Chief Justice Roberts MAY have just destroyed the health insurance industry.

[Laelth]

Since they came out this morning, I've been chewing on the SCOTUS ruling on the ACA, as well as Justice Ginsburg's concurrence and the dissent of the four horsemen of the apocalypse. As I chewed, I posted three new threads on these opinions that you may have seen:

here: Glaring contradiction in SCOTUS ruling on ACA. A tax or not a tax?
here: Roberts takes a swing at Scalia in ACA majority opinion.
and here: The Broccoli Horrible (Crow eaten here.)

... just in case you didn't see them.

But here's what I think really just happened today and, despite my better judgment and my natural skepticism, I am thrilled by it. I think that the SCOTUS may have just destroyed the health insurance industry. Bear with me, and I will explain.

First, the SCOTUS stripped the mandate of all its teeth. It is not a crime to not purchase health insurance, nor will it be a crime to not purchase insurance in 2014. I know this because Chief Justice Roberts said so, and his opinion is now the law of the land. Read it if you don't believe me, here: http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf.

That was a big relief to me because, as an attorney, I can be disbarred for criminal activity. Now I know I can not be criminally penalized for failure to comply with the mandate. That's good. Instead, solely because the Chief Justice said so, persons who do not purchase insurance may be subject to a tax. To that I say big deal.

First off, persons who don't owe Federal income taxes or who don't file because they don't make enough money to do so will not be required to pay the tax. That lets most poor people off the hook, and that assuages another of my major concerns. Second, even if you are fortunate enough to owe Federal income taxes (because you make enough money to owe income taxes), the extra tax will be minimal for most people. As a result, their income tax refunds will be a little smaller. Again, big deal. The Chief Justice also noted that the IRS will be barred from using its more coercive collection practices (like levying) in collecting this extra tax, and that was a relief. For those who are very wealthy and owe a lot of taxes, the most one can be compelled to pay in extra taxes is the current, going rate for insurance according to the Act's community-rating criteria. So, in essence, the most the penalty could ever be is the exact amount you would have to pay for insurance if you complied with the mandate.

If that is the case, I ask, why would anyone ever buy insurance? I conclude that they wouldn't. The rational economic decision is to risk the tax. If that's what people decide to do, private insurance will disappear.

To those who say doctors won't provide care to people without insurance, I say hogwash. Under the ACA, as it has been interpreted by Justice Roberts, doctors will know, and I mean know, that Medicaid will pay for their services if the person who needs treatment lacks insurance. For this reason alone, doctors will simply provide treatment to everyone who needs it and rely on medicaid to pay. Medicaid will simply pay if there's neither medicare coverage nor private insurance, and then the IRS will just collect whatever extra taxes it can, when it can, but the amount it will collect will never be more than the amount one would pay for insurance under the community-rating criteria.

Under those facts, I ask again, why would anyone ever purchase health insurance?

On the other hand, if a state were insane enough to opt out of the new "expansion" of medicaid, it is true that, in such a state, doctors would continue to avoid treating those without some kind of insurance. That would be a problem, but even the dissent by the four horsemen of the apocalypse admits that the states will be compelled to participate. What politician could refuse to implement a plan to cover all the state's citizens when the Federal government is promising to pay 100% of the cost (dropping to 90% by 2020). What politician could tell his or her constitutents this: "Well, we have to keep paying our Federal taxes in order to fund this plan in the other 49 states, but our state will remain strong against the will of the evil Obama. We're still going to pay for the plan through our Federal tax dollars, but we're not going to enjoy the benefits of universal coverage because, darn it, it's good to have lots of people without health insurance!" I can't see even the most rabid of Republicans making that argument. As the dissenters rightly noted, state compliance with the new expansion of medicaid is virtually assured.

So, here we are--100% coverage, no criminal sanctions, 100% state participation, and all the doctors and hospitals know they're going to get paid by medicaid, at the very least, so that everyone has access to some level of medical care.

Again, I ask, why would anyone, under these facts, buy health insurance? I don't think they would. If I am right, it's goodbye health insurance industry, and good riddance.

This is almost enough to make me believe in 11-dimensional chess. (Never thought I'd say that.)

Happy day, America.

-Laelth


Edit:Laelth--typos. I am a little giddy. Sue me.

