Posts
Sunday, April 25, 2010
Thursday, April 22, 2010
Nearly 4M to pay health insurance penalty by 2016
Nearly 4M to pay health insurance penalty by 2016
Stephen Ohlemacher
From Real Clear Politics
Nearly 4 million Americans will have to pay a penalty if they fail to get health insurance when that element of President Barack Obama's health care overhaul law kicks in, according to congressional projections released Thursday.
The penalties will average a little more than $1,000 apiece in 2016, the Congressional Budget Office said in a report.
The vast majority of people paying the fine will be middle class, which would violate Obama's 2008 campaign pledge not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.
Republicans have criticized the penalties, even though the idea for a mandate was originally proposed by Republicans in the 1990s and is part of the Massachusetts health care plan signed into law by then Gov. Mitt Romney, a Republican, in 2006. Attorneys general in more than a dozen states are working to challenge the mandate in federal court as unconstitutional.
Democrats argue the mandate and the penalties are a necessary part of a massive overhaul designed to expand coverage to millions who now lack it. They point out that getting young, healthy Americans in the insurance pool will reduce costs for others.
Americans who don't get qualified health insurance will be required to pay penalties starting in 2014, unless they are exempt because of low income, religious beliefs, or because they are members of American Indian tribes. The penalties will be fully phased in by 2016.
About 21 million nonelderly residents will be uninsured in 2016, according to projections by the CBO and the Joint Committee on Taxation. Most of those people will be exempt from the penalties.
Under the new law, the penalties will be phased in starting in 2014. By 2016, those who must get insurance but don't will be fined $695 or 2.5 percent of their household income, whichever is greater.
After 2016, the penalties will be increased by annual cost-of-living adjustments. People will not be required to get coverage if the cheapest plan available costs more than 8 percent of their income.
The penalties will be collected by the Internal Revenue Service through tax returns. However, the IRS will not have the authority to bring criminal charges or file liens against those who don't pay.
About 3 million of those required to pay fines in 2016 will have incomes below $59,000 for individuals and $120,000 for families of four, according to the CBO projections. The other 900,000 people who must pay the fine will have higher incomes.
The government will collect about $4 billion a year in fines from 2017 through 2019, according to the report.
Stephen Ohlemacher
From Real Clear Politics
Nearly 4 million Americans will have to pay a penalty if they fail to get health insurance when that element of President Barack Obama's health care overhaul law kicks in, according to congressional projections released Thursday.
The penalties will average a little more than $1,000 apiece in 2016, the Congressional Budget Office said in a report.
The vast majority of people paying the fine will be middle class, which would violate Obama's 2008 campaign pledge not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.
Republicans have criticized the penalties, even though the idea for a mandate was originally proposed by Republicans in the 1990s and is part of the Massachusetts health care plan signed into law by then Gov. Mitt Romney, a Republican, in 2006. Attorneys general in more than a dozen states are working to challenge the mandate in federal court as unconstitutional.
Democrats argue the mandate and the penalties are a necessary part of a massive overhaul designed to expand coverage to millions who now lack it. They point out that getting young, healthy Americans in the insurance pool will reduce costs for others.
Americans who don't get qualified health insurance will be required to pay penalties starting in 2014, unless they are exempt because of low income, religious beliefs, or because they are members of American Indian tribes. The penalties will be fully phased in by 2016.
About 21 million nonelderly residents will be uninsured in 2016, according to projections by the CBO and the Joint Committee on Taxation. Most of those people will be exempt from the penalties.
Under the new law, the penalties will be phased in starting in 2014. By 2016, those who must get insurance but don't will be fined $695 or 2.5 percent of their household income, whichever is greater.
After 2016, the penalties will be increased by annual cost-of-living adjustments. People will not be required to get coverage if the cheapest plan available costs more than 8 percent of their income.
The penalties will be collected by the Internal Revenue Service through tax returns. However, the IRS will not have the authority to bring criminal charges or file liens against those who don't pay.
