ACA, "No thanks I'll just pay the penalty"

[Ser Scot A Ellison]

Tracker,

I'm now confused. I thought one of the big selling points of the ACA was that insurance companies couldn't say no to new customers so long as the customer can pay the premium? Is that not the case? Can insurance refuse to cover because of when the coverage was sought?

Sci,

I don't deny it is foolish. But people have a funny waynof deciding for themselves where they want to put their money. The subjectivity of value is why penalties were needed in the first place. If everyone saw health insurance as a necessary expense then the penalties wouldn't be there.

[TrackerNeil]

Tracker,

I'm now confused. I thought one of the big selling points of the ACA was that insurance companies couldn't say no to new customers so long as the customer can pay the premium? Is that not the case? Can insurance refuse to cover because of when the coverage was sought?

The policies offered on the exchanges are guaranteed-issue, meaning you don't have to endure the medical underwriting process before getting coverage. However, that doesn't mean you can sign up whenever you want. The open enrollment period runs roughly mid-October through mid-December, and if you miss that window you must wait for the next. Again, there are certain "qualifying events", like the loss of employer-sponsored coverage, that exempt one from these enrollment periods.

[Ser Scot A Ellison]

Triskele,

Is it still a red herring if it hits me on the back of the head having come out of left field?

Tracker,

So, anyone can be insured so long as they sing up at the right time? Doesn't that leave people naked until the next open enrollment period hits?

[TrackerNeil]

Tracker,

So, anyone can be insured so long as they sing up at the right time? Doesn't that leave people naked until the next open enrollment period hits?

Unless they have a qualifying event, yes. That's to prevent people from gaming the system. Sure, it leaves them naked, but that's why they're being pushed to sign up as soon as the exchanges open.

[Ser Greguh]

SerG,

You're missing my point. Costs and value are subjective. To a healthy person the value of a health insurance policy may be less, to them, than the cost impossed by the penalty. This is true, in part, because they know they can't be denied coverage any longer. As such they chose to wait until they get sick to get insurance.

Part of the purpose of the penalties is to get healthy people into the pool to lower costs for sick people. If too many people see insurance as costing more, subjectively, than the value they get from health insurance costs will continue to go up. As such, penalties (to be effective) need to be stiffer.

I don't think I'm missing your point. I suspect you're missing mine. The "Subjectivity" of costs and values is a clause without meaning. Yes, technically everything is "subjective" (even and perhaps most rationally the value of money itself), but to the degree to which people's "subjective" interpretations of the costs and values of insurance translates to foolish behavior, the country as a whole suffers.

As tempted as I generally am to just sit back and let people continue to behave foolishly (go ahead, chase that inside straight against me because you "have a feeling"), the cooperative-game-theory aspects of an issue as large as health care for a country tend to weigh out, because I don't actually benefit from other people behaving foolishly, and in fact, nobody really does. Particularly since we do have socialized health care in this country, but only for the least cost-effective method for health care that we have available to us. Every time some numbskull who "thought they were healthy" wanders into the emergency room because of an issue that could have / should have been caught in a routine, insurance-covered checkup six months ago, we all are worse off.

So the ACA exists as a poke and prod from one side (the penalty), and a carrot on the other side (the ease and general standardization of making insurance available in the same overall piece of legislation). It's imperfect, and only really palatable because socialized health care was never really on the table, but the general principle is solid. The notion that it exists to "get healthy people to buy into the system" is an oversimplification at best, and rote foolishness at worst.

[Ser Scot A Ellison]

SerG.,

So if the purpose of the ACA was not to lower the cost of health insurance by broadening the pool what was its purpose?

[TrackerNeil]

But if one had to state one goal/purpose of the ACA, it is that it will expand access and end the discrimination against people based on health status. It is a socialist program, and thank God for that. It mostly ends the threat of financial ruin for all but the very wealthy due to health matters.

Word.

[TerraPrime]

Ser Greguh:

I feel bad for your Don Quixote task of infusing rationality in people's decision making process. Surely, as a former professional gambler, you know that most people do not make rational decisions. That is even without a political party hell-bent on exagerating the negative effects and sometimes outright lying about the piece of legislation to pollute the information pool.

[TrackerNeil]

I feel bad for your Don Quixote task of infusing rationality in people's decision making process. Surely, as a former professional gambler, you know that most people do not make rational decisions.

Gosh, yes! The failure to understand this aspect of human nature is, to me, the fundamental flaw of libertarian philosophy. Human beings are not primarily rational actors. We make decisions based on fears, hopes, delusions, prejudices, grudges, willful ignorance, and a host of other most decidedly non-rational bases. Any system predicated on the notion that human beings use rationality as a basis for their actions is doomed to fail.

[Fez]

The policies offered on the exchanges are guaranteed-issue, meaning you don't have to endure the medical underwriting process before getting coverage. However, that doesn't mean you can sign up whenever you want. The open enrollment period runs roughly mid-October through mid-December, and if you miss that window you must wait for the next. Again, there are certain "qualifying events", like the loss of employer-sponsored coverage, that exempt one from these enrollment periods.

