Tuesday, March 7, 2017

GOP Health Plan Tosses Working Families Off The Cliff

Cartoon by Paul Fell - GOP Health Plan
Now that the GOOPrs have revealed this new "repeal and replace"  plan for Obamacare, the sheer devastating effects on poor and working class families, individuals have become apparent.  As I noted in previous posts exposing this fraud, the new plan leans heavily on tax credits and health savings accounts- neither of which is much use or benefit to a lower income worker or family.

For example, the typical annual tax credit for a 30-year old will be $2,000 and for a 60 year old $4,000. So, the former earning $50,000 a year after taking his standard deduction ($6,350) gets to deduct another $2,000. That leaves him paying tax on  $41, 650.  As a younger person he probably would spend no more than $1,000 on health care - if that- so the tax credit would cover maybe half of his health care expenses.

Since most younger people have very little by way of health care spending, it would make sense for them to use the tax credit  in the Republican plan to buy a catastrophic plan, that may have a deductible of $10,000 or $12,000 or more. This plan would cost little and allow them to put most of the credit in a health savings account (HSA).

Now, look at the 60 year old, still too young to go on Medicare. His only choices are high deductible plans and COBRA if he can get it. The first will not kick in until he shells out $10,000 or so, and the latter costs nearly $650 a month.  A $4,000 tax credit will do almost nothing for him, especially if he is diagnosed with something like prostate cancer. If my experience is any guide, the full costs that would be paid for a standard treatment would be nearly $50,000. (Of course, when I was diagnosed I was fortunately on Medicare which paid most of the treatment costs, except for about $1,200).

The Centers for Medicare and Medicaid Services projects that health care costs in 2017 will average $10,800 this year. The average for cost for the ten percent of most expensive patients is $54,000. The average cost for the least expensive 50 percent is just $700.  The GOP plan adds insult to injury for over 60s, by allowing insurance companies to charge them five times more for premiums than young, healthy millennials.

As one website (Axios) assesses the differences between younger and older people on  the new tax credits vs those for Obamacare:

  • Younger, wealthier people fare better under the tax credit system. That's partially because Obamacare subsidies phase out at 400 percent of the federal poverty level, which means people who make more than that get no federal assistance. Tax credits would be given to everyone on the individual market, regardless of income.

  • Older, poorer people would pay more — sometimes a lot more — under the GOP plan. While older people can currently pay three times as much as young people in premiums, the tax credit only doubles between the highest and lowest age brackets.

  • The only people who would be interested in buying conventional insurance policies would be people with high medical expenses. Insurers would then price these policies to reflect the anticipated costs. This means that they would have to cost tens of thousands of dollars per person. Most of these( mainly older)  people will not be able to afford these plans. The credit proposed by the Republicans will not go far towards meeting the cost of policies for these over 60 years old who are bound to have more health costs, say from prostate or breast cancers.

    And tax credits are not like actually getting the money in the hand,  say like $4,000 in an annual subsidy. All a tax credit does is reduce you TAX exposure. Same thing with an HSA,  In  a post last year, I cited a one family from California with an AGI  of $100,000/ yr. and an autistic child who would only garner a benefit of $3,300 via use of tax credits. Barely one tenth of what they needed to cover annual  medical costs.

    HSAs primarily benefit affluent people who can afford to save more.  In other words, you need to have ample disposable income to shell out of pocket for your care, and then you can make effective use of the HSAs. But if you're a Walmart or Burger King worker, that's about as pie in the sky s expecting to win your state lotto just as your health care is demolished.

    As for the GOP claim of retaining the two prime ACA benefits: i) allowing access for those with pre-existing conditions, and ii) allowing kids to stay on parents' plan until age 26, that is more hype than anything else.   Without the "individual mandate"  requiring all citizens to purchase insurance, these benefits fall through. There will not be the money, enhanced risk pool of patients, to support them. (The Internal Revenue Service will no longer require people to answer a question on their tax returns about whether they had insurance the previous year. So no tax penalty will be forthcoming). When fewer people, especially the young and healthy, buy insurance (or at least pay tax penalties), overall costs go up, because the people who do sign up tend to need more medical care.

