walkitout (walkitout) wrote,
walkitout
walkitout

A Few Remarks about the Affordable Care Act

Taken from this:

www.fas.org/sgp/crs/misc/R41137.pdf

This is current, from June of last year. It's written by Bernadette Fernandez and and Thomas Gabe for the "Congressional Research Service". This is the Library of Congress' description of the "Congressional Research Service": http://www.loc.gov/crsinfo/

You should know, if you googled in here, that when I say "A Few", I'm usually lying. And when I say "Remarks", it's code for, "Expect frequent updates until I tire of the subject".

Beginning in 2014, there will be Federal tax credits available to make health care premiums more affordable for "people" (individuals, families, "Tax Reporting Units", wtf) who are between 133% and 400% of the Federal Poverty Level. The people who find themselves unluckily below 133% have another path to health care provided. This is the "carrot" to go get some health care (which your employer is not providing). The "stick" is tax penalties if you _don't_ go get some health care. This post is an assessment of the crunchiness, juiciness, color and palatability of the carrot. It is NOT about the stick.

First, observe that companies which already offer health care coverage, unless that coverage is unusually expensive to the employee and/or unusually crappy, will feel no particular change under the law. Very small companies (fewer than 50 Full Time Equivalent employees) will also experience no effect. The FTE rule is AWESOME. It should prevent companies from trying to dodge the effects of the law by making everyone go part time. Making full time people go "part time" for insurance avoidance purposes would be incredibly lame, since history suggests that companies which pull that kind of crap also engage in labor law violations associated with reporting overtime and so forth.

To assess the quality of the health insurance on offer, "levels" of insurance have been devised (bronze, silver, gold, platinum) that represent an actuarial assessment of the value -- that is, what fraction of the customers health care costs are covered under the plan (60-70-80-90). "Unusually crappy" health care from an employer = worse than silver.

To deal with the "unusually expensive" part of the health care issue, there are fractions of AGI levels that self-only coverage can cost depending on AGI vs. FPL. Sorry about that. I'm going to try English. There's a sliding scale of what your health care premium can cost, whether you get it from your employer or an exchange. If you make between 133% and 300% of the Federal Poverty Level, self-only premium for Silver (see above) is supposed to run between 3% and I forget. Between 300% and 400% of FPL, it goes up to 9.5%. But when assessing employer provided insurance for "affordability" that's _self-only_ -- a family of 4 making just under 400% of the Federal Poverty Level could still be paying decent chunk for the whole family if they get their health care through their employer. OTOH, they _are_ making $70K+, so on the scale of People We Worry About, they rank lower than people who are making ... a lot less. (And I believe they retain the option to get the earner's health insurance through the employer and a family plan on the exchanges, which should at least cap things at, worst case, 2x 9.5%, but I'm speculating here. There may be a hole that will require some rule making to deal with.)

See Figure 2 in the above referenced article.

If you have to go buy insurance yourself, the same levels apply, but they apply on the family/Tax Reporting Unit. (Does this make working for a small -- <50FTE -- company that doesn't offer health insurance a better deal for a family of 4 making less than 400% of the FPL than working for a large company that offers health insurance that squeaks in at 9.5% self-only, and charges the same for each additional family member? Maybe! Assuming you can afford to front the cash to the health insurance company and wait for your tax credit, or assuming the withholding calculation accounts for it.).

And remember, the credits that make up the difference between what you have to pay and what the formula says you should have to pay apply to _silver_ plans. You buy a Platinum Plan, we're not going to help you with the difference between silver and platinum.

Table 4 shows how the reality of what you pay for annual health care premiums interacts with what the IRS kicks back to you in a tax credit.

For a family of four, making 350% of the Federal Poverty Level, or $78,225 (48 contiguous states -- it's higher in Alaska and Hawaii), the maximum premium contribution as a percentage of income is 9.5%. If the actual premium paid is $13,500, then subtracting 9.5% (or $7,431) gets you a credit on your tax return of $6,069, assuming I understood the table and transcribed things correctly. (Again, this is the you-bought-it-option, not the your-employer-provided-it option.)

What do you get for this? A silver plan is supposed to cover 70% of your health care costs. But there will be all kinds of "silver" plans with costs all over the place. So the ACA and/or associated rule making has designated the "second lowest-cost silver plan" as the reference plan. Silver health plans will likely exist in a variety of structures (some with high deductibles, some with higher co-pays, etc.), which should give consumers the ability to pick one that lets them get a little bit better deal but stay close to the "reference plan" cost and value. (<-- That is my speculation.) There is a bunch of rule making associated with what plans _must_ cover.

The ACA recognizes that insurers charge more for people who are older than people who are younger and sets limits on the differential. The ACA recognizes that some geographical areas are more expensive (beyond the contiguous states thing) than others and that insurers charge more for people in those areas than in others. I believe the ACA limits that, but I'm not so sure.

If you make more than 400% of the Federal Poverty Line, congratulations! Also, you're going to get jack in terms of credits from the IRS. You'll keep paying what you pay. Sorry.

There's a marriage penalty, and it gets worse the more your premium exceeds the 9.5% cap (this is only for people below 400% of FPL, obvs, and again, only those buying for themselves, not getting it through an employer). Life sucks if you are old. Once people adjust to this, efforts to raise the age of eligibility for Medicare are going to result in, erm, verbal if not physical violence, because we'll have this huge group of people who vote regularly, who are below 400% of FPL, who have insurance premiums that substantially exceed the 9.5% can -- and who are married. They will be pissy, and they will be looking at Medicare as an opportunity to get out from under a substantial burden that they feel is disproportionately on them. (And the pissy group will include some people whose employer provided coverage is "affordable" at 9.5% self-only, but charges a gargantuan amount for family members.)

Read the whole thing; my summary is quite pathetic by comparison.
Tags: health, politics
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