Good news: HealthCare.gov's shop-only feature is now all you could wish

In the darkest days of HealthCare.gov's dysfunction, I was preoccupied for a time by the partial workarounds enabled by third-party informational sites like ValuePenguin and HealthSherpa. ValuePenguin in particular offered (and still offers) a near-complete and accurate substitute for the informational functions of HealthCare.gov: it will calculate your subsidy and show you all available plans, accurately priced, with plan summaries.

HealthCare.gov at first, famously, had no pre sign-in informational feature allowing users to scope out options if they could not register, as most couldn't. When that feature was hurriedly added, it at first referred people to the Kaiser subsidy calculator, rather than incorporating its own subsidy calculation. It also gave out misinformation, at least for me in New Jersey: failing to query about age, the site quoted prices at a middle-range age without disclosing that it was doing so. In my case, the quoted prices were half to two-thirds of the actual prices, which I found on ValuePenguin and confirmed with the insurers.

The Wall Street Journal's narrow view of narrow networks

I have see-sawed back and forth between respect for the Wall Street Journal's healthcare reporters and intimations that WSJ coverage of the Affordable Care Act has been skewed toward the negative.

Today's front-page story by Timothy Martin on the prevalence of "narrow networks" in plans offered on the ACA exchanges certainly emphasizes the negative -- without adequate context, in my view.

First, consider the broader context. News this weekend was full of "ACA signup surge" headlines: 1.1 million people have enrolled in plans via HealthCare.gov, and about 2 million overall have enrolled in ACA plans when state exchange totals (not yet fully tallied for the pre-Christmas surge) are added in.  That's well off original projections but signals a significant recovery and acceleration. Today's front-page Journal story is the first since these numbers came in, and mentions them only in passing.

Fair enough, perhaps. The story is about "narrow networks" -- ACA plans that exclude access to many doctors and hospitals within the coverage area. The narrative is built on a McKinsey study finding that 70% of silver plans offered on the ACA exchanges are "narrow" or "ultranarrow" as defined by the study: offering access to fewer than 14 hospitals.

The ACA is killing off a college plague: junk student insurance

One type of junk health insurance that the ACA is doing away with is the kind of crappy policy that many colleges used to push on their students. (There is one loophole extended to Jan. 1, 2015, explained below.)  BusinessWeek exposed this scam in 2008:

More than half of the insurance plans recommended by colleges offer benefits of $30,000 or less, according to a survey published in March by the General Accounting Office, an arm of Congress. Many plans have further limits that prevent payout of even modest maximums. While two-thirds of the country's more than 17 million college students have coverage from a parent's employer or their own job, many of the rest may be vulnerable if they suffer a serious illness or accident. With premiums and restrictions increasing under employer-provided plans, a growing number of parents are shifting children to college-sponsored coverage. But "when a student gets gravely sick, $30,000 in benefits is unrealistically low," says Alan Sager, a professor at Boston University's School of Public Health.

Free market visionary foresees healthcare apocalypse

Free market fundamentalist John H. Cochrane gave himself a Christmas gift on the Wall Street Journal op-ed page on Dec.25, allowing himself to anticipate the Affordable Care Act's certain imminent demise. Then, like a Left Behind acolyte imagining the apocalypse, he moved on to a vision of the new healthcare heaven and earth (liberally adorned with those free market halos, stock tickers):

We need to permit the Southwest Airlines, LUV -0.18% Wal-Mart, WMT +0.42% Amazon.com AMZN +0.95% and Apples of the world to bring to health care the same dramatic improvements in price, quality, variety, technology and efficiency that they brought to air travel, retail and electronics. We'll know we are there when prices are on hospital websites, cash customers get discounts, and new hospitals and insurers swamp your inbox with attractive offers and great service. 

The Affordable Care Act bets instead that more regulation, price controls, effectiveness panels, and "accountable care" organizations will force efficiency, innovation, quality and service from the top down. Has this ever worked? Did we get smartphones by government pressure on the 1960s AT&T T +0.30% phone monopoly? Did effectiveness panels force United Airlines and American Airlines to cut costs, and push TWA and Pan Am out of business? Did the post office invent FedEx, FDX +1.01% UPS and email? How about public schools or the last 20 or more health-care "cost control" ideas? 