[unblock]

1. if they had just called it a tax all along, no one would have been crying tyrrany or whatever.

they would have objected to the tax hike, of course, but no one would have questioned its constitutionality or its legitimacy.

nor would anyone feel particularly pissed about paying it. they'd resent the higher check to the irs, just but people already resent sending money to the irs. but no one would think it was any more or less coercive than any other part of the income tax code.

would people then get insurance to qualify for the 100% offsetting tax credit? perhaps. offsetting credits certainly have helped sell hybrid cars and solar panel and such, although a good chunk of that benefit is folded into a higher price for such things -- suggesting that insurance would only get still more expensive as a result of the tax credit.

but again, no one would have questioned the constitutionality of the whole thing.


well, not really. in actuality, opponents were always going to fight it in court and they would concoct an excuse if only to distract the obama administration. but no one really would have taken them seriously.




so what will happen? yes, i'm sure plenty of people will simply pay the tax instead of getting insurance as insurance will still be very expensive even with the offsetting tax credit and assistance. but some will.

so the insurance companies will get more customers -- nowhere near ALL of the currently uninsured, but a good chunck of people, many of whom are presumably low-risk (hence the current decision to go without).

and the treasury will also get a decent chunk of change, and we all know it needs it.

the people who are out are the currently uninsured who either pay the tax or get insurance only grudgingly. but that was the point, to get these people to pay for the healthcare services use, one way or another.


i don't think anything earth-shaking will come about because either the law or the decision.

[Laelth]

9. I may be missing something, here, but it seems to me that this worked out perfectly.

I don't think the ACA could have made it through Congress if the "penalty" was described as a tax. Frankly, I don't think the health insurance industry would have signed on unless they believed that the Federal Government was going to compel people to buy insurance through some kind of coercive "penalty."

But, because it was a "penalty," and not a new "tax," the Democratic Party and the health insurance industry, for the most part, signed on, and the ACA became law.

What happened today is that the Chief Justice just stripped all the teeth out of the mandate by making it a "tax" and not a criminal penalty. As I argue above, the rational decision for an uninsured person is to risk the tax ... i.e. not buy the insurance.

Because there's no real penalty, the uninsured will not buy private insurance (a few will, of course, but that number will dwindle over time). As such, the risk-spreading function of the ACA will fail. Health insurance companies will still have to cover pre-existing conditions, and they will be forced to bill under the community-rating criteria, but they won't get the massive influx of new, healthy plan participants they expected--because the mandate has been stripped of its teeth. They'll start to lose money. Then they'll either jack up their rates, and lose even more customers, or they will simply fold.

I vote FOLD.

-Laelth

[unblock]

11. the supreme court didn't change the law, they just called it out for what it was.

it was ALWAYS a tax. they just avoided using that terminology.
it was always to be collected by the irs, always payable to the u.s. treasury, and always with an offsetting credit for various reasons including poverty and purchasing a qualifying product.

a rose by any other name....

i agree that the decision to avoid the dreaded t-word was no doubt instrumental in its passage, which was a nail-biter.

it also makes all the brouhaha and legal challenges look rather silly. imagine if there had been uproar and a supreme court battle challenging reagan's "revenue enhancements". HEY! the constitution doesn't give you the power to enhance revenue! power grab! tyrrany!

the insurance companies will get SOME, but certainly not ALL new customers from the current pool of uninsured people, but they will make a fat profit on this group. those who don't will pay the tax, and the treasury will collect a good chunk of change for this.

if the health insurance companies really are struggling (hard to imagine, given how insanely profitable they are these days) then they'll just lobby congress for subsidies out of all that "penalty" money the irs is collecting.

[Skraxx]

39. Right, Instead of Paying An Insurance Company, Many Will CHOOSE To Pay The Gov't

and the govt' will use those funds to fund and expand M/M, which will continue to be expanded. When you add in the REQUIREMENT to have non-profits on the exchanges (umm, M/M may qualify for this), well, do the math.

Who's going to choose a FOR-profit alternative on the exchanges? There's NOTHING prohibiting the gov't from creating a non-profit alternative to compete on the state exchanges. Nothing.

[Rosco T.]

2. Point of Order!

That was a big relief to me because, as an attorney, I can be disbarred for criminal activity. Now I know I can not be criminally penalized for failure to comply with the mandate. That's good. Instead, solely because the Chief Justice said so, persons who do not purchase insurance may be subject to a tax. To that I say big deal

The Chief Justice had nothing to do with that, it WAS IN the original bill.

[Laelth]

4. You're right. It was in the original bill.

But any court could have construed disobeying the mandate as a crime if it so chose. Now no court can do that, as the Chief Justice has made clear.

-Laelth

[unblock]

12. a crime punishable by absolutely nothing?

in fact, i'm not even clear that the irs is allowed to enforce collection of the "penalty".

if there, in fact, any punishment at all for failure to pay the "penalty"?

i thought they specifically denied any enforcement powers to the irs under the aca.

[jeff47]

52. They can take the penalty out of a tax refund.

That's about it. Increase your exemptions on your W-4 and problem solved.

[DevonRex]

15. I concur.

And it was argued as not a tax, from passage arguments to Supe arguments, precisely because it was a tax. That's how it got passed to begin with and that's how Roberts was able to justify crossing over.

