Obama Prepares to Screw his Base

[Torie]

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Yes, I am talking about you, you young studs. Per this screed, under Obamacare health insurance premiums  for youngs go up 169% (at least for some), and the premiums for me, a dessicated old, go down 25%, nice cross subsidy from the generally impecunious youngs to well, folks like me, who are neither young, nor in a state of penury.  Obama loves me.  Does he love you as much?

I have been saying this since rocks cooled, and ignored. Maybe I will be ignored less, when the premium bills start rolling in, and you guys have to start paying them. You will someday you know. You won't be under 26 forever.

[Torie]

Because obviously we will never get old and stay forever young.

I just knew you would show up sbane.  And I am impressed that you have such a long time horizon, and are so patient. Well done sir!

You think this cross subsidy is good policy?

[Torie]

...and youngs, more likely to be lower income, also get subsidized, so it probably ends up cheaper in the long run.

How does that work exactly?  Got any numbers?

Let's see, my premiums go down 25%, while "it is cheaper in the long run" for youngs too. Fantastic. It's a free lunch - everybody wins!

[Torie]

well the actual numbers won't be out until 2014, but it's a well known fact that the bill subsidizes for it anyone who has difficulty paying their going rate.

The going rate for many youngs now is zero - they don't buy insurance. Why should they?  When you have a zero net worth, having insurance is just silly, isn't it?  But it is nice that the government will subsidize premiums for those who can't afford it, and subsidize olds who can as well, while all the while, Obamacare was supposed to save money. This puppy is a trifecta. Awesome!

Aren't you over 26 BRTD?  Let me know what happens to your premiums, won't you?

[Torie]

Sbane, I still don't quite get why youngs, just because they are young, should subsidize olds, just because they are old, as opposed to just means testing regardless of age. It seems nutter to me. I understand the politics (part of it being the youngs tend to be less informed about these things), but that does not make it right.

[Torie]

Sbane, I still don't quite get why youngs, just because they are young, should subsidize olds, just because they are old, as opposed to just means testing regardless of age. It seems nutter to me. I understand the politics (part of it being the youngs tend to be less informed about these things), but that does not make it right.

It makes sense to me because it's almost like you are paying into the system when you can most afford it (I would prefer it be a Bismarck system with a lot of the costs being paid through payroll taxes but that's teh socializm!! panic! panic! panic!), and reaping the benefits when you are older and could be ruined by health costs. Mind you that this is only going to be affecting health plans that cover a small number of people or individual plans. These cross subsidies are already in effect in many large company plans (group plans). So all this does is make it easier for older people to buy their own insurance or start their own companies when they are older.

Obamacare mandates higher cross subsidies based on age than the state mandates which ala CA mandate age cross subsidies lite.

It might be a fun poll: ask youngs if they prefer paying twice as much as they should now, if they can afford it, in exchange for paying 25% less when they hit age 55 or something.

[Torie]

Ezra Klein has a good response to why this is way too simplistic, and there's a lot of redistribution on both sides of the age divide, as well as a number of other demographic divides: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/11/dont-worry-kids-obamacare-is-a-good-deal/

Sure there are offsets for some youngs, but that hardly justifies the age qua age discrimination. Thanks for putting the link up though. Klein is always worth reading.

[Torie]

Again the age discrimination in group plans is a state generated rule where it exists, and is far more muted than what is in Obamacare. So while the principle is the same, the magnitude is not. Magnitude matters.  I mean, I favor progressive taxation just like you do, but we still argue some about the magnitude of the "progressivity" (among other things) don't we? 

[Torie]

Again the age discrimination in group plans is a state generated rule where it exists, and is far more muted than what is in Obamacare. So while the principle is the same, the magnitude is not. Magnitude matters.  I mean, I favor progressive taxation just like you do, but we still argue some about the magnitude of the "progressivity" (among other things) don't we? 

I am not aware of employers charging you a different premium based on your age. Does this actually happen?

No, but the rates that the carriers charge based on those in the plan are state regulated, and mandate age discrimination, albeit as I said, at a lower level than Obamacare. The youngs in essence are subsidizing in particular uninsured olds, so they can get insurance at lower rates than otherwise.

[Torie]

well the actual numbers won't be out until 2014, but it's a well known fact that the bill subsidizes for it anyone who has difficulty paying their going rate.

The going rate for many youngs now is zero - they don't buy insurance. Why should they?  When you have a zero net worth, having insurance is just silly, isn't it?

I have a good friend who had the same attitude. And then severe asthma put him in the ICU for a while. And now he has $50,000 in medical bills. So he can either file bankruptcy and spend many years in financial purgatory or work out a settlement and spend fewer years in limbo but have to live off the kindness of strangers.  Genius plan, Torie!

BK is the ticket of course. It will cost about 5K to effect. So he gets a 90% discount as it were per your hypo.