An all-too-hidden benefit in ACA insurance

Eugene R. Anderson, a pioneer in insurance coverage litigation for policyholders for whose firm I've long worked, was fond of saying that insurance is a unique product. You pay up front, and you get what you pay for much later, if ever.

That's less true of health insurance than of most other forms of insurance, since we all need some healthcare in most years. But it's true of high-deductible health insurance.  And that may prove a problem for public perception of the Affordable Care Act.

What subsidy cliff? Jared Bernstein and Dean Baker defend the Affordable Care Act

I spent my last post peering over the edge at various points of the Affordable Care Act's subsidy cliff -- the income cutoff beyond which shoppers for health insurance are ineligible for subsidies.  I was prompted by a New York Times article spotlighting  who stand to lose most by this cutoff: middle aged and older, with incomes just over the line. In brief: if you're 27 and single, premium subsidies fade out gradually. If you earn one dollar more than the subsidizable limit, it may cost you $100 per year. If you're 55 and looking to cover a family of four, however, that extra dollar may cost you almost $9000 in subsidies.

While I had a couple of quibbles with the Times article, I thought it was fair.  The subsidy cliff is a real design flaw. A pair of 55 year-olds covering a 23 year-old son or daughter in New Jersey with an income of $79k shouldn't have to pay $1300/month for rather crappy insurance, which is what they would pay in Essex County, NJ.

I was somewhat taken aback, then, to discover that the fiery Dean Baker and the more mild-mannered Jared Bernstein both took rather furious issue with the Times article (by Katie Thomas, Reed Abelson, and Jo Craven McGinty). Baker's rhetoric is harsher than Bernstein's, but I think he does have a point. Bernstein's rebuttal strikes me as more of a reflex partisan pushback.* Take his opening salvo:

The ACA's subsidy cliff for older buyers

The New York Times quite rightly highlights* the plight of older ACA exchange shoppers who fall over the "subsidy cliff"  -- that is, earn just enough to be ineligible for premium subsides but are subject to high premium prices because they're older.

The article's poster family is in the worst possible situation as far as the ACA is concerned: 50-something couple, two kids, no employer-based insurance, and an income just over the subsidy line. You could say they're not representative, because they're worst-placed -- but that, in a way, was the point. Winners and losers should not be separated by $1000 in annual income.

There is a serious flaw in the ACA subsidy formula. If you're young and single, subsidies taper gradually. If you're 50something, they fall to zero abruptly.  If you're fiftysomething with kids, they fall very abruptly. That's because premium prices (and thus subsidies) are higher for older adults, and subsidies (if you qualify) rise with each additional person covered by the plan. If there's three or four or five of you, and you don't qualify, you lose effectively three or four or five subsidies. It's primarily age that carves the cliff, though -- especially for two older adults.

Self-employed? That pre-ACA health insurance deduction is still there...

Self-employed and seeking health insurance? Call an accountant.

Everyone who's paying attention knows that shoppers on the ACA exchanges are eligible for premium subsidies if their income is under 400% of the Federal Poverty Level  (FPL) and the benchmark silver plan in their area would cost them more than 9.5% of their income (for young people in states with low premiums, subsidies may fade out somewhere under 300% FPL).

Equally important for those who qualify are additional subsidies to reduce deductibles and maximum yearly out-of-pocket costs. As I pointed out in a prior post, these subsidies have hard break points: they bump up at income levels of $17,235 and $22,980 and phase out at $28,775. Since self-employed "profit from business" is notably malleable, and since retirement contributions come off the Modified Adjusted Gross Income (MAGI) used to calculate subsidy eligibility, the low income self-employed are well advised to keep an eye on those break points.

There is in fact a third dip for the low-income self-employed -- and a longstanding major benefit for those with higher incomes. It's the self-employment health insurance deduction. If you're self-employed and buying insurance for yourself and/or your family on the individual market, you can deduct the full cost of the insurance from your MAGI. That is, if your self-employment income exceeds the cost of insurance after various other deductions:

If only Obama would say what he's never stopped saying. If only he would do what he's done.