With a huge bite taken out of the CC. We will have to wait and see how that shakes out as time goes by. I think perhaps not as well as Roberts believes it will.

[Laelth]

32. It's true that the Commerce Clause did take a hit.

But, as I suggested in another post, Justice Ginsburg did a great job of explaining why the Chief Justice's ramblings on the Commerce Clause are pure dicta, and they are. The Commerce Clause was not the basis of the Court's ruling.

Her concurrence is a thing of beauty.

-Laelth

[DevonRex]

48. Yes, I read it after I read your first OP.

I've never read another opinion like it before and enjoyed it thoroughly. I believe she got his goat completely.

[rhett o rick]

3. Thank you for posting but I am going to have to read your post again

to understand it. But that's ok. I am not the fastest tool in the tool shed, or whatever.

[uponit7771]

34. +1! Sounds like he's saying people would pay the 100 dollar "tax" than pay insurance

..and there's no enforcement of the "tax" collection via the IRS and medicade has been expanded on the state level unless the reThug governors decide not to take the expansion.

With the expansion and if you're sick and don't have the money for insurance the "tax" will eventually pay...

Sooner or later the HCIs go bankrupt or the 7 million young adults float them for a while...

Seems all orchestrated.

[progree]

62. The Penalty is $695 or 2.5% of income WHICHEVER IS GREATER in 2016 and thereafter

A single adult (no children) with a $40,000 income pays a 2.5% * 40,000 penalty = $1000 -- though the Washington Post comes up with a different answer. One puts in one's "Adjusted Gross Income" into the calculator along with the number of people in the household, and marital status (why on the latter?)

Here's an insurance and penalty calculator: http://www.washingtonpost.com/wp-srv/special/politics/what-health-bill-means-for-you/?hpid=z2

Starting in 2014:You will have the option of buying a health plan through your state's exchange with federal assistance. Based on your income, your annual premiums for that plan would be no more than $3,800 (me: that's $317/month). Your maximum out-of-pocket costs for deductibles and co-payments would be capped at 30 percent of the total cost.

Insurers can’t discriminate against you for having a pre-existing condition, and can only vary rates within a narrow range.

If you do not obtain insurance coverage by 2014 you will be assessed a tax penalty. The penalty becomes progressively greater from 2014 through 2016, when it reaches full strength. At that point, assuming your current income remains the same and your household consists of 1 uninsured adult, you would be subject to a penalty of about $744. You are exempt from the penalty if the least expensive plan option in your area exceeds eight percent of your income.

Some calculations I did:

Penalty: 2.5% of 40000 = $1000. (How do they get $744 which is 1.86% of income? Perhaps behind the scenes they subtract some exemption and maybe even standard deduction first in order to obtain "income&quot

8% of 40,000 = $3,200 which is $267/month. <- I'm exempt from penalty if the least expensive plan costs more than that.

[Laelth]

70. Spot on. Thanks for posting this. n/t

-Laelth

[slipslidingaway]

5. Quick reply ...

"... Under those facts, I ask again, why would anyone ever purchase health insurance?"

Because if you have a good HC plan you have better access to the best facilities/doctors when something serious happens, we saw and heard from others when we stayed at Hope Lodge in NYC for my husband's bone marrow transplant. Some had the best care with their insurance plans and others wished they could change hospitals/doctors.

[Laelth]

10. Interesting. Hard to say how that might change once the ACA takes full effect.

And I envision serious effects far beyond those imagined by the drafters of the legislation.

But we'll see. I will add that, for a while, the seriously ill will continue to purchase private insurance, but that is exactly why I think the ACA will drive health insurers out of business. The truly ill will buy their products, and hardly anyone else will.

-Laelth

[slipslidingaway]

28. It is gamble ...

my husband was not ill before, no meds etc. until one day it all came crashing down. Many times you never know you are seriously ill until it happens. I'm sure glad we did not have to rely on Medicaid and could go to a top transplant center. We met others at Hope Lodge on Medicaid who did not have access to some of the best docs for breast and throat cancer, they did not have the same flexibility and access we did.

I wish that I were as optimistic as you about everyone having access to the best care for their situation under Medicaid and the demise of the health insurance industry. Guess the question for many people will be if you have a choice, how much do you want to gamble with the life of your spouse or child?

"Again, I ask, why would anyone, under these facts, buy health insurance? I don't think they would. If I am right, it's goodbye health insurance industry, and good riddance."

,

[mythology]

29. Additionally even for just routine stuff

having a doctor who knows you, who knows your medical history, what medications you're taking can help prevent unexpected complications or head things off before they turn into major issues.

Also if you have a doctor you have been established with, you don't have to worry about either hitting an emergency room or trying to get a new patient visit when you do get sick.

