Wednesday, July 30, 2014

What are Obamacare's failures?

The hysterical right-wing reaction to Obamacare has largely squashed any room for serious discussion of the law's many flaws--compared to their rhetoric of doom and gloom, even the worst aspects of the law seem like huge successes.

To be sure, the law has had tons of success already. Millions of people have gained health insurance, and millions more have been able to get it more cheaply with subsidies and other redistributionary mechanisms such as community rating, and more still saw their coverage expanded (some at additional cost) to include caps on out of pocket expenses, more coverage for kids, eliminations of lifetime maximums, and a variety of minimum coverage guarantees. We ought to be able to acknowledge that some parts of the law have succeeded to some extent, while other parts have failed to some extent. For a bill that was born out of compromise and gridlock, it was inevitable that it would include both good and bad aspects.

So here's a non-hysterical list of some of the aspects of the law that I think are failing:
  1. The website (duh).

    While early difficulties of the federal website are legendary, they have mostly now been fixed. However, some problems continue to linger, and the federal website was not the only one to have problems--four states that attempted their own exchange have now actually scuttled theirs due to technical problems, and will now default to federal exchanges.

  2. High deductibles.

    Of course, a lot of economists, including myself, have advocated higher deductibles as a way to encourage efficiency, because health insurance is not generally a very efficient way to pay for low-cost, routine expenses. However, I've noticed that economists' rhetoric on this has subtly shifted: the "high-deductibles" they were pushing for in 2007 were actually quite a bit lower than the average $5,000 deductible for actual bronze level Obamacare plans today, yet the same folks are still arguing for even higher deductibles. Even the silver plan average deductible of $3,000 is almost double the $1,600 USD deductible of Singapore's acclaimed "catastrophic insurance" system. So let's be honest about it: deductibles for Obamacare are surprisingly high--higher than almost all of us actually wanted.

  3. Screwed-up phaseouts of benefits.

    Anyone examining the law before it passed should have been able to tell that they'd screwed up the phaseouts. For example, there's a hard cutoff in eligibility for subsidies at incomes over 400 percent of poverty level that was never harmonized with the formula for subsidies below that threshold. While I have doubts about the veracity of that New York Times story about the Chapmans, the underlying point is valid: many individuals around Obamacare's various thresholds and cutoffs face effective marginal tax rates that are, if not greater than 100 percent, inefficiently high.

  4. Medicaid expansion.

    Obviously, the law's authors could not have known that the Supreme Court would amend the statute to make this expansion optional for states--an unprecedented move, quite literally in the sense that many court precedents had ruled in exactly the opposite way. And besides, they certainly can't be blamed for the absurd calculus that republicans are using to decide against accepting the expansion. And the medicaid expansion has nevertheless proven to be one of the most highly successful aspects of Obamacare, even in the face of obdurate republican obstruction. Nevertheless, the failure of some states to expand medicaid is a failure that begs for some fixing, either in state laws or federally, somehow.

  5. Employer mandate.

    Here's a part of the law that both was stupid to include and failed to work as intended, because the administration ended up delaying the provision twice. Ok, to be sure, some reports indicate that the expansion of employer coverage was one of the most wildly successful parts of the law with millions of workers gaining coverage through their employers, regardless of whether the employer mandate, which still hasn't come into effect yet, is somehow responsible. But, most health economists are in agreement that it would have been better to sever the connection between employment and health insurance altogether. Moreover, of all the ways we could have failed to sever that connection, the employer mandate was an exceptionally bad plan because it creates an additional layer of distortion, discouraging employers from hiring full-time workers.

  6. Accountable Care Organizations.

    To be sure, it's still way too soon to draw any conclusions about the ACO initiatives in Obamcare. However, this was basically the only major mechanism in the ACA that was designed to lower provider costs and encourage more efficient healthcare utilization. It's a far cry from the payment reforms that were originally considered in the debates over health reform. Morevover, uptake of the ACO model has not been very impressive, and for those that have, early reports have shown little reductions in cost or improvements in quality. It remains an open question whether ACOs are beneficial, but I'm skeptical that the effects will be big.

