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Taking Advantage?

November 1st, 2013
You often seem to hear this kind of story from some Obamacare opponents:
So, I get this letter from my health plan. It says I can't keep my current coverage because my plan isn't good enough under Obamacare rules. It tells me to go to the exchange or their website and pick a new plan before January 1 or I will lose coverage. ... Now, my plan covers about everything. Never had a procedure for either my wife or myself turned down. Wellness benefits are without a deductible. It covers mental health, drugs, maternity, anything I can think of. The new plan would have a deductible $500 higher than the one I now have and a lot more if I go “out-of-network” inside the rest of the Blue Cross national network. ... Thankfully, my Blue Cross plan is offering me an “early renewal” which means I can keep this plan I really like until December 2014—at which point my beloved health plan is toast. My health insurance company is doing everything they can—this is not their fault.
Reports like this make me more than just a little bit suspicious. What sticks out here is the claim that the insurance plan the person now has is more or less perfect, and they are being forced to pay more for a worse plan. Well, if so, then what exactly is making their current plan non-compliant with the ACA relative to the inferior plan? That does not seem to make any sense. I see two possibilities: One is that insurance companies are using the ACA to defraud their customers, to dump people who have advantageous plans that the carriers would rather shed. When I see stories like the ones above, I never see any indication that the person in question did any investigating at all to discover why their current plan is non-compliant or why their carrier cannot give them only a slight adjustment to make the plan compliant. That would be the first thing I would do: call the insurer and ask what was wrong with my current plan. I have the feeling that insurers are straining hard to find faults with so-called “Cadillac” plans so they can cancel them and save money. I would not be surprised if many such cancellations are fraudulent. Or that if the plans do fail legitimately it may be on some small point would could easily be repaired and the current policy continued—but the carrier, again, would rather dump these people and therefore throw up their hands and make the false claim that “there's nothing we can do.” The other possibility is that the writers of sad stories such as these are leaving out key facts—like, for example, what was non-compliant about such perfect plans. It had to be something—so what was it? And can we be certain that they actually found all the options regarding new plans they could sign up for? Or is he being lied to? We recently heard Made-for-Fox-News stories of people who say that their insurance agents assured them they would have to pay higher premiums that sound suspiciously like the one detailed in the story quoted above—but which a cursory check showed were untrue, and better plans existed which the people had not found. The writer quoted above does not make clear that he actually checked things out for himself; could it be that he only checked with an agent who was trying to scam him? Or is the person simply yet another anti-Obamacare crusader who is either exaggerating, lying by omission, or outright making crap up? Looking at other posts on the quoted blog, it sure seems that this guy is rather vociferously opposed to Obamacare and is not inclined to treat it objectively. I'm not saying that he can't be 100% informed and 100% honest, maybe he is. I'm not saying that the insurance companies can't be honestly doing what the law requires and (as the write suggests) are truly trying their best to help their customers. What I'm saying is that stories like these, because of what they say and what they don't say, really sound like something else is in play here.

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  1. Troy
    November 1st, 2013 at 11:02 | #1

    tough to know, but the absence of any numbers other than “$500 more” and 66% more raises flags.

    there’s also the issue that the new plans have to take all applicants. This alone will result in “rate shock” unless one qualifies for the subsidies, the “Affordable” part of PPACA.

    Also, the scam the insurance companies are doing is trying to re-enroll their individual beneficiaries in these captive plans w/o any tax subsidies since they don’t want to lose them to other providers on the exchange.

    Looking at coveredca, I see the silver plan for 2 people aged 60 (how old is this guy anyway??) is $1600/mo (!) (I gave them $80,000 in income so they don’t get any subsidies, LOL — if they were making $40k they’d see a $300/mo premium after $1300 tax credit — now that’s “affordable”!)

    This is a blue cross PPO like what the guy wants. $4000 family deductible, $12,700 out-of-pocket maximum.

    No numbers from this guy, who cares. BSers gonna BS.

  2. Troy
    November 1st, 2013 at 11:54 | #2

    One thing though that I’ve seen people — well “Digby” actually — mention, is that PPACA really adds to the effective marginal tax burden the upper middle class are hit with in this country.

    Tax subsides by income level:

    $40k $16,400 (making “bronze” level for the above 60 yo couple just $2/mo!)

    But with a $50k income, the subsidy drops $1,400 to $15,000, a 14% marginal tax increase.

    Same deal with $60k, the subsidy falls another $1000 to $14,000

    But when the subsidies run out at the 400% poverty level line, things get horrendous:

    Family of 2 making $62k gets a $13,800 tax credit, but if they make $100 more that year, THEY GET NOTHING!

    Kaiser’s subsidy calculator with these numbers confirms what coveredca.com is saying.

    PPACA may or may not be enough to get me to stay in the US. Certainly as a 40+ yo it’s a good deal for me, but our system is so nuts I think I’d be better off moving back to Japan, or trying my luck in Denmark or something.

    I can learn how to make Chipotle-style braised beef, and hell, the money I’ll save living in Japan can probably pay for a monthly CARE package from home.

    Pretty weird how prices haven’t risen much in Japan since I was first there in 1992, while here in the US everything is up ~75% or so since then:

    http://research.stlouisfed.org/fred2/graph/?g=nWM

    red is rents, up 80% since 1992
    blue is food, up 70% since 1992

    Here’s Japan:

    http://research.stlouisfed.org/fred2/graph/?g=nWS

    blue is housing, up less than 10% since 1992 (but down since 1998)

    red is food, flat, largely thanks to the strong yen I guess, and the population aging out of prime consumption years:

    http://research.stlouisfed.org/fred2/series/LFWA25TTJPM647S

  3. Troy
    November 1st, 2013 at 12:09 | #3

    oops, here’s a better graph of the falling population of Japan (I forgot young adults):

    http://research.stlouisfed.org/fred2/graph/?g=nWU

    Stunning! 1 out of 7 people, just . . . disappeared!

    Japan certainly is a curious place, economics-wise; I certainly can’t make heads or tails out of you guys’ prospect.

    (If the US can reject the tea party eruption, we might be OK, otherwise, we’re f’d — but I can’t really say if Japan is f’d one way or the other . . . as long as the elderly and economically helpless can be fed, housed, and hospitalled, Japan should be OK, since a falling population can be a more efficient population, as the economic margin is abandoned)

  4. Troy
    November 5th, 2013 at 02:15 | #4

    heh, Ezra Klein said the same thing I did about “taking all applicants”:

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/04/the-trouble-with-obamacares-most-popular-promise/

    “But the premiums are much lower because the insurer is keeping out the people who their actuarial models say will need the plan most.”

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