About 3 million of those required to pay fines in 2016 will have incomes below $59,000 for individuals and $120,000 for families of four, according to the CBO projections. The other 900,000 people who must pay the fine will have higher incomes.
The government will collect about $4 billion a year in fines from 2017 through 2019, according to the report.
Would the Founders Love ObamaCare?
Would the Founders Love ObamaCare?
THE RESISTANCE TO OBAMACARE IS ABOUT A LOT MORE THAN THE 10TH AMENDMENT.
The left-wing critics are right: The rage is not about health care. They are also right that similar complaints about big government were heard during the New Deal and the Great Society, and the sky didn't fall.
But what if this time the sky is falling—on them.
What if after more than a century of growth in the national government, starting with the Progressive Era, the American people are starting to push back. Not just the tea partiers or the 13 state attorneys general seeking protection under the 10th Amendment and the Commerce Clause. But something bigger than that.
Daniel Henninger discusses the widespread anxiety over the size of government.
The Democratic left, its pundits and academics criticizing the legal challenges to ObamaCare seem to be arguing that their version of our political structure is too big to change.
That's not true. The American people can and do change the nation's collective mind on the ordering of our political system. The civil rights years of the 1960s is the most well-known modern example. (The idea that resistance to Mr. Obama's health plan is rooted in racist resentment of equal rights is beyond the pale, even by current standards of political punditry.)
Powerful political forces suddenly seem to be in motion across the U.S. What they have in common is anxiety over what government has become in the first decade of the 21st century.
The tea party movement is getting the most attention because it is the most vulnerable to the standard tool kit of mockery and ridicule. It is more difficult to mock the legitimacy of Scott Brown's overthrow of the Kennedy legacy, the election results in Virginia and New Jersey, an economic discomfort that is both generalized and specific to the disintegration of state and federal fiscs, and indeed the array of state attorneys general who filed a constitutional complaint against the new health-care law. What's going on may be getting past the reach of mere mockery.
Constitutional professors quoted in the press and across the Web explain that much about the federal government's modern authority is "settled" law. Even so, many of these legal commentators are quite close to arguing that the national government's economic and political powers are now limitless and unfettered. I wonder if Justice Kennedy believes that.
Or as David Kopel asked on the Volokh Conspiracy blog: "Is the tax power infinite?"
In a country that holds elections, that question is both legal and political. The political issue rumbling toward both the Supreme Court and the electorate is whether Washington's size and power has finally grown beyond the comfort zone of the American people. That is what lies beneath the chatter about federalism and the 10th Amendment.
Liberals will argue that government today is doing good. But government now is also unprecedentedly large and unprecedentedly expensive. Even if every challenge to ObamaCare loses in court, these anxieties will last and keep coming back to the same question: Does the Democratic left think the national government's powers are infinite?
No one in the Obama White House, asked that in public on Sunday morning, would simply say yes, no matter that the evidence of this government's actions the past year indicate they do. In his "Today Show" interview this week, Mr. Obama with his characteristic empathy acknowledged there are "folks who have legitimate concerns . . . that the federal government may be taking on too much."
My reading of the American public is that they have moved past "concerns." Somewhere inside the programmatic details of ObamaCare and the methods that the president, Speaker Pelosi and Sen. Reid used to pass it, something went terribly wrong. Just as something has gone terribly wrong inside the governments of states like California, New York, New Jersey, Michigan and Massachusetts.
The 10th Amendment tumult does not mean anyone is going to secede. It doesn't mean "nullification" is coming back. We are not going to refight the Civil War or the Voting Rights Act. Richard Russell isn't rising from his Georgia grave.
It means that the current edition of the Democratic Party has disconnected itself from the average American's sense of political modesty. The party's members and theorists now defend expanding government authority with the same arrogance that brought Progressive Era reforms down upon untethered industrial interests.
In such times, this country has an honored tradition of changing direction. That time may be arriving.