This isn't an exhaustive list, and I'm sure that there are many other ways in which aspects of the ACA have failed to fulfill their purposes. If you think of something not on my list, please share it in the comments!

Addendum: some readers will wonder why I didn't say anything about those whose insurers cancelled their plans as a result of the ACA. I'm filing that one under "sorry not sorry." Maybe it was stupid for Obama to promise that "if you like your plan you can keep it," but insurance cancellations were common before Obamacare, and frankly I'm not sorry your insurer won't be offering any of those ridiculously crappy plans anymore. Sorry, not sorry.

Tuesday, July 29, 2014

Debt-free and unhappy

Articles about mostly meaningless maps have exploded recently, and while I try not to pay attention, the unexpected correlation between these two from Slate and Vox caught my eye.
Map of reported happiness.
Map of debt collections.
Maybe the people in the South are not so much happy as blithe.

Monday, July 28, 2014

Monday Morning Music

I still have a couple more arias from Mozart's Abduction from the Seraglio I want to post. So here's Diana Damrau gloriously singing the coluratura aria Ach, Ich Liebt in her native tongue:

Friday, July 25, 2014

Jonathan Gruber was wrong!

Today Halbig's proponents are pouncing on the discovery of tape (above) from January 2012 in which health economist and Obama administration consultant Jonathan Gruber said:
"What’s important to remember politically about [Obamacare] is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges. But, you know, once again the politics can get ugly around this."
Unlike their previous evidence of Max Baucus's comments in a senate hearing, this one actually does say what they claim: for whatever reason, in January 2012 Gruber was under the impression that subsidies would not be available on federal exchanges.

However, this only supports the Halbig proponents' case if you ignore the dates. For one thing, 2012 is quite a long time after the ACA was signed into law, so that anything said in 2012 can't really be taken as evidence of what congressmen thought in 2009. But more importantly, at the time Gruber made these remarks he was already unambiguously wrong: 45 CFR 155.20, the section of federal regulations that defines "an exchange established by the state" to include federal exchanges, was proposed on July 15th, 2011, well before Gruber's remarks.

Gruber, of course, was not a member of Congress and his comments can't be construed as Congressional intent. But if you want to take his comments as evidence of the Obama administration's intent, you are simply wrong--they had explicitly and publicly taken the opposite position at least 7 months prior to Gruber's remarks! Here's how the administration described it's views at the time:
"The definition for an “Exchange” in §155.20 is drawn from the statutory text in section 1311(d)(1) and 1311(d)(2)(A). We interpret section 1321(c) of the Affordable Care Act to mean that this definition includes an Exchange established or operated by the Federal government if a State does not establish an Exchange."
That's pretty unequivocal, was made public well before Gruber's remarks, so don't go claiming that as of 2012, the Obama administration believed federal exchanges would not receive subsidies.

As a final thought, the proposed interpretation was made public in July 2011 explicitly for the purpose of soliciting public comment. A relevant question, and one to which I do not have an answer, is whether anyone submitted a comment challenging the administration's interpretation of "an exchange established by the state" for the purposes of calculating subsidies. That would be helpful in ascertaining whether anyone actually believed the Halbig proponents' interpretation at the time the rule was proposed. I'm hoping that a reader somewhere will have this answer.

Tuesday, July 22, 2014

Halbig fictions

If you haven't heard, a three-judge panel of the DC circuit court just ruled that individuals who bought health insurance on the Obamcare exchange in any of the 36 states that refused to set up their own exchanges are ineligible for subsidies. The case stems from a typo in the section of the ACA that lays out formulas for calculating subsidies, which refers to "state" exchanges rather than to both state and federally set up exchanges. Proponents argue that the typo was a deliberate: congress intended to deny subsidies to residents of states that refused to create their own exchange.

Mike Konczal points out the fundamental problem with the Halbig proponent's position. They are arguing specifically that the statutory language isn't a typo at all, and that theirs is the intended interpretation of the statute. Halbig and its proponents claim that the authors of the ACA intended to apply subsidies only to state implemented exchanges in order to coerce states into implementing exchanges so that the federal government wouldn't have to. As Konczal says, the proponents claim that it wasn't an ambiguous typo, but a secret doomsday device. The problem with that, of course, is you can't threaten people into submission if they aren't aware of your doomsday device--if this was intended to be threatening, then where is the threat?

