Update on the Affordable Care Act (“Obamacare”)

Yesterday’s edition of Healthcare Triage looks at the Affordable Care Act, aka “Obamacare,” one year after its less-than-spectacular launch:

Link: http://youtu.be/v-LzLGjNi18

The speaker is Aaron Carroll MD, a pediatrician who also blogs and vlogs about healthcare. You can read his blog (with contributions from other folks) here: http://theincidentaleconomist.com.

To summarize what Dr Carroll has to say, the dire prediction about the ACA haven’t come true, and most people are better off. However, there are some problems he doesn’t touch on:

The law offers income tax credits to working people with income between one and four times the poverty level so that a policy in the “silver” category will cost no more than 9.5 percent of their income (in fact, no more than 2 percent for those making just above the poverty level). In addition, those with income between one and 2.5 times the poverty level can get help with their out-of-pocket spending. Those making below the poverty level are supposed to be covered by Medicaid, whose coverage was expanded by the ACA.

However, the Supreme Court made up a brand new law based on a “states rights” provision not actually found in the Constitution (seriously, the opinion makes no specific reference to any section of the Constitution or the Amendments) saying that states can unilaterally choose to follow the old Medicaid rules rather than current law, and a number of state governments, for purely partisan reasons, opted to do so. (I say “partisan reasons” because there is no economic justification for it. Accepting the expansion saves them money both immediately and in the long run.)

Consequently people making below the poverty line and living in the wrong state are out of luck.

People making over four times the poverty level face a less serious problem but one that still ought to be fixed. Just below that amount (around $46,000 for a single taxpayer with no dependents) their Silver-plan premiums are capped at 9.5 percent of income and they get a tax credit worth an average of more than $3000 per year, or covering over 40% of the premium. But if their income is just a tiny bit higher, they get no tax credit. It should phase out rather than cutting off abruptly.

In addition, while most states have seen very modest increases in health insurance costs for individuals buying insurance through the exchanges — markedly less than in previous years, in fact — insurers in a few states have announced significant increases. Thanks to the aforementioned tax credits, however, the majority of people will see little if any rise in the amount they pay. Interestingly, though, the “grandfathered” non-ACA-compliant policies that people can still renew for next year are increasing nearly 20%. That at least shows that it’s not the ACA that’s making the rates here go up.

The ACA has been more successful than not, but it isn’t perfect and ought to be improved in a few areas. Unfortunately too many Republicans in Congress are determined to block any improvements because they want to see the law fail. I’ll have more to say tomorrow about the reasons for this, but in the meantime see these articles from New York Magazine, Business Insider, and WBUR radio in Boston.

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