    What will happen? In the first instance insurance companies will respond by raising premiums, maybe 20-25 % per year, and also raising deductibles.  In the second case, we know that 'bombs' may be planted in the fine print of the policy, e.g.  pre-existing conditions to be covered but only if the person has been on such a plan for no less than 18 months of continuous coverage. Ultimately, one can surmise that the families that would most benefit will be priced out of their health insurance. It's all a matter of the numbers.

    The GOP plan also wants to slash spending on the Medicaid aspect of ACA by 2020. This will be by giving states the option of a "block grant" or a per capita allotment. So here in Colorado, for example, that may mean allocating the state a fixed amount for next year of $100m. That then will have to suffice to cover the needs of some 125,000  citizens, mainly frail elderly, poor, unemployed or under-employed. But if those people normally need some $4,000 a year each for their medical needs, just doing the math discloses the shortfall will be nearly a factor 5 less than needed ($500m vs. $50m).

    In addition, the GOP plan targets Medicaid reimbursements for Planned Parenthood, to the tune of $500m a year. These are for services that include: cancer screenings, prevention and treatment of sexually transmitted diseases, and contraception (which has helped lower the teen pregnancy rate to its lowest in years).. Abortion plays no part in the reimbursements so that, effectively, what the GOP plan does is punish the 2.6m low income women on Medicaid. Bad enough given the GOP plan freezes Medicaid enrollment and a puts cap on Medicaid funds.

    This means all those affected would be tossed into "high risk pools".  This means they can be charged up to double the cost of those with no serious ailments.  As a matter of record, in the recent past it was found that in more than 30 states that had such high risk pools net losses added up to more than $1.2 billion. That was in 2011, the height of such pools before the ACA took effect. Most of these pools also had lifetime and annual limits on coverage. So, if you got breast or prostate cancer, for example, your coverage might be capped at $25,000 a year whereas you needed at least $50,000 for full tests (e,g. followup biopsies) treatments.  In addition, waiting periods were imposed of up to a year to get even this limited plan.

    So no wonder some GOOPrs (mainly in blue states or blue districts) are worried that "the plan doesn't provide enough stability and certainty for individuals and families who are in the Medicaid expansion program" Well, duh!

    By contrast the current incarnation of the ACA pays for the health care of everyone who is eligible. During recessions, when the number of people in poverty increases, the government spends more. Without that flexibility built into Medicaid, Congress would have to vote to give states more money when health care costs rise. (Say if there is an outbreak of Avian flu).  But politically, that's an “impossible dream” - at least so long as the GOP controls the purse strings with majorities in congress.

    The only "good" news is that the Repukes are facing off in two factions, one more "moderate" which wants this perfidy passed, and another set of right wing ideologues who are dug in to stop it  - they believe it is too much "Obamacare lite".  Thus, as one wag put it, we have the two sides haggling over how much misery they will inflict on the most vulnerable citizens, including the Trump voters in coal country.

    Welcome to the brave new world of Republican 'repeal and replace', supposedly governed by the principles of the "free market".  But as MSNBC Business specialist Ali Yelshi recently pointed out the free market has no interest in insuring old people and the sick. Without government dictates in forming risk pools - where the healthy help pay insurance costs for the sick or elderly - it simply doesn't work. This is why Paul Ryan is trying to peddle piffle on the American people with his yammer about "choice". Yeppers, "choice" on the speed with which you want to go to the grave because Ryan and his gang have cut $15 m from Medicaid.

    Just keep your fingers crossed you don't get a serious cancer from drinking water laced with all the coal waste Trump has allowed to be dumped into rivers via one of his recent EOs. Or, the benzene and perchlorates Scotty Pruitt will now permit dumped into mountain streams, reservoirs under new EPA water rules.

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    1 comment:

    Apu Mridha said...

    Thank you for sharing such an amazing and informative post. Really enjoyed reading it. :)


    Health Plan Administration