Faced with corporate writedowns in response to the reality of Congress's new health plan, an apoplectic Congressman Henry Waxman commanded his economic vassals to appear before him in Washington.
Faced with a challenge to his vision last week, President Obama laughingly replied to these people: "Go for it."
They will.
As to the condescension and sniffing left-wing elitism this opposition seems to bring forth from Manhattan media castles, one must say it does recall another, earlier ancient regime
THE RESISTANCE TO OBAMACARE IS ABOUT A LOT MORE THAN THE 10TH AMENDMENT.
The left-wing critics are right: The rage is not about health care. They are also right that similar complaints about big government were heard during the New Deal and the Great Society, and the sky didn't fall.
But what if this time the sky is falling—on them.
What if after more than a century of growth in the national government, starting with the Progressive Era, the American people are starting to push back. Not just the tea partiers or the 13 state attorneys general seeking protection under the 10th Amendment and the Commerce Clause. But something bigger than that.
Daniel Henninger discusses the widespread anxiety over the size of government.
The Democratic left, its pundits and academics criticizing the legal challenges to ObamaCare seem to be arguing that their version of our political structure is too big to change.
That's not true. The American people can and do change the nation's collective mind on the ordering of our political system. The civil rights years of the 1960s is the most well-known modern example. (The idea that resistance to Mr. Obama's health plan is rooted in racist resentment of equal rights is beyond the pale, even by current standards of political punditry.)
Powerful political forces suddenly seem to be in motion across the U.S. What they have in common is anxiety over what government has become in the first decade of the 21st century.
The tea party movement is getting the most attention because it is the most vulnerable to the standard tool kit of mockery and ridicule. It is more difficult to mock the legitimacy of Scott Brown's overthrow of the Kennedy legacy, the election results in Virginia and New Jersey, an economic discomfort that is both generalized and specific to the disintegration of state and federal fiscs, and indeed the array of state attorneys general who filed a constitutional complaint against the new health-care law. What's going on may be getting past the reach of mere mockery.
Constitutional professors quoted in the press and across the Web explain that much about the federal government's modern authority is "settled" law. Even so, many of these legal commentators are quite close to arguing that the national government's economic and political powers are now limitless and unfettered. I wonder if Justice Kennedy believes that.
Or as David Kopel asked on the Volokh Conspiracy blog: "Is the tax power infinite?"
In a country that holds elections, that question is both legal and political. The political issue rumbling toward both the Supreme Court and the electorate is whether Washington's size and power has finally grown beyond the comfort zone of the American people. That is what lies beneath the chatter about federalism and the 10th Amendment.
Liberals will argue that government today is doing good. But government now is also unprecedentedly large and unprecedentedly expensive. Even if every challenge to ObamaCare loses in court, these anxieties will last and keep coming back to the same question: Does the Democratic left think the national government's powers are infinite?
No one in the Obama White House, asked that in public on Sunday morning, would simply say yes, no matter that the evidence of this government's actions the past year indicate they do. In his "Today Show" interview this week, Mr. Obama with his characteristic empathy acknowledged there are "folks who have legitimate concerns . . . that the federal government may be taking on too much."
My reading of the American public is that they have moved past "concerns." Somewhere inside the programmatic details of ObamaCare and the methods that the president, Speaker Pelosi and Sen. Reid used to pass it, something went terribly wrong. Just as something has gone terribly wrong inside the governments of states like California, New York, New Jersey, Michigan and Massachusetts.
The 10th Amendment tumult does not mean anyone is going to secede. It doesn't mean "nullification" is coming back. We are not going to refight the Civil War or the Voting Rights Act. Richard Russell isn't rising from his Georgia grave.
It means that the current edition of the Democratic Party has disconnected itself from the average American's sense of political modesty. The party's members and theorists now defend expanding government authority with the same arrogance that brought Progressive Era reforms down upon untethered industrial interests.
In such times, this country has an honored tradition of changing direction. That time may be arriving.
Faced with corporate writedowns in response to the reality of Congress's new health plan, an apoplectic Congressman Henry Waxman commanded his economic vassals to appear before him in Washington.