Perhaps inevitably, at every political stress point liberals knock themselves out urging Obama to say precisely the things he's been saying nonstop since he first appeared on our horizon. The latest to succumb to the temptation is Michael Tomasky:

...politically I don’t think fairness is enough. Average Americans care about fairness, but not really all that much. People who have incomes comfortably above the median but who still aren’t rich are going to suspect that fairness means something is coming out of their hide. What they do care about, though, is growth. Everybody from Bill Gates to his janitor wants the economy to grow. So the case for these programs that Obama needs to make consistently going forward is not the case for their fairness, but the case that these policies, and not tax cuts for the wealthy or more draconian domestic budget cuts or less regulation, will promote growth.

Yup, if only Obama would say something like "in America, our prosperity has always risen from the bottom-up" and make the case that prosperity is not sustainable when inequality is rising. As he did in Raleigh, NH in June 2008:

We've done this because in America, our prosperity has always risen from the bottom-up. From the earliest days of our founding, it has been the hard work and ingenuity of our people that's served as the wellspring of our economic strength. That's why we built a system of free public high schools when we transitioned from a nation of farms to a nation of factories. That's why we sent my grandfather's generation to college, and declared a minimum wage for our workers, and promised to live in dignity after they retire through the creation of Social Security. That's why we've invested in the science and research that have led to new discoveries and entire new industries. And that's what this country will do again when I am President of the United States.

 And in Georgetown in April 2009:

The long and the short of income inequality

Ezra Klein made a splash a few days ago by arguing that Obama is wrong to call rising inequality the defining challenge of our time, asserting that jobs should take precedence: "Growth simply isn't producing enough jobs. This is a more severe and more urgent problem than inequality.

Today, Paul Krugman counters that inequality that the president was right -- first because stagnant incomes may have contributed to the debt crisis and are now depressing consumer demand, but more fundamentally, because the wealthiest have converted their disproportionate economic power into disproportionate political power, corrupting the country's ability to address its policy challenges.  The  the super-0rich, Krugman charges, triggered the financial meltdown by building a bipartisan consensus for financial regulation -- and have crippled the recovery by demanding austerity.

Klein's binary choice between addressing unemployment or austerity seems fundamentally mistaken to me, I would supplement Krugman's analysis with research by Peter Turchin (thanks, T. Greer), who has identified very long-term cycles of expanding and contracting inequality, and tied them chiefly to the supply of labor:

Young, self-employed and seeking health insurance via the ACA exchanges? See an accountant

A good number of Americans who will be shopping for health insurance on the ACA exchanges are self-employed.  A 2007 Commonwealth Fund study found that 34% of buyers on the individual market for health insurance were self-employed (p.3). In 2012, about 15 million Americans were self-employed.

Doubtless many of the younger Americans subject to "rate shock" on the ACA exchanges are self-employed and earning enough to qualify for only small subsidies or none at all. For those who have not learned to max out on allowable deductions to reduce their taxable income -- e.g., everything from paper clips to home office space to computers, auto expenses and retirement fund contributions  -- the ACA adds new incentives -- in some cases powerful ones.

The ACA offers subsidies not only for premiums but for deductibles and maximum out-of-pocket (OOP) expenses. While the premium subsidies shrink at a steady rate per $1000 of income (and fade gradually to zero for a single young person), the break points for deductibles and OOP are sharper.  At some break points, a $1000 difference in reported income can mean a difference of thousands in medical expenses covered in a given year.

In which Ezra Klein shorts Avik Roy

ACA supporters are naturally ticked off that conservatives are now carping at the high deductibles and out-of-pocket maximums in many ACA insurance plans, most notably the bronze ones. Ditto for "narrow networks" -- a limited choice among doctors and hospitals.  The Dish has a precis of complaints from Jonathan Chait, Jonathan Cohn, Kevin Drum and Ezra Klein. Here's Ezra:

What's confusing about this line of attack is that high-deductible health-care plans -- more commonly known as "health savings accounts" -- were, before Obamacare, a core tenet of Republican health-care policy thinking. In fact, one of the major criticisms of Obamacare was that it would somehow kill those plans off. "Obamacare may be fatal for your HSA," warned the Heritage Foundation on 2010. "Health Savings Accounts Under Attack" blared Red State....