[slipslidingaway]

36. Very true ...

and I wish everyone had more of a choice and people were treated by their needs instead of where their plan allows.

[EFerrari]

6. Um, 100% coverage (which this isn't) isn't 100% access to health care.

And the decision specifically does not ensure "all the doctors and hospitals know they're going to get paid by medicaid" because the Court ruled the Feds could not dock the states for not expanding Medicaid coverage.

[Laelth]

13. I am not sure I am following you.

You know me well enough to know that my ultimate goal is a single-payer system. Like you, I have argued before that health insurance is not the same as health care. I have argued against the ACA on the grounds that it sort-of provides insurance but doesn't provide any health care. Nobody needs insurance, I have said, but everyone needs health care. On that, you and I agree.

But I envision, here, the ACA destroying the health insurance industry. I envision doctors and hospitals treating everyone because there's virtual assurance that medicaid will pay for those who lack insurance. What's the hospital going to do when an uninsured person comes in for treatment? Will they require proof of income to insure that the uninsured person makes 133% or less than the Federal poverty limit? I doubt it.

In the end, the truly sick will continue to purchase private insurance, and hardly anyone else will. The health insurance companies will lose money and, ultimately, fold.

I could be wrong. This time, I hope I am not.

-Laelth

[EFerrari]

14. Today's decision stripped the Federal government's ability

to withhold federal funds from states who refuse to expand Medicaid coverage.

So that won't change until Congress changes it.

[Laelth]

18. True.

But the states will be compelled to adopt the new, expanded Medicaid for reasons explained above and as the four dissenters from the majority opinion readily admit, so I am not too worried about any of the states defecting and not implementing the new expansion.

-Laelth

[EFerrari]

23. What is more likely to happen is the states grudgingly adopting the expansion

and providing even more sub-standard care for Medicaid patients than they do now.

I've been in that system. It's awful.

So yes, like so many programs, this one will be fine on paper. It will be deadly for people who try to actually use it. And that will be the case as long as for profit insurance is the standard.

[Lex]

65. But it sounds like "for profit" health insurance will be gutted

by the new system. I sure hope so. It's immoral to make money for shareholders off the suffering of people who are sick.

[Fawke Em]

7. I've been saying this all day today.

It's my take on it, too.

[malthaussen]

8. Laelth--typos. I am a little giddy. Sue me

Sorry, dude, I wouldn't sue a lawyer under any provocation.

Interesting thoughts. About the only flaw I can see in it is that you appear to assume that legislators (nevermind the general public) are going to react logically. The problem with that assumption is that a) zillions of polls have shown that, no matter what the issue, at least 1/3 of Americans are certifiably insane, and b) the bad guys and their media whores can spin anything to make it look like anything else they want -- thus propping that 1/3 insanity.

There are probably a lot of people who will still buy insurance because they think it's the right thing to do, or because they feel vulnerable without it. So the Health-Industrial-Complex might be a while in dying, even if you're right.

While I would love to see Big Insurance suck a gas pipe, that's an emotional reaction. Practically speaking, a lot of people make their livings from working in insurance, and not just 1% greedheads, but young, struggling CSRs whose jobs are concerned with explaining all the million and one options, regulations, and programs to other people, and fixing things when they break. Destroy Big Insurance, and all those people are on the street. Well, they can join the rest of their unfortunate cohort flipping burgers and making lattes, I guess. It is unfortunate that the post-industrial economic system we have evolved places a high percentage of the work force into jobs where their function is to explain ever-more-complex rules to other people. Maybe we can create a Bureau of Health Care to seamlessly integrate these workers while kicking their profit-guzzling bosses to the curb. I'd be all for something like that.

-- Mal

[Laelth]

16. I almost vomited when the President said ...

(paraphrasing) that the health insurance industry was an integral part of our economy, that many people who work in health insurance are our friends and neighbors, and that eliminating private health insurance would be too disruptive.

While all of that is sort-of true, I think the health insurance industry produces nothing of value and should, therefore, be eliminated as the drain on our economy that it is. I'd rather put people to work doing something useful, and that will happen, in time, as the job market adapts to the changes that will result from ACA's implementation.

Or so I hope.

As for the certifiably insane, as I said above, and as the dissenters agree, universal participation by the states in expanded medicaid is virtually assured. It appears to me that only the repeal of the ACA could stop that now (and that's why Romney immediately promised to repeal it once the SCOTUS decision was released).

-Laelth

[Son of Gob]

17. Not following the mandate was never a crime, that was a RW talking point

Nothing was stripped as far as the mandate goes.

The health care bill signed by President Obama explicitly says there are no criminal penalties for those who do not obtain coverage and refuse to pay the penalty tax.

As plainly stated on page 111 of the law, "In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure." There would also be no liens or levies placed on property for failure to pay.