Faced with a challenge to his vision last week, President Obama laughingly replied to these people: "Go for it."
They will.
As to the condescension and sniffing left-wing elitism this opposition seems to bring forth from Manhattan media castles, one must say it does recall another, earlier ancient regime
Wednesday, April 21, 2010
The Truth About the Health Care Bill
A retired Constitutional lawyer has read the entire proposed healthcare bill.Share
Today at 4:20pm
The Truth About the Health Care Bill
A retired Constitutional lawyer has read the entire proposed healthcare bill.Share
Today at 4:20pm
The Truth About the Health Care Bills - Michael Connelly, Ret.
Constitutional Attorney
Well, I have done it! I have read the entire text of proposed House Bill
3200: The Affordable Health Care Choices Act of 2009. I studied it with
particular emphasis from my area of expertise, constitutional law. I was
frankly concerned that parts of the proposed law that were being discussed
might be unconstitutional. What I found was far worse than what I had heard
or expected.
To begin with, much of what has been said about the law and its implications
is in fact true, despite what the Democrats and the media are saying. The
law does provide for rationing of health care, particularly where senior
citizens and other classes of citizens are involved, free health care for
illegal immigrants, free abortion services, and probably forced
participation in abortions by members of the medical profession.
The Bill will also eventually force private insurance companies out of
business, and put everyone into a government run system. All decisions
about personal health care will ultimately be made by federal bureaucrats,
and most of them will not be health care professionals. Hospital
admissions, payments to physicians, and allocations of necessary medical
devices will be strictly controlled by the government.
However, as scary as all of that is, it just scratches the surface. In
fact, I have concluded that this legislation really has no intention of
providing affordable health care choices. Instead it is a convenient cover
for the most massive transfer of power to the Executive Branch of government
that has ever occurred, or even been contemplated If this law or a similar
one is adopted, major portions of the Constitution of the United States will
effectively have been destroyed.
The first thing to go will be the masterfully crafted balance of power
between the Executive, Legislative, and Judicial branches of the U.S.
Government. The Congress will be transferring to the Obama Administration
authority in a number of different areas over the lives of the American
people, and the businesses they own.
The irony is that the Congress doesn't have any authority to legislate in
most of those areas to begin with! I defy anyone to read the text of the
U.S. Constitution and find any authority granted to the members of Congress
to regulate health care.
This legislation also provides for access, by the appointees of the Obama
administration, of all of your personal healthcare -- a direct violation of
the specific provisions of the 4th Amendment to the Constitution
information, your personal financial information, and the information of
your employer, physician, and hospital. All of this is a protection against
unreasonable searches and seizures. You can also forget about the right to
privacy. That will have been legislated into oblivion regardless of what
the 3rd and 4th Amendments may provide...
If you decide not to have healthcare insurance, or if you have private
insurance that is not deemed acceptable to the Health Choices Administrator
appointed by Obama, there will be a tax imposed on you. It is called a tax
instead of a fine because of the intent to avoid application of the due
process clause of the 5th Amendment. However, that doesn't work because
since there is nothing in the law that allows you to contest or appeal the
imposition of the tax, it is definitely depriving someone of property
without the due process of law.
So, there are three of those pesky amendments that the far left hate so
much, out the original ten in the Bill of Rights, that are effectively
nullified by this law It doesn't stop there though.
The 9th Amendment that provides: The enumeration in the Constitution, of
certain rights, shall not be construed to deny or disparage others retained
by the people;
The 10th Amendment states: The powers not delegated to the United States by
the Constitution, nor prohibited by it to the States, are preserved to the
States respectively, or to the people. Under the provisions of this piece
of Congressional handiwork neither the people nor the states are going to
have any rights or powers at all in many areas that once were theirs to
control.