[Torie]

The idea of young people as Obama's base is also patently absurd. Very few turnout and those that do vote just slightly more Dem than everybody else. Is Bucks County, PA Obama's base too? Ethnic/racial minorities are Obama's base. And the GOP is furious about it.

Youngs voted 60% for Obama. And anyway, it juiced up the headline, so any hyperbole attending it all was well worth it for the prose poetry. Thanks! 

[Torie]

Again the age discrimination in group plans is a state generated rule where it exists, and is far more muted than what is in Obamacare. So while the principle is the same, the magnitude is not. Magnitude matters.  I mean, I favor progressive taxation just like you do, but we still argue some about the magnitude of the "progressivity" (among other things) don't we? 

I am not aware of employers charging you a different premium based on your age. Does this actually happen?

No, but the rates that the carriers charge based on those in the plan are state regulated, and mandate age discrimination, albeit as I said, at a lower level than Obamacare. The youngs in essence are subsidizing in particular uninsured olds, so they can get insurance at lower rates than otherwise.

I don't get what you are saying. As far as I know, any person who works for a large company that offers healthcare does not pay more or less based on their age. Am I wrong about this? If I am correct, this is pure community rating which is even more "radical" than what Obamacare does with the individual market.

No, or course nominally the employer pays the premium. The premium rate is regulated, so an employer employing a bunch of geezers pays less than the actuarial risk, and the reverse, if it is an IT outfit filled with 20 somethings all wearing tight jeans. At least I think that is the case, but it is just possible I am full of it here, when it comes to employer plans (it is certainly true with individual plans, which among other reasons, is why my carrier loses a bunch of dough on me. I am sure Blue Cross/Anthem prays for my early and immediate death. 

See if you can reduce the old man to ashes on this one sbane. You have a shot this time.

[Torie]

Funny, I don't recall premiums skyrocketing when Romneycare got implemented. Our sicks must have been different from all these other sicks.

You had only 4% uninsured (these blue states are just so upscale these days), and I don't think it changed the cross subsidy formulas.

[Torie]

It means that the tight jeans folks are not fats. If they are, well I just don't want to picture that.

[Torie]

well the actual numbers won't be out until 2014, but it's a well known fact that the bill subsidizes for it anyone who has difficulty paying their going rate.

The going rate for many youngs now is zero - they don't buy insurance. Why should they?  When you have a zero net worth, having insurance is just silly, isn't it?

I have a good friend who had the same attitude. And then severe asthma put him in the ICU for a while. And now he has $50,000 in medical bills. So he can either file bankruptcy and spend many years in financial purgatory or work out a settlement and spend fewer years in limbo but have to live off the kindness of strangers.  Genius plan, Torie!

BK is the ticket of course. It will cost about 5K to effect. So he gets a 90% discount as it were per your hypo.

You think people should go bankrupt because they got sick?

If it saves them money as compared to paying insurance premiums, sure. Obviously, the system needs to preclude that with mandatory insurance, but absent that, it is a good financial strategy, and I can't criticize it.

I don't know why the premiums should not be just set at market, with subsidies based on income levels, with a system that makes it possible for insured to switch insurance companies with pre-existing conditions. That is the tricky part - making whole the company who has to take on a sick, in a system that is not a single payer of course. But it is worth the trouble to do it that way, so folks can fire vendors they don't like. I have fired many doctors, who did not do it the way I wanted them to do it - or wasted my time.

[Torie]

Wait, so you're telling me my premium will be higher for the ONE YEAR where I am not eligible to be covered by my parents? OBAMA HOW DARE YOU!!!!! 

No, it doesn't go like that. It's not a cliff, it's a slope.  Regardless of the law, as you age, you'll pay more and more until you hit Medicare. The law just means that the increase will come sooner rather than later.  Since younger people are less likely to have employer-sponsored insurance, and tend to have less income to buy health insurance, that doesn't strike me as a good deal.  How much individual subsidies will help I don't know.

This is not true at all. The new law would benefit those in their 40's and 50's (or who are otherwise in poor health) but "screw" those who are younger and healthier. Of course, if you want to lower overall insurance premiums, this is the way to do it. Medicare doesn't have much to do with it.

I see no reason why this law would decrease the average person's insurance cost over their lifetime.

If the law had some teeth (as in high enough penalties to force everyone to get insurance), theoretically it would lower costs. Right now many healthy people forgo insurance because they think they don't need it. If you create a healthier pool, premiums will go down.

Only if you do cross subsidies, and you know I loathe that concept based solely on age, or to a lessor on any other basis, other than based on means. Sure it will save money if the number of free loaders who can afford insurance premiums paid out of their own pocket, start paying them, rather than leaving unpaid medical bills strewn around.

[Torie]

Cross subsides non means tested are controversial to me. Maybe I am just weird. The percentage of income thing sounds like another tax. We can chat about tax policy another time. I am out of here. I am going on a double date tonight, and need to get ready. Cheers.