Instead, the law would allow the government to collect the tax by deducting it from any IRS tax-refund checks or other government payments.

Just to be certain we weren’t missing anything, we asked Virginia Attorney General Ken Cuccinelli’s office for their take on the issue.

"The law does not send people to jail for not paying the fine," confirmed Brian Gottstein, Cuccinelli’s director of communication.

http://www.politifact.com/virginia/statements/2010/dec/20/bob-marshall/del-bob-marshall-says-violators-obama-health-care-/

[Laelth]

20. Yes, I know.

But, as I said in a reply above, any judge could have construed a violation of the mandate as a crime until Justice Roberts made a definitive ruling on that subject in the majority opinion. Now, the matter is settled law, and I feel much more comfortable about it.

-Laelth

[Son of Gob]

21. Alrighty

[Kablooie]

19. So you can just pay the low taxes and only buy insurance after you become ill.

Now that the insurance companies can't deny you, you can wait.

You could also then stop the insurance and pay the taxes once you are well again.

Isn't the assumption that the no insurance penalty (tax) will go to the insurance companies to make up for the customer loss?
Even if it does, it doesn't sound like it will compensate adequately.

You may be right.
I wonder if insurance companies will voluntarily leave the medical insurance business because they foresee the collapse of their profits.

[Laelth]

22. As I understand it ...

Extra taxes collected by the IRS will go to the treasury to offset the increased cost of medicaid. That money will not go to the insurance companies. What the insurance companies were expecting to get out of this was compelled purchase of private insurance by young and healthy people. I just don't see that happening. Why buy insurance if it's not a crime to go without it? Why not risk the penalty (the extra tax) if that tax can never be more than what you would have paid for insurance? It seems to me that the economically-wise decision would be to risk the tax.

-Laelth

[Aerows]

25. The health insurance industry

has screwed over the people for so long, I wouldn't shed a tear if they all go belly up now that they actually have to live up to the obligations of the premiums that were paid.

They have gotten away with doing nothing for far too long, stonewalling for far too long, and the wellspring of hatred towards health insurance companies has reached a point that they can't fix it now with PR even if they wanted to. All they can do is scream "socialized medicine", and frankly, I know more than a few hard right folks that are starting to think that's a good idea.

[Laelth]

33. Hear, hear. n/t

-Laelth

[Kablooie]

26. Ah, but can't the insurance companies keep raising their prices to keep profitable?

I heard there is no cost control in the bill to prevent this.

[Laelth]

35. Absolutely true.

And as they raise their prices they will drive more healthy people away from private heath insurance and will retain only the sick. They will still be prevented by the ACA from denying coverage to people with pre-existing conditions. As such, they will be left only with those whom it is not profitable to insure, and they will simply fold.

Or, so it appears to me.

-Laelth

[Kablooie]

50. Is Kaiser Permanente considered a health insurance company?

They actually provide health care, not just insurance.

Any thoughts on how a corporation like that will be affected by the new laws?

[Laelth]

64. Non-profit insurers will have an edge in the insurance exchanges under the ACA.

They'll be able to deliver a better product for a lower price because they don't have to make a profit. One poster in this thread observed that the insurance exchanges will play a large role in wiping out for-profit insurance because of this feature of the ACA. That may be so.

Ultimately, though, with its ability to dictate costs and with its ridiculously low overhead, medicaid should be able to produce the best medical results for the lowest price. If Kaiser can match that, great. If not, they may lose some healthy customers. Those healthy customers, when they get sick, may then switch back to Kaiser, thus hurting Kaiser by increasing their ratio of costly, unprofitable customers.

But, admittedly, my thoughts, here, are speculative and untested. We'll have to just wait and see how this all shakes out.

-Laelth

[Dalai_1]

75. Kaiser Tutorial with Health Care Reform

http://www.kaiseredu.org/tutorials/Medicare-and-health-reform/player.html

[Aerows]

24. I hope to heaven they do

Because it's a death industry, not a health industry. As they fold, the government will be compelled to take over. Only a rabid right winger would see that as a bad thing.

The next thing they should do is waive tuition for doctors and nurses so that people who wish to participate as health care workers can do so without crippling themselves with tuition. Then things would even out.

[Laelth]

31. Excellent idea. n/t

-Laelth

[cbdo2007]

58. You still have to wait for the policy to become active....

which will stop people from signing up for insurance after they get sick or after they break their leg, but before they get treatment. I'm guessing there will still be an administrative period of 7 days or so for your new insurance policy to become effective before you can use it. The details of this aren't explained but I did read this part of the law yesterday and it seems to make an emphasis on the terms "active" and "policy" so you can't just call an insurance company from the hospital and instantly have coverage.

[lonestarnot]

27. Tax amounts to $90 and one doesn't have to pay it. Hmmmf.

I'm pretty giddy myself!