I could write many more pages about this legislation, but I think you get
the idea. This is not about health care; it is about seizing power and
limiting rights... Article 6 of the Constitution requires the members of
both houses of Congress to "be bound by oath or affirmation to support the
Constitution." If I was a member of Congress I would not be able to vote for
this legislation or anything like it, without feeling I was violating that
sacred oath or affirmation. If I voted for it anyway, I would hope the
American people would hold me accountable.
For those who might doubt the nature of this threat, I suggest they consult
the source, the US Constitution, and Bill of Rights. There you can see
exactly what we are about to have taken from us.
Michael Connelly
Retired attorney,
Constitutional Law Instructor
Carrollton , Texas
Today at 4:20pm
The Truth About the Health Care Bill
A retired Constitutional lawyer has read the entire proposed healthcare bill.Share
Today at 4:20pm
The Truth About the Health Care Bills - Michael Connelly, Ret.
Constitutional Attorney
Well, I have done it! I have read the entire text of proposed House Bill
3200: The Affordable Health Care Choices Act of 2009. I studied it with
particular emphasis from my area of expertise, constitutional law. I was
frankly concerned that parts of the proposed law that were being discussed
might be unconstitutional. What I found was far worse than what I had heard
or expected.
To begin with, much of what has been said about the law and its implications
is in fact true, despite what the Democrats and the media are saying. The
law does provide for rationing of health care, particularly where senior
citizens and other classes of citizens are involved, free health care for
illegal immigrants, free abortion services, and probably forced
participation in abortions by members of the medical profession.
The Bill will also eventually force private insurance companies out of
business, and put everyone into a government run system. All decisions
about personal health care will ultimately be made by federal bureaucrats,
and most of them will not be health care professionals. Hospital
admissions, payments to physicians, and allocations of necessary medical
devices will be strictly controlled by the government.
However, as scary as all of that is, it just scratches the surface. In
fact, I have concluded that this legislation really has no intention of
providing affordable health care choices. Instead it is a convenient cover
for the most massive transfer of power to the Executive Branch of government
that has ever occurred, or even been contemplated If this law or a similar
one is adopted, major portions of the Constitution of the United States will
effectively have been destroyed.
The first thing to go will be the masterfully crafted balance of power
between the Executive, Legislative, and Judicial branches of the U.S.
Government. The Congress will be transferring to the Obama Administration
authority in a number of different areas over the lives of the American
people, and the businesses they own.
The irony is that the Congress doesn't have any authority to legislate in
most of those areas to begin with! I defy anyone to read the text of the
U.S. Constitution and find any authority granted to the members of Congress
to regulate health care.
This legislation also provides for access, by the appointees of the Obama
administration, of all of your personal healthcare -- a direct violation of
the specific provisions of the 4th Amendment to the Constitution
information, your personal financial information, and the information of
your employer, physician, and hospital. All of this is a protection against
unreasonable searches and seizures. You can also forget about the right to
privacy. That will have been legislated into oblivion regardless of what
the 3rd and 4th Amendments may provide...
If you decide not to have healthcare insurance, or if you have private
insurance that is not deemed acceptable to the Health Choices Administrator
appointed by Obama, there will be a tax imposed on you. It is called a tax
instead of a fine because of the intent to avoid application of the due
process clause of the 5th Amendment. However, that doesn't work because
since there is nothing in the law that allows you to contest or appeal the
imposition of the tax, it is definitely depriving someone of property
without the due process of law.
So, there are three of those pesky amendments that the far left hate so
much, out the original ten in the Bill of Rights, that are effectively
nullified by this law It doesn't stop there though.
The 9th Amendment that provides: The enumeration in the Constitution, of
certain rights, shall not be construed to deny or disparage others retained
by the people;
The 10th Amendment states: The powers not delegated to the United States by
the Constitution, nor prohibited by it to the States, are preserved to the
States respectively, or to the people. Under the provisions of this piece
of Congressional handiwork neither the people nor the states are going to
have any rights or powers at all in many areas that once were theirs to
control.