Slight correction: Open enrollment for 2014 runs from October 1, 2013 to March 31, 2014; its every year after that where open enrollment runs from October to December.

ETA: And to your larger points: yes, exactly.

[IheartTesla]

Isn't lowering the cost of healthcare the job of the free market? Whyever would government want to get involved with that? It has always been about access to the 30 million who dont have any, and lowered health care costs are a bonus. Of course, the do-nothing approach would have resulted in costs continuing to balloon.

This is all old ground. Anyway, the CNN article appears not to be very rigorous with its numbers. The premiums they have appear to be a bit high for single people (I paid $1200/yr when I was single)

The other thing missing in this analysis is that we have 86% coverage without penalties. Is the argument that it will go below that 86%? How is that possible?

[NestorMakhnosLovechild]

Gosh, yes! The failure to understand this aspect of human nature is, to me, the fundamental flaw of libertarian philosophy. Human beings are not primarily rational actors. We make decisions based on fears, hopes, delusions, prejudices, grudges, willful ignorance, and a host of other most decidedly non-rational bases. Any system predicated on the notion that human beings use rationality as a basis for their actions is doomed to fail.

Not to derail, but pretty much any political system is predicated on that assumption - particularly democracy, which is predicted not just on the notion that people are able to vote rationally for their interests (demonstrably untrue, as people are not only bad at identifying their interests, but are often bad, on a basic factual level, at figuring out who actually supports the position they want), but also that the people who are voted into positions of great authority are ALSO going to act to fulfill the rational desires of voters.

[Tyrion's Third Wife]

Those numbers are wrong, and really should compare the bronze plans for those thinking of risking forgoing insurance altogether.

This is a much more balanced realistic view, IMO:

http://www.motherjones.com/kevin-drum/2012/06/buying-insurance-vs-paying-fine-whats-tradeoff

[Inigima]

I've seen a fair bit of talk in here about whether penalties will be raised. I was under the impression, via Slate this morning, that penalties go up annually as it is. Is that not the case?

[TrackerNeil]

Isn't lowering the cost of healthcare the job of the free market?

We gave the "free market" ample time to control costs. Of course, one could always argue that we just needed to wait another decade, but that sounds like a "true communism has never been tried" approach.

[TrackerNeil]

I've seen a fair bit of talk in here about whether penalties will be raised. I was under the impression, via Slate this morning, that penalties go up annually as it is. Is that not the case?

They do go up after a few years, yes, eventually to around $800 a year, I think.

[Fez]

I've seen a fair bit of talk in here about whether penalties will be raised. I was under the impression, via Slate this morning, that penalties go up annually as it is. Is that not the case?

They do. Its the greater of $95 or 1% of taxable household income in 2014, $325 or 2% of taxable household income in 2015, and $695 or 2.5% of taxable household income in 2016. For years after 2016, its $695 x annual rate of inflation or 2.5% of table household income.

ETA: And that's for each individual. So for a married couple in 2014 their combined penalty would be $190 or 2% of taxable household income, and etc.

ETA: And there are exemptions of course, for instance people who would have qualified for the Medicaid expansion but live in a state that didn't expand won't face a penalty.

[TerraPrime]

Those numbers are wrong, and really should compare the bronze plans for those thinking of risking forgoing insurance altogether.

This is a much more balanced realistic view, IMO:

http://www.motherjones.com/kevin-drum/2012/06/buying-insurance-vs-paying-fine-whats-tradeoff

Good article, provided his numbers check out.

[Ser Greguh]

SerG.,

So if the purpose of the ACA was not to lower the cost of health insurance by broadening the pool what was its purpose?

"Broadening the pool" does not in and of itself reduce health insurance premiums. Insurance doesn't really work that way. Even if the pool of people that don't currently have insurance are healthier than average (which I'm pretty sure is the opposite of reality), a health insurance company that's doing its job should have that taken into account in their actuarial tables, and such people would be allowed to purchase a plan that accurately reflected that low risk. That wouldn't lower everyone else's premiums, it just means that more affordable insurance would already be available to them.

The problem is precisely that many people have irrational opinions as to the status of their own health and thus the value of an insurance policy, as opposed to the insurance company, which makes its decisions based on hard actuarial tables. Not only is their resultant refusal to participate in the process bad for the insurance company, it's bad for society as a whole, since properly-moderated risk-pooling is big-picture win-win.

So the ACA exists as an incentive to promote people's participation in that win-win, both in terms of the mandate (the stick) and the guaranteed availability of certain policies that should be more than affordable to most (the carrot).

[TrackerNeil]

They do. Its the greater of $95 or 1% of taxable household income in 2014, $325 or 2% of taxable household income in 2015, and $695 or 2.5% of taxable household income in 2016. For years after 2016, its $695 x annual rate of inflation or 2.5% of table household income.

ETA: And that's for each individual. So for a married couple in 2014 their combined penalty would be $190 or 2% of taxable household income, and etc.

ETA: And there are exemptions of course, for instance people who would have qualified for the Medicaid expansion but live in a state that didn't expand won't face a penalty.

Thank you! This thread is the source of much valuable information.