Michael F. Cannon has done his best to dig up actual evidence of the Halbig threat:I will add the same disclaimer as Cannon did: this is the only evidence, anywhere, ever, that has been offered as support for Halbig's claim. Cannon states the proponent's case:
"Baucus’s response is hardly a model of clarity. But I can see no possible interpretation other than Baucus is admitting that (A) the statute makes tax credits conditional on states establishing an Exchange, and therefore does not authorize tax credits through federal Exchanges, and (B) that this feature was essential for the Senate’s tax-writing committee to have jurisdiction to legislate in the area of health insurance."
I want to point out that Cannon's point (B) doesn't really follow. This was an impromptu remark offering tax subsidies as one example of why the Senate Finance Committee has jurisdiction over the ACA. Indeed, the subsidies aren't even the only reason the Baucus offers--he starts by noting that the ACA is largely about medicaid regulations, which are indisputably exclusive jurisdiction of the committee. But this is a moot point--jurisdiction and parliamentary procedure are not disputed in the Halbig case.

As to point (A) I think you really have to twist the words to make them say that subsidies don't apply to federal exchanges. Here's the transcript of the video starting at 1:54 minutes in:
Ensign: "How do we have jurisdiction on changing state laws on coverage? [outside of Medicaid]"

Baucus: "there are conditions to participate in the exchange"

Ensign: "that's right"

Baucus: "for setting up an exchange"

Ensign: "these would be conditions to participate"

Baucus: "and states, an exchange is essentially is tax credits"
The last line reveals the full extent of Baucus's argument: "Senate Finance Committee because tax credits." Baucus was arguing that Senate Finance Committee can promulgate insurance regulations for plans offered on exchanges because plans on the exchanges are eligible for tax credits--at no point anywhere in the video is any contrast made between exchanges created by states versus HHS. In fact, adopting Cannon's interpretation that states can opt out of the tax subsidies actually contradicts Baucus's point because the bill does not allow states to opt out of the insurance regulations promulgated by the Senate Finance Committee (this is not disputed in Halbig). Had it been made clear, at any point during this hearing, that states opting not to set up their own exchange would be ineligible for tax subsidies, Senator Ensign would have attacked the validity of the committee's regulations on non-subsidized exchanges. He didn't do that, because it was clear to everyone in that room that non-cooperating states would still be eligible for tax subsidies. CASE CLOSED.

Besides, I don't accept this kind of evidence as valid. It gives individual congressmen way too much power. If Baucus had casually said in committee that section 1312 should be interpreted as requiring everyone to make him a sandwich, would we all be legally required to give him a sandwich? It was his intention, and there's nothing in the legislative record that says otherwise!

update: Here's an amicus brief, signed by Max Baucus, stating that
"Congress always intended that the tax credits be available to all Americans, regardless of whether they purchased their health insurance on a state-run or federally-facilitated Exchange."

update 2: Some readers I've talked to are getting too caught up in the actual argument about jurisdiction. This was always a moot point, because the committee's jurisdiction is whatever Baucus says it is. The full context of the clip above is this: the PPACA had already been assigned to Baucus's Finance Committee, and Ensign was trying to attach his medical malpractice reform bill as an amendment to the PPACA while it was still in committee, but Baucus refused to call a vote on the amendment, claiming that malpractice reform is outside the jurisdiction of the finance committee and that the amendment should be voted on separately by the full senate. In the clip above, Ensign is just trying to call out Baucus's hypocrisy, since he allowed the committee to promulgate insurance regulations that have little to do with tax law while claiming that malpractice regulations aren't in the committee's jurisdiction. As a legal matter this is irrelevant--as chairman of the committee Baucus is free to pick and choose what to hold votes on. So this entire clip is rhetoric and political posturing--actual legal disputes are settled in legal briefs drafted by outside legal experts, not impromptu exchanges between committee members. The clip above is relevant only to the extent that it is evidence of the zeitgeist in which the PPACA was passed, the actual points of contention in the video are moot.