I could write many more pages about this legislation, but I think you get
the idea. This is not about health care; it is about seizing power and
limiting rights... Article 6 of the Constitution requires the members of
both houses of Congress to "be bound by oath or affirmation to support the
Constitution." If I was a member of Congress I would not be able to vote for
this legislation or anything like it, without feeling I was violating that
sacred oath or affirmation. If I voted for it anyway, I would hope the
American people would hold me accountable.
For those who might doubt the nature of this threat, I suggest they consult
the source, the US Constitution, and Bill of Rights. There you can see
exactly what we are about to have taken from us.
Michael Connelly
Retired attorney,
Constitutional Law Instructor
Carrollton , Texas
Monday, April 19, 2010
ObamaCare will drive up costs, burden the healthy
NYT: ObamaCare will drive up costs, burden the healthy
Posted on April 18, 2010 by Ed Morrissey
From the Hot Air Blog
Perhaps the New York Times needs to change its well-known motto to All the News That’s Fit to Print … Eventually. In today’s edition, buried in its Regional section, comes an analysis of the health-insurance reforms imposed by the state of New York over fifteen years ago. Like ObamaCare, the state required insurance carriers to issue policies to people with pre-existing conditions as a means of making the industry more “fair” and imposed community pricing rather than risk-based premiums.
How did that work for New Yorkers?
About the way ObamaCare critics predicted:
New York’s insurance system has been a working laboratory for the core provision of the new federal health care law — insurance even for those who are already sick and facing huge medical bills — and an expensive lesson in unplanned consequences. Premiums for individual and small group policies have risen so high that state officials and patients’ advocates say that New York’s extensive insurance safety net for people like Ms. Welles is falling apart.
The problem stems in part from the state’s high medical costs and in part from its stringent requirements for insurance companies in the individual and small group market. In 1993, motivated by stories of suffering AIDS patients, the state became one of the first to require insurers to extend individual or small group coverage to anyone with pre-existing illnesses.
New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.
Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”
In fact, that death spiral has nearly wiped out the individual market insurance industry in New York. The state has the highest annual premiums for individual-market policies at over $6600 for single-beneficiary comprehensive plans and about double that for families. The employer-based market has fared better, but mainly because employers subsidize insurance and so keep healthy people in the plans.
ObamaCare supporters will argue that the federal insurance mandate will solve this problem, even though the mandate in Massachusetts hasn’t kept costs in line.
Interestingly, the New York Times also sounds skeptical:
The new federal health care law tries to avoid the death spiral by requiring everyone to have insurance and penalizing those who do not, as well as offering subsidies to low-income customers. But analysts say that provision could prove meaningless if the government does not vigorously enforce the penalties, as insurance companies fear, or if too many people decide it is cheaper to pay the penalty and opt out.
Under the federal law, those who refuse coverage will have to pay an annual penalty of $695 per person, up to $2,085 per family, or 2.5 percent of their household income, whichever is greater. The penalty will be phased in from 2014 to 2016.
It doesn’t take much to do the math here. If one has to pay $6600 per year for a comprehensive policy one doesn’t really need or pay $2500 on a salary of $100,000, which one will healthy, younger earners take? That assumes, of course, that the government will actually enforce the mandate, which Democrats insisted the ObamaCare bill couldn’t do.
The rebuttal to this will be that most young, healthy people earn much less and will get federal subsidies, but that still depends on them deciding whether to pay anything out of pocket at all for a comprehensive policy that clearly doesn’t suit them. That argument neglects the fact that the actual costs will still skyrocket, but that taxpayers will be on the hook for the subsidies, which will have to increase to match the premium hikes to remain effective. Instead of just having premiums based on rational risk assessments, we have the young and healthy subsidizing premiums for the older and less healthy, who then subsidize the younger and healthier through federal handouts. It’s an insane feedback loop.
If nothing else, this proves a couple of points that critics have made all along. The mandates are nothing more than a way to get the young to create a proxy welfare state by forcing them into a usurious insurance model. It does nothing to reduce actual costs, and in fact makes cost increases both more likely and more amplified.
