Wednesday, March 8, 2017

GOP Health Plan Follow-up

I had an extremely busy day at work and didn't get a chance to do this blog justice.  But I wanted to follow up on yesterday's post with some further thoughts.

Some of you readers had strong words to the effect that tax credits that rise with age would not be a very good idea in any way.  One reader had a very prescient comment that I incorporate here with names omitted for confidentiality reasons.  Emphasis added mine:

One thing I'd like to point out - if I were 25 again and had the choice of having to pay a huge amount of money now or face higher premiums later, I (being young and not fully understanding the consequences of my actions) would just not participate in the program at all, therefore taking even more people out of the 'healthy pool.' Would love to see some correlations between this plan and the aging boomer population too - essentially we want the next generation to pay for our mistakes, like every defunded pension plan in existence right now (my [union pension fund] being top of mind) that is on the verge of collapse.

That young people are not fiscally responsible is not news.  I part ways with fiscal-conservative scolding along the lines of "you didn't plan intelligently when you were young, so oh well, you're up the creek and it's you're fault."  Young people make bad decisions.  I know I made some bad ones.  Are people who make mistakes to be damned for life?

Anyways, the Times has follow-up on the issue today: 

While the tax credits in the Republican proposal are the most generous for older people — $4,000 for a 60-year-old compared with $2,000 for a 25-year-old — they end up covering less of an older person’s costs. As soon as next year, the Republican plan would allow insurers to begin charging older individuals much more than younger individuals. Insurers are prohibited today from charging the older person more than three times as much as the youngest, but the Republican plan would allow them to charge five times as much. A 64-year-old could see annual premiums increase by almost 30 percent to $13,100 on average, according to the S.&P. analysis.

So - with the prohibitions on pricing removed, any potential benefit from giving older health care customers a tax benefit is obviated immediately by huge price increases.

The young and healthy could save a good chunk of change by opting to buy the skimpiest of all plans:

Not everyone would lose out. Some younger adults would probably benefit the most from age-based tax credits and proposed changes that would allow insurers to offer them less expensive policies, such as those with less generous coverage.

Joshua Yospyn, 40, a freelance photographer in Washington, earns slightly too much to receive a tax credit under the Affordable Care Act and pays about $374 a month for his BlueChoice H.M.O. plan. The Republican proposal would provide him with an age-based tax credit of $3,000 a year, which would cut his current premium costs by two-thirds, to $1,488 from $4,488.

And as the reader's comment above illustrates, many younger people are likely to make that exact choice.  That means health insurance pools will have less money coming in... the end result:
The result, said Donald H. Taylor Jr., a health policy professor at Duke University, is that people who buy coverage are sicker, causing the cost of premiums to soar. “This looks like to me adverse selection on steroids,” he said. “I don’t see how it doesn’t crater the individual market.”

This being GOPcare, of course, the poor are going to pay most of all:

The proposal would also eliminate another important element of the subsidies, the financial assistance available for low-income people with their out-of-pocket costs, such as deductibles and co-payments. While many of the plans now sold through the Affordable Care Act marketplaces have large deductibles, the cost-sharing reductions available protect lower-income people from medical bills that could otherwise run into the thousands of dollars. Analysts say the lack of out-of-pocket assistance is likely to make any plan much less attractive to low-income people.

Just wanted to follow-up.  This plan, if it passes, will make us a sicker society, period, end stop.  There's often grey areas in policy debates; there's not a lot of grey area here. 

Pictures of adorable ponies inserted to cheer us all up.


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