[tammywammy]

43. Only for 2014, it goes up each year after that. n/t

[1StrongBlackMan]

30. Book Marking this ...

to chew on later, after I have read the Opinion three times over.

But you give me hope.

[FarLeftFist]

37. K&R!

[Laelth]

71. Thanks. n/t

-Laelth

[lumberjack_jeff]

38. I think your premise is flawed.

Those who don't have coverage aren't enrolled in medicaid by default.

Without insurance, the hospital will send you the bill and if you don't pay, will send your bill to a collection agency.

[Laelth]

40. True.

For a while, some people will continue to purchase insurance for that very reason. But people who don't have insurance now, the ones the insurance industry is banking on participating in the market, will be better-off risking the tax. As such, the health insurance companies will not be compensated for their having to insure people with pre-existing conditions. Nor will they be able to gouge those they insure due to the community-ratings provisions of the ACA. The health insurance companies will then jack up their rates in response, thus driving away more healthy people and retaining the sick. In the end, they will be left with only those it is not profitable to insure, and they will fold.

Or, so it appears to me.

-Laelth

[Skraxx]

41. You're Not Taking Into Account The State Exchanges, Which Will Be REQUIRED

to provide a non-profit alternative. There's NOTHING preventing a government sponsored/partnered option on those exchanges.

Some people may choose to pay the tax, many more may actually choose to join the cheaper, more efficient, non-profit alternatives on the exchanges.

I suspect these may turn out to be the real challenge to the for-profit system.

[Laelth]

44. That wouldn't bother me one bit.

Either way, it's bad news for the health insurance industry, and that makes me happy.

-Laelth

[Skraxx]

57. yup

[Odin2005]

47. Hence by reply to the OP, the Swiss health system via the back door.

[madrchsod]

42. you missed something that just might happen

employers will realize they can get rid of healthcare benefits by pushing for medicare for all. my wife figures she`d save money if she and her employer could join the medicare system. it would be a win win for both the employers and employees...it seems to work in the rest of the civilized world

[Laelth]

45. And that would be an even better outcome. n/t

-Laelth

[Odin2005]

46. The Swiss system through the back door?

[Laelth]

56. So it appears to me. n/t

-Laelth

[ProgressiveEconomist]

49. 2 big flaws in yr argument: (1) Medicaid applications are no joke. If you are not below 130% of pov

(1) Medicaid applications are no joke. If you cannot prove you are below 130% of poverty, you will not be approved for Medicaid. And you'll be stuck with a huge bill, because the non-insured get no deeply discounted prices for hospital care or medical procedures.

(2) Skeptics say rational people will wait until they are sick to get insurance, but how will they know they are sick? Will people wait until they can feel their kids' tumors to seek cancer treatment for them? Or, if they can afford insurance, will they sign up long before anyone in the family feels sick , to get deeply discounted prices and small copays for screening and preventative care?

[jeff47]

53. You're forgetting about the other changes.

And you'll be stuck with a huge bill, because the non-insured get no deeply discounted prices for hospital care or medical procedures.

So sign up for private insurance on the way to the hospital. There's no pre-existing conditions anymore, so the insurance company can't deny your treatment.

Once you've recovered from whatever it was, cancel the insurance and go back to paying the penalty.

If they add a waiting period to try and stop this, sign up for a catastrophic plan to cover you in an emergency, and sign up with a normal plan when you schedule any expensive treatment.

but how will they know they are sick?

Well, I'm guessing they know because they're seeking out a doctor.

Or, if they can afford insurance, will they sign up long before anyone in the family feels sick , to get deeply discounted prices and small copays for screening and preventative care?

Sign up when you go to the doctor. Cancel when you leave his/her office.

[ProgressiveEconomist]

55. Have you heard of deductibles? Cutting things that close sounds very risky, and all that canceling

and re-applying seems very impractical.

Deductibles would limit the premium savings from canceling and re-applying for insurance.

Look at the deep discounts on your own doctors' statements. If you have insurance, doctors' fees and lab costs easily may be discounted 80 percent or more. If your insurance application or re-application takes more than a few hours, you can be hit with tremendous medical bills for having been uninsured when you received the medical services.

IMO very few people would want to do what's being suggested in this thread, and administrative rules (such as $1000 deductibles and 2 weeks for processing insurance applications) easily could prohibit such strategic evasion of insurance premiums.

[Laelth]

66. You're right about the Medicaid applications.

But that's where the executive branch can have enormous influence. They can order the streamlining of the application process, if they choose, and states will be denied funding for the expanded medicaid if they do not comply. On the other hand, if certain states make their application process heinous (as Georgia does), and if the executive branch does not demand streamlining, then lots of people will not get medicaid who deserve it.