Obama's pledge that "if you like your doctor, you can keep your doctor" is also under fire. The issue here is that insurers entering the competitive health marketplaces are tightening their networks in order to cut costs and improve quality. It's worked: Premiums in the marketplaces are far lower than was expected when Obamacare passed.

 This, too, is a success for a longtime conservative health-policy idea..."Narrow networks are not some cruel attempt to limit patient choice foisted upon us by the insurance industry," write economists David Dranove and Craig Garthwaite. "Instead, these plans may provide our best opportunity for harnessing market forces to lower prices."

Fair enough. However, when Klein asks his old healthcare sparring partner Avik Roy to explain the apparent hypocrisy, he lampoons Roy's response without engaging its substance, which is perfectly consistent with Roy's longstanding attack line against the ACA. There are, I believe, internal contradictions in that attack line, and Klein has dealt with them elsewhere. But not here:

The End of the End of History?

In The Origins of Political Order, Francis Fukuyama casts the history of the state as the history of the sovereign power's struggle to neutralize powerful subjects' (or citizens') biological imperative to pass their advantages on to their children  -- that is, the sovereign's attempts to neutralize the force of kinship ties, which are the means of building rival power centers. Sovereigns have come up with various ingenious means of checking the encroaching power of hereditary local elites, such as an exam-based civil service (China) or an imported elite slave class (Mamluk and Ottoman empires). The most successful and enduring of such means has been democracy, enabled by (and evolving from) rule of law and a strong state, wherein the majority retains the power to periodically trim or slap back back entrenched privilege.  Hence Fukuyama's faith, famously professed in The End of History, that a kind of Darwinian pressure of global competition would lead all states to embrace liberal democratic capitalism.

Recent years have dented that faith, however, as Fukuyama has come to fear that that other Darwinian pull -- of elites to pass their privilege to their offspring -- might batter down the walls of commonwealth.  Here's how he puts it in an article previewing his next book, Political Order and Political Decay, due out in September 2014:

Obama's Mandela: man of interior action

Some time ago, after James Fallows wrote that Obama's speeches are often memorable at the ideas level, but rarely at the phrase level, I responded:

Re that strange absence of memorable phrases: it's not just balanced by one strength, it's book-ended between two: conceptual complexity/coherence on the macro side, and cadence on the sub-micro. At least in 2007/2008, less so now, Obama's speeches were musical, hinging on repeat phrases (yes we can) and on the simplest of rhetorical devices, various forms of parallel structure, e.g. anaphora, the repetition of beginning words (also a lot of parallel phrasings in series -- "A man touched down on the moon, a wall came down in Berlin" etc.).  It was no accident that Will.i.am was able to set one of his speeches to music to some effect.

I heard this kind of music in Obama's eulogy for Mandela. It was a speech of strong cadences that gave shape to the speaker's thought. At his best, Obama is a prose poet, and today he was Mandela's poet.

Poet, not novelist. At the outset, Obama set himself a problem:

WSJ hits ACA from the left

Good reporters at the Wall Street Journal continue to bust the ACA's chops.  The likes of Louise Radnofsky, Amy Schatz, Timothy Martin and now Leslie Scism, who's been covering insurance for at least 15 years (and is also a news editor), are not going to get their facts wrong. But it remains fair to wonder whether the Murdoch-era news editorial regime is shaping the stories' emphasis [UPDATE: I have spoken to someone at the Journal, whose word I trust, who assures me that editors area not imposing a political agenda on reporters. I regret speculating about motive without information.]

Today, Scism and Martin spotlight something that has in truth troubled me as I explore offerings on HealthCare.gov and ValuePenguin:  the prevalence of high deductibles, particularly in bronze plans:

As enrollment picks up on the HealthCare.gov website, many people with modest incomes are encountering a troubling element of the federal health law: deductibles so steep they may not be able to afford the portion of medical expenses that insurance doesn't cover.
The average individual deductible for what is called a bronze plan on the exchange—the lowest-priced coverage—is $5,081 a year, according to a new report on insurance offerings in 34 of the 36 states that rely on the federally run online marketplace.

