killer.  Republican politicians have been claiming that for years.  There are about 8 million part-time workers looking for full-time work.  It's easy to suggest that all of them are hurt by the employer mandate that requires employers of 50 or more full-time workers to offer health insurance.  But when the law was signed, there was over 9 million part-time workers looking for full-time work.  So, if there were more part-time workers when the law was signed and now there's less.....that's not how it works.  I won't be intellectually dishonest enough to say that.  The Bureau of Labor Statistics found that the explosion of part-time workers was in 2008, probably because of the recession.  The trend for part-time workers looking for full-time work is actually decreasing. In fact, the Center on Economic and Policy Priorities found that as we approached the original employer mandate deadline, we found FEWER workers working twenty-six to twenty-nine hours than the year before.  The Congressional Budget Office does project that as the employer mandate is enforced, we'll see employers hiring more seasonal or part-time workers and fewer low wage jobs.  But we haven't seen that, yet.  So, all the talk about how companies reacted to the employer mandate are anecdotal at best.

We can look at the employer mandate.  People can talk about how companies are going to fire people to get under the number of 50 employers or hire more part-time workers.  But the truth is, 94% of the businesses affected by the employer mandate already offer health insurance voluntarily.  Why?  Because in order to attract talent to the job, you need to offer some type of benefits.  Health insurance is not taxed the same as wages, so it is often cheaper than giving out that money in salary.  Mark Zadi of Moody's Analytics has said that we have not seen companies slash jobs due to the employer mandate at a large scale.  We've seen broad based job growth that is consistent with companies growing.

I imagine at this point, you're thinking, what about Papa John's.  They said they would have to increase the price on pizzas to cover health insurance for their employees, of course John Schattner the CEO of Papa John's supported Mitt Romney in 2012 but I'm sure that had nothing to do with his statements. But people also forget that he wrote an op-ed in the Huffington Post, explaining that he is not planning on cutting team hours as a result of the health care law.  In fact, he was opening hundreds of new stores and adding thousands of new employees.  Grrr. Those evil people getting ready for the law.  Darden restaurants did claim they were shifting their workforce from full-time to part-time to avoid the penalty, but then in December 2012 announced they weren't doing that.  But even if the 6% of the employers who don't offer health insurance start laying off hours and hiring part-time workers, is that the business or the government's fault?  Why should the business be allowed to treat employees like that?  Shouldn't you be mad at the business who treats employees like that as opposed to the government, trying to stop these employers?  But I digress.

That's it.  I'm not trying to be the loudest person in the room.  I'm not saying Obamacare is perfect. There are reforms that we can do to make it better.  But it doesn't help that the vast majority of you have no idea what the fuck is happening.  You find these videos that show someone criticizing the law and you exclaim it does a great job dismantling the law.  But you don't know that they're avoiding a lot.  You see the advertisements bought and paid for by the people most opposed to the law that say your premium will increase, but they don't say, by the way this is only for the people who don't have employer sponsored health insurance.  It's annoying.  So actually research.  Actually look stuff up.  If you don't like the law at that point, alright.  But you should probably understand why you don't like it, instead of using vague hypotheticals that don't actually make sense in the real world.  Also, look up the meaning of any of the words you say to describe it.

We've just given up to our confirmation bias.  We actively seek out information that agrees with whatever stance we have.  Maybe, you should realize, you have no stance.  Let the facts fall where they may. See how much more informed you become.

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