Even so, I doubt those people will buy insurance. The healthy people will stay out of the market and risk the tax. The end result will be the same, slow decline of the health insurance industry.

As to your second point, I agree with the analysis of jeff47, above.

-Laelth

[ProgressiveEconomist]

67. 'As to yr 2nd point'--You don't agree that deductibles and processing time for

private insurance applications would prevent repeated cancellation for not paying premiums and subsequent re-applications when someone again wanted medical services? Be more practical and not so theoretical. Your argument doesn't withstand much practical scrutiny.

[Laelth]

68. I agree that those deductible policies will drive people away from private insurance.

And that's my point. The SCOTUS ruling on the ACA may create a business death spiral of private health insurance. Will people continue to suffer from bad health insurance company practices? Sure. Will much of what you predict come to pass? Sure. I understand your "practical" concerns. What I am arguing is that the rational response from healthy, uninsured people will be to not buy insurance and to risk the tax. If this is so, the insurance companies will be stuck carrying more and more sick people and fewer and fewer healthy people. In the end, I don't think they will be able to sustain that business model.

-Laelth

[Lionessa]

51. Except that many will NOT be covered by Medicaid.

Many states only offer Medicaid to the disabled, so if Red States don't accept the Medicaid portion, many will still have no healthcare.

And I don't believe they will be compelled. Remember their constituents, and the weird things they cheered for during the debates and during townhalls. They would rather see poor people die than help them in anyway.

[jeff47]

54. There is no state that only offers Medicaid to the disabled.

Currently, medicaid covers poor pregnant women, elderly, children and their parents.

Childless non-elderly are only covered if disabled.

[Enrique]

59. so you cancelled your health insurance?

I am not expecting to, what about you? What about other DUers, let's take a poll.

[Laelth]

60. I am self-employed and can't get reasonbly priced insurance. n/t

-Laelth

[GoneOffShore]

61. Check out Slate's article about this decision gutting the Commerce Clause

By ruling that the individual mandate was permissible as a tax, he joined the Democratic appointees to uphold the law—while joining the Republican wing to gut the Commerce Clause (and push back against the necessary-and-proper clause as well).

http://www.slate.com/topics/o/obamacare.html more at the link.

[Laelth]

63. Slate has several good articles on the subject.

The key point, though, is that Justice Ginsburg in her concurrence makes it clear that everything that Chief Justice Roberts says about the Commerce Clause is dicta--in legal jargon that means just excess wording with no legal force. Only the ruling and the basis for the ruling, in a legal opinion, are regarded as law. So, lower courts are free to ignore everything that the Chief Justice said about the Commerce Clause because the five members of the Court who upheld the mandate did so on the basis of the Federal government's taxing power, not on the basis of the Commerce Clause. While it's clear that the Chief Justice wants to limit the Commerce Clause, and he has telegraphed his desire to do so, he did not do so yesterday because the four people who agreed with him that the law is constitutional did so on the basis of the Court's taxing power. As Justice Ginsburg remarked,

"THE CHIEF JUSTICE states that he must evaluate the constitutionality of the minimum coverage provision under the Commerce Clause because the provision “reads more naturally as a command to buy insurance than as a tax.” Ante, at 44. THE CHIEF JUSTICE ultimately concludes, however, that interpreting the provision as a tax is a “fairly possible” construction. Ante, at 32 (internal quotation marks omitted). That being so, I see no reason to undertake a Commerce Clause analysis that is not outcome determinative."

That means, in a nutshell, that the Chief Justice had no business talking about the Commerce Clause in his opinion because that was not the legal basis of the Court's ruling. It's dicta. Therefore, lower courts are free to ignore it. It was, simply, unnecessary verbiage.

-Laelth

[vaberella]

69. But that means nothing.

The judicial body does not write legislation nor do they have the power to rewrite a proposed legislation. So there is no "gutting" going to happen. They're only power is to rule whether something is constitutional or not. They can't amend anything.

[rhett o rick]

72. Thank you for the post. Some great discussion in the thread. nm

[Laelth]

77. My pleasure, and I am honored that you read it. n/t

-Laelth

[progree]

73. Minimal penalty? And one would choose to pay the penalty even if it is same as cost of insurance?

Second, even if you are fortunate enough to owe Federal income taxes (because you make enough money to owe income taxes), the extra tax will be minimal for most people. As a result, their income tax refunds will be a little smaller.

I don't consider a penalty of $695 or 2.5% of income, whichever is greater, to be minimal. (That's the rate that takes effect in 2016).

The Chief Justice also noted that the IRS will be barred from using its more coercive collection practices (like levying) in collecting this extra tax, and that was a relief. For those who are very wealthy and owe a lot of taxes, the most one can be compelled to pay in extra taxes is the current, going rate for insurance according to the Act's community-rating criteria. So, in essence, the most the penalty could ever be is the exact amount you would have to pay for insurance if you complied with the mandate.

If that is the case, I ask, why would anyone ever buy insurance? I conclude that they wouldn't. The rational economic decision is to risk the tax. If that's what people decide to do, private insurance will disappear.

I'm not following -- in the case of a penalty being the same as the cost of insurance, wouldn't anyone but the most insane buy the insurance? Just in case, umm, one gets sick? (Paying the penalty doesn't give one any health coverage).

=========================================
Here's an example of a "minimal" penalty, based on the following
http://www.washingtonpost.com/wp-srv/special/politics/what-health-bill-means-for-you/?hpid=z2

A single Mom, 1 child, $30,000 adjusted gross income -- after the premium subsidy, insurance would cost $1,200 to $1,890 / year. If couldn't afford the insurance, in 2016 when penalties reach their full level, would have to pay a $1,043 penalty tax.

Is that what we're celebrating? Is that "progressive"?

[Laelth]

74. I agree that the tax structure is somewhat regressive on paper.

What I am celebrating, here, is the potential end of the vampiric health insurance industry that is the principal cause of our health care problems.

While the "extra tax" structure looks regressive on paper, and it is, I think the middle class can take steps to avoid the extra tax or, at least, minimize it. In fact, I think healthy people will, by and large, simply not buy insurance and risk the tax. If a given person were to get sick, he or she could purchase insurance to cover that and then cancel the insurance after the illness had been fully treated. Nothing in the ACA prevents this. And the "extra tax" can really only be collected through the IRS's least coercive means, i.e. one might get a lesser income tax return. Simply adjusting one's exemptions and paying less tax in the first place would minimize one's losses. Those who pay no Federal income taxes can't be penalized at all.

In the short term the ACA will be burdensome to some, but in the long term I think it could wipe out private, for-profit health insurance. That's what I am hopefully anticipating.

-Laelth

[progree]

78. Sorry, I'm highly skeptical that the only way they can enforce the penalty is a smaller refund

And many who "don't pay income taxes" actually "pay" a negative income tax -- they get a check from the government, thanks to the Earned Income Tax Credit and child tax credits. I knew a self-employed single Mom with a child who had $18,000 in earnings, paid in nothing to the IRS during the year (no withholding, no estimated tax payments, nothing) and got $900 back from the federal government. And that is after they in effect paid her payroll taxes. (I actually studied her tax return). So it worked out like this:

3654 Negative federal income tax (EITC, child tax credits, many deductions, big mortgage)
-2754 Payroll taxes (15.3% * 18,000) 15.3% is the rate for self-employed
==========================
900 Check from federal government

I'm also wondering - it seems to "work" in Massachusetts -- only about 0.7% pay the penalty. What's different there?

Anyway, I think they will enforce the penalty (passing any necessary legislation if they have to) before they let premium rates skyrocket for the vast majority who do have health insurance.

[Laelth]

79. I think you're right to note that some would lose their Earned Income Tax Credit.

If they did not buy the offered insurance. You're also right to note that the law could be amended to grant more coercive collection powers to the IRS. Whether Congress would do that is another question. Frankly, I haven't thought much about it.

I am not sure how Massachusetts manages such a low collection rate. I am projecting a higher collection rate for the ACA, to be sure. Still ... people who can't afford health insurance ... can't afford health insurance, and I think most of them will risk the tax. I think that millions of such individual decisions, in the aggregate, will cripple the health insurance industry.

-Laelth

[progree]

80. Its certainly a good argument for why premiums may rise at least somewhat

If they did not buy the offered insurance. You're also right to note that the law could be amended to grant more coercive collection powers to the IRS. Whether Congress would do that is another question. Frankly, I haven't thought much about it.

I am not sure how Massachusetts manages such a low collection rate. I am projecting a higher collection rate for the ACA, to be sure. Still ... people who can't afford health insurance ... can't afford health insurance, and I think most of them will risk the tax. I think that millions of such individual decisions, in the aggregate, will cripple the health insurance industry.

Its certainly a good argument for why premiums may rise at least somewhat (compared to no Obamacare). Ouch.

The CBO projects 4 million will pay the penalty in 2016, a number that includes the dependents of those who pay the penalty. 4 million is a just 1.3% of the current U.S. population (and even less of the 2016 population), so it probably wouldn't be enough to cause a death spiral. But only time will tell, and we won't know until for a number of years (for example a lot might sit out 2014 when penalties are lower -- greater of $95 or 1% of income)

[Lint Head]

76. Oh my friend you are SO right!

I have been trying to let this settle in my mind an interpret just what it means. You have summarized it in a fantastic manner. I think you may be correct and if I were gambling and playing the percentages my bet would be on your conclusion.