Finally, this problem has unfolded in New York for years. The premium problem in individual markets — the very kind that ObamaCare requires — were well known to the New York Times. They had almost a year to report this during the health-care debate before a vote was taken. Instead, they report it almost a month after Congress passed the bill, and stuck it in the Regional section where national readers might have missed it. Shameful.
Posted on April 18, 2010 by Ed Morrissey
From the Hot Air Blog
Perhaps the New York Times needs to change its well-known motto to All the News That’s Fit to Print … Eventually. In today’s edition, buried in its Regional section, comes an analysis of the health-insurance reforms imposed by the state of New York over fifteen years ago. Like ObamaCare, the state required insurance carriers to issue policies to people with pre-existing conditions as a means of making the industry more “fair” and imposed community pricing rather than risk-based premiums.
How did that work for New Yorkers?
About the way ObamaCare critics predicted:
New York’s insurance system has been a working laboratory for the core provision of the new federal health care law — insurance even for those who are already sick and facing huge medical bills — and an expensive lesson in unplanned consequences. Premiums for individual and small group policies have risen so high that state officials and patients’ advocates say that New York’s extensive insurance safety net for people like Ms. Welles is falling apart.
The problem stems in part from the state’s high medical costs and in part from its stringent requirements for insurance companies in the individual and small group market. In 1993, motivated by stories of suffering AIDS patients, the state became one of the first to require insurers to extend individual or small group coverage to anyone with pre-existing illnesses.
New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.
Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”
In fact, that death spiral has nearly wiped out the individual market insurance industry in New York. The state has the highest annual premiums for individual-market policies at over $6600 for single-beneficiary comprehensive plans and about double that for families. The employer-based market has fared better, but mainly because employers subsidize insurance and so keep healthy people in the plans.
ObamaCare supporters will argue that the federal insurance mandate will solve this problem, even though the mandate in Massachusetts hasn’t kept costs in line.
Interestingly, the New York Times also sounds skeptical:
The new federal health care law tries to avoid the death spiral by requiring everyone to have insurance and penalizing those who do not, as well as offering subsidies to low-income customers. But analysts say that provision could prove meaningless if the government does not vigorously enforce the penalties, as insurance companies fear, or if too many people decide it is cheaper to pay the penalty and opt out.
Under the federal law, those who refuse coverage will have to pay an annual penalty of $695 per person, up to $2,085 per family, or 2.5 percent of their household income, whichever is greater. The penalty will be phased in from 2014 to 2016.
It doesn’t take much to do the math here. If one has to pay $6600 per year for a comprehensive policy one doesn’t really need or pay $2500 on a salary of $100,000, which one will healthy, younger earners take? That assumes, of course, that the government will actually enforce the mandate, which Democrats insisted the ObamaCare bill couldn’t do.
The rebuttal to this will be that most young, healthy people earn much less and will get federal subsidies, but that still depends on them deciding whether to pay anything out of pocket at all for a comprehensive policy that clearly doesn’t suit them. That argument neglects the fact that the actual costs will still skyrocket, but that taxpayers will be on the hook for the subsidies, which will have to increase to match the premium hikes to remain effective. Instead of just having premiums based on rational risk assessments, we have the young and healthy subsidizing premiums for the older and less healthy, who then subsidize the younger and healthier through federal handouts. It’s an insane feedback loop.
If nothing else, this proves a couple of points that critics have made all along. The mandates are nothing more than a way to get the young to create a proxy welfare state by forcing them into a usurious insurance model. It does nothing to reduce actual costs, and in fact makes cost increases both more likely and more amplified.
Finally, this problem has unfolded in New York for years. The premium problem in individual markets — the very kind that ObamaCare requires — were well known to the New York Times. They had almost a year to report this during the health-care debate before a vote was taken. Instead, they report it almost a month after Congress passed the bill, and stuck it in the Regional section where national readers might have missed it. Shameful.
Sunday, April 18, 2010
Friday, April 16, 2010
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