An early proponent of leading from behind

was Nelson Mandela, according to the New York Times obit (by Bill Keller):

In his autobiography, Mr. Mandela recalled eavesdropping on the endless consensus-seeking deliberations of the tribal council and noticing that the chief worked “like a shepherd.” 

“He stays behind the flock,” he continued, “letting the most nimble go out ahead, whereupon the others follow, not realizing that all along they are being directed from behind.” 

That would often be his own style as leader and president.

[Update via Smartypants, citing Mandela's biographer Richard Stengel: Mandela used the term directly:

Mandela loved to reminisce about his boyhood and his lazy afternoons herding cattle. "You know," he would say, "you can only lead them from behind." He would then raise his eyebrows to make sure I got the analogy.

[Update 2: Note that the original association of Obama with "leading from behind," in Ryan Lizza's New Yorker analysis of his foreign policy, incorporates the shepherding metaphor (and in Mandela's case, experience):

Nonetheless, Obama may be moving toward something resembling a doctrine. One of his advisers described the President’s actions in Libya as “leading from behind.” That’s not a slogan designed for signs at the 2012 Democratic Convention, but it does accurately describe the balance that Obama now seems to be finding. It’s a different definition of leadership than America is known for, and it comes from two unspoken beliefs: that the relative power of the U.S. is declining, as rivals like China rise, and that the U.S. is reviled in many parts of the world. Pursuing our interests and spreading our ideals thus requires stealth and modesty as well as military strength. “It’s so at odds with the John Wayne expectation for what America is in the world,” the adviser said. “But it’s necessary for shepherding us through this phase.”

The Times obit also stresses Mandela's supreme self-confidence:

Obama portrays a nation at risk in bid to reset national agenda

Obama gave a great speech today, focused on reversing rising income inequality, which he called "the defining challenge of our time." It's been a dispiriting autumn, and as Obama's returned to the bully pulpit in recent days I've thought that maybe I'm past getting keyed up as he cranks up the rhetoric.  But he didn't do that. He offered new thinking and reframed our political discourse. He expanded and refocused the narrative he's been developing throughout his political career.

The outlines of that narrative were familiar. Throughout its history, the United States has thrived because it's periodically widened the circles of opportunity, extended the means to pursue happiness to previously excluded groups, made new investments in shared prosperity. Around 1980, though, the country took a wrong turn, and the American dream is fraying.  As president, he will channel popularly willed recommitment to shared prosperity.

This time around, though, there were several differences. The stylized, compressed precis of U.S. history that's an Obama speech staple was focused more sharply on economic turning points.  The wrong turn of the last 30-plus years was ascribed in large part to global economic forces, in a sense depoliticized. The faith that political action will right the ship was tempered by a warning that rising inequality, unchecked, could take us to a point of no return.

Finally, an economic argument that sustainable prosperity depends on reversing the widening wealth gap was more fleshed out than ever before. I have never read a presidential speech that cited as many economic studies.  Those studies and a battery of stats were deployed to make several key points: that inequality is at an historic high point; that the U.S. lags other wealthy countries in economic mobility; that those born in poverty in the U.S. today are likely to remain locked in; that poverty is not just a "minority" problem but touches more than half of Americans at some point in their lives; and that rising inequality is a drag on growth.

About that "toothless" Dodd-Frank reform...

Dodd-Frank is widely written off as meek, weak and watered down by relentless bank lobbying.  Perhaps it is in many respects. But the long-unfinalized and tortuously complex Volcker Rule, largely eliminating the banks' proprietary trading and in-house hedge and private equity funds, has already had significant effect, as the WSJ's Scott Patterson recounts:

Regulators aren't expected to start strictly enforcing the Volcker rule until 2015, giving banks some breathing room. Because the rule was widely anticipated, most banks already have done away with operations focused on proprietary trading, or making bets with their own money.

For example, Goldman shut down in 2010 its Principal Strategies in-house trading unit, partly as a response to the looming Volcker rule. Last month, Goldman Chairman and Chief Executive Lloyd C. Blankfein outlined other steps being taken by the New York company to comply with the Volcker rule, including "winding down our hedge-fund investments."

Moreover, the relative hawks in the contentious five-agency rule-writing process, most notably outgoing CFTC Chair Gary Gensler, seem to have in large part prevailed on key issues in the rule's pending finalization next week: