Relevant and even prescient commentary on news, politics and the economy.

Health Care Exchange: Eligibility vs. Enrollment

by Bruce Webb

In the near four months since it passed out of Committee there has been little discussion of the Senate HELP Bill and the reason is clear, Max Baucus made it clear that Senate Finance would write a bill from the ground up. What this has meant is that the basis for comparing and contrasting alternate bills has been HR3200, the House Tri-Committee Bill. There are three main bills that have been presented in opposition to HR3200 with the Senate Finance Committee coming at it from the center-right while Wyden’s Free Choice Act and HR676, Single Payer, coming from the left.

The major critiques of HR3200 have focused around the Public Option, with SFC debating whether it should even be part of the bill, while the Free Choice Act and HR676 arguing that it is too weak. This latter set of arguments seems to me largely driven by a profound misreading of the bill that may in its turn be driven by ideology from the Single Payer Now folk that have combined into a toxic stew that has led both the original HR3200 and his successor to be labeled in the harshest possible ways.

In the eyes of many progressives the problem with the PO is that it is just too cramped and limited to a “small sliver” of the American people, that “200 million people” will find it unavailable, that only people who are currently uninsured can get it, and so on. Well none of that is right, but seeing why will take some lengthy quotation and parsing, which for those interested can be found under the fold.

During the campaign Obama promised people that if they liked their current insurance they could keep it, and the bill does that, but what too many people took away is the idea that if they had current insurance, particularly through their employer that they HAD to keep it, that only those people who didn’t have coverage at all, mostly the young, the self-employed, and workers in small businesses, would be served by the Exchange and the PO. Well lets go to the text, in this case the new House Bill.

SEC. 302. EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOYERS.
(a) ACCESS TO COVERAGE.—In accordance with this section, all individuals are eligible to obtain coverage through enrollment in an Exchange-participating health benefits plan offered through the Health Insurance Exchange unless such individuals are enrolled in another qualified health benefits plan or other acceptable coverage. (p.156)

The key word here is “enrolled”. Under the bill if your employer offers you insurance it has to be in the form of a Qualified Health Benefits Plan or QHBP, meaning that it has to meet all the accessibility, affordability and coverage provisions applicable to an Exchange plan which should mean in practice there would be little advantage to getting a QHBP Plan inside or outside the Exchange. So the bill writers and subsequently the CBO built in the assumption that most people who accept employer coverage, to the degree that they added a provision for employers to auto-enroll employees in the lowest cost plan offered by the employer. This process led many people to believe they were then simply locked into the company plan. Well not so fast, NOTHING permently locks you in, instead you have a number of different opt-out options.

Now one not acceptble option is simply not to have insurance at all, there are some religious exceptions but under the Individual Responsibility section there is a requirement for individuals to prove they have ‘Acceptable Coverage’. And what is that?

(2) ACCEPTABLE COVERAGE.—For purposes of
this division, the term ‘‘acceptable coverage’’ means
any of the following:
(A) QUALIFIED HEALTH BENEFITS PLAN COVERAGE.—Coverage under a qualified health benefits plan.
(B) GRANDFATHERED HEALTH INSURANCE COVERAGE; COVERAGE UNDER CURRENT GROUP HEALTH PLAN.—Coverage under a grand- fathered health insurance coverage (as defined in subsection (a) of section 202) or under a current group health plan (described in sub- section (b) of such section).
(C) MEDICARE.—Coverage under part A of title XVIII of the Social Security Act.
(D) MEDICAID.—Coverage for medical assistance under title XIX of the Social Security Act, excluding such coverage that is only available because of the application of subsection (u), (z), or (aa) of section 1902 of such Act.
(E) MEMBERS OF THE ARMED FORCES AND DEPENDENTS (INCLUDING TRICARE).—
Coverage under chapter 55 of title 10, United States Code, including similar coverage furnished under section 1781 of title 38 of such Code.
(F) VA.—Coverage under the veteran’s health care program under chapter 17 of title 10 United States Code.
(G) OTHER COVERAGE.—Such other health benefits coverage, such as a State health benefits risk pool, as the Commissioner, in coordination with the Secretary of the Treasury, recognizes for purposes of this paragraph.

Well that is clear enough, an individual meets his responsibility requirement by showing he is covered under his employer plan, his spouse’s employer plan, perhaps a parent’s family plan or by a range of other public insurance plans. And in any of those latter situations the employee can opt-out of new employer coverage offers. But one of these opt-out possibilities is somewhat hidden here, that is the one that allows any employee to opt-out of employer coverage altogether and get an individual or group plan through the Exchange, including the PO, because in doing so he would meet the requirement of (A), the Public Option is explicitly defined as a QHBP. So where did the idea that the PO was only for the uninsured and was so limited to a fraction of the population arise?

Well a couple of places. First as noted the expectation is that most new employees without health insurance would simply enroll in whatever employer supplied plan level that met their needs, and that those who failed to do so would simply be auto-enrolled by the employer as provided in Sec 412 (c)

(c) AUTOMATIC ENROLLMENT FOR EMPLOYER SPONSORED HEALTH BENEFITS.—
(1) IN GENERAL.—The requirement of this subsection with respect to an employer and an employee is that the employer automatically enroll such employee into the employment-based health benefits plan for individual coverage under the plan option with the lowest applicable employee premium.
(2) OPT-OUT.—In no case may an employer automatically enroll an employee in a plan under paragraph (1) if such employee makes an affirmative election to opt out of such plan or to elect coverage under an employment-based health benefits plan offered by such employer. An employer shall provide an employee with a 30-day period to make such an affirmative election before the employer may automatically enroll the employee in such a plan. (p. 273-4)

If the employee does opt-out during that 30 days he is not “enrolled” and so falls under the definition of “exchange eligible individual” as defined in Sec 302. At which point the provisions of Sec 411 (3) kick in:

(3) CONTRIBUTION IN LIEU OF COVERAGE.—
Beginning with Y2, if an employee declines such offer but otherwise obtains coverage in an Exchange- participating health benefits plan (other than by reason of being covered by family coverage as a spouse or dependent of the primary insured), the employer shall make a timely contribution to the Health Insurance Exchange with respect to each such employee in accordance with section 413.

In short you are ‘exchange eligible’ unless you ACCEPT enrollment or ALLOW yourself to be auto-enrolled. On my reading there is no such thing as a lockout for any given individual, if you want the PO you can get it, though not without taking some positive action.

But what about employers? Why are they locked out of the Exchange and the PO? Well the answer is that they aren’t, at least not permanently, that is simply the result of misunderstanding the language governing ‘transition’. Subject for another post.

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That 3.5% rise in GDP

UPDATED

Divorced one like Bush wants to know how accurate the polling was that came up with a consensous that the GDP rose 3.5% in the third quarter. I did my own poll last night at band practice and 100% of the self employed band members (only one for an employer and that’s the public school system) said they did not see it in their business.

I think this GDP rise, “we’re out of the recession” was just more of the inside the beltway pundit MSM happy talk. How else can you explain a 200 point rise in the Dow?

UPDATE:
I took another poll today. It’s of retail. It’s a poll of 1, but I think it’s significant. The results are good. Retail sales were up 5.3% for the 3rd quarter over the same time last year. WOW! I think I’ll buy stock in this company. Here’s how it broke out:
July up 19.4%,
August down 14.2%,
September up 12.2%.
Six out of the last nine months were negative as compared to last year.

Here’s how the money flowed:
Account sales down 11.8%,
American Express up 78.4%,
Cash down 3.2%,
Discover down 39%,
Visa/Master Card up 24.6%.

Here’s the Advanced Retail Sale report from October 14, 2009

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for September, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $344.7 billion, a decrease of 1.5 percent (±0.5%) from the previous month and 5.7 percent (±0.7%) below September 2008. Total sales for the July through September 2009 period were down 6.6 percent (±0.3%) from the same period a year ago. The July to August 2009 percent change was revised from +2.7 percent (±0.5%) to +2.2 percent (±0.2%).

Retail trade sales were down 1.7 percent (±0.7%) from August 2009 and 6.4 percent (±0.7%) below last year. Gasoline stations sales were down 25.3 percent (±1.3%) from September 2008 and building material and garden equipment and supplies dealers were down 13.0 percent (±2.0%) from last year.

And the Dow came back to reality today. At least for the moment.

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HR3962: the new House Bill and its Scoring

by Bruce Webb

Well I have been venturing around the blogosphere and it is grievously clear that most people did not take my advice and Read the Bill!. Well it is not too late: http://docs.house.gov/rules/health/111_ahcaa.pdf (3.3 MB) Moreover CBO followed up with their preliminary analysis:
http://www.cbo.gov/ftpdocs/106xx/doc10688/hr3962Rangel.pdf

The above image is Table 2 and it shows the before (current law) and after numbers. There is a substantial amount of confusion on this with some people adding where instead they should be subtracting and I’ll have to admit while I got the arithmetic operation I mislabeled the results elsewhere. So lets sort it out.

Under current, pre-reform law CBO projected that by 2019 there would be 54 million uninsured American residents, which figure includes undocumented workers. Since under current political conditions it is impossible to extend real reform to include “illegals” any solution will be by nature incomplete. In the case at hand CBO projects that the House bill would extend coverage to 36 million residents leaving 18 million without insurance. Of that 18 million a third or 6 million will be “illegals” leaving 12 million legal non-elderly residents without coverage (some people have tried to add 18 + 12 to get to 30, going the wrong way down One Way Math Street). This 12 million number will include both the so-called ‘invincibles’ who would rather pay the fine than get coverage as well as people who are Medicaid eligible but for whatever reasons can’t manage the paperwork labyrinth. But generally if you are a legal resident of the U.S. who wants insurance you will be able to get it. (Affordability is another question, I think the bill contains adequate provisions for that, others will have differing opinions, we can fight that out in comments or on subsequent posts).

In percentages that adds up to 94% of the total non-elderly population up from 81% today, while it is 96% of the legal non-elderly population, up from 83% today. Not exactly the Universal Single Coverage that people like me would like, but still closing roughly 75% of the gap. Not bad considering the somewhat artificial restraints of both keeping the bill’s cost under $900 billion AND making it deficit neutral over the ten year window.

(Minor note. People are still referring to ‘HR3200’ but as you can see the bill number has changed to ‘HR3962’

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Dr. Black asks, AngryBear Answers

The question:

How much was credit being funneled away from all other sectors in the economy?

The answer: Very little if any. Neither the general consumer lending:

nor the specific Real Estate lending:

appears to run in a different direction that Business Loans, except possibly, in the latter case, in late 2003 and early 2004.

Looking at the absolute numbers, while there is a significant negative correlation with consumer lending for the period, that is more than offset by the significant positive correlation with Real Estate lending over the period.*

So the statement probably made a good soundbite, but the reality is that all lending generally increased during the peak of the bubble. There does not appear to be evidence of “crowding out” of Business Loans.

*Real Estate lending for the period averages more than four times greater than consumer lending (2.73 trillion v. 680 billion), so the net result over the period is positive to business lending.

By contrast, a regression of the changes over the same period and there is virtually no support for the idea; Adjusted R^2 was slightly negative, and the coefficients both include 0 in a 95% confidence interval.

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1204 and forever…more unitary executive?

Rdan

Hat tip Naked Capitalism regarding the Financial Stabilility Improvement Act as described by Washington’s Blog concerning banks/investment companies ‘too big to fail’ actions by the US and EU countries.
October 29, 2009 begins testimony on more emergency powers by the executive branch.

The House Committee on Financial Services will hold a hearing on the bill tomorrow, with Tim Geithner, Sheila Bair, John C. Dugan (Comptroller of the Currency), Daniel K. Tarullo (Governor, Board of Governors of the Federal Reserve System), John E. Bowman (Acting Director, Office of Thrift Supervision), Richard Trumka (President, AFLCIO), and others as witnesses.

Since unitary executive power has been the trend in the last few decades, each party sort of picking its turf to expand regardless of actual programs, this is a worry. It is timely to review how the F-22 stayed alive and well regardless of inefficiencies, and the opportunities costs of this way of doing business. Decades of costs.

Are we ever going to try and deal with the main street economy, or is that for historians? Where is the vision for more than the welfare of financials, or multinational companies?

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Economic time/space phenomenon: Health care/Unemployment

by divorced one like Bush

While your reading this, think about the physics concept of two things occupying the same time and space. Think about the similar idea that light is both a wave and a particle. Think about the message we have been told that many very bright people (like physicist) went to Wall Street.

During my lunch break I was watching C-span, the Senate. My Senator, Mr. Whitehouse was speaking on the need to move on the extension for unemployment insurance. Two comments were made. First, that 7000 people per day are falling off the unemployment rolls since October eighth.

Seven thousand people per day! Got to wonder how many of these have no health insurance and thus will become a member of the forty four thousand group that dies because of no health insurance.

This brings up the second comment Senator Whitehouse made as a means of putting a face, a person, people into the economic equations. There is a woman, a mother of 2 children in their early teens who has been unemployed for 13 months. She is recovering from a heart attack.

Now, you do not have to take my word for this, but it is rather well understood that stress is a cause of heart disease, though stress is not selective. It can cause havoc with just about any system of the body and it usually effects more than just one simply do to the fact that our body’s systems do not function in isolation to all the others.

So just what do you think is going to happen to this mother and her family if she falls off the unemployment rolls? Does she no longer cost our society? For those who argue that people think the public option or the real solution, a single payer system means “free”, I ask: Do you theorize that this mother and her family will no longer be an effect on your personal income when her unemployment stops and thus their life is free to you?

Do you/we understand that this woman is the realization of two things occupying the same space and time, yet appearing as two different entities in the “science” of economics? This woman and her family will not be free to us! This woman will cost us regardless. It is not, I am sure, this woman or I who thinks her life should be free (as in no money needed). It’s only those who think this woman costing them is an inefficiency who think her life should be free. They mistake the loss of risk do to the accumulation of money as free from cost.

We all cost each other in some way. Our goal should be to make efficient, every one in our economic system. We should, at this time after having so many experiences with recessions/depressions, understand that the only true efficiency of an economic system is the efficiency of people’s lives. The only way to efficiency is to reduce risk collectively. But, instead we are still chasing the efficiency of money as in not having the health care cost bust a budget (but Ok’ing the war) or equating unemployment as costing us while we bail out Wall Street.

With all the bright people we are told that went from physics/mathematics to Wall Street, people who understand the ability for something to appear the same, yet different, that one thing can occupy two places at once yet have two things occupy the same space and time, how can they/we not understand that an economy is not and can not be discussed, manipulated or changed without a basic acceptance that it is one living and breathing, energy producing and expending entity? It’s efficiency, as in the conservation of energy law is found in people, not money. An economy’s efficiency is calculated by the accumulated reduction of risk, not increase in money. Counting, manipulating, playing with the money is like playing with the energy and ignoring the matter.

This woman Senator Whitehouse talked about and her situation is the phenomenon realized of the Theory of Everything which Einstein went to his death trying to solve . Einstein was working in the wrong science. Had he been in economics he would have succeed in proving this Theory I believe. But, if not him, then certainly John Nash should be able to recognize such. It is his theory that takes into consideration everyone’s decisions. We’re talking integration. Systems. Ecosystems, physiologic systems, physics, economic systems all described in mathematics. Math, the thing those people on Wall Street and the Chicago School (or is it the lake school?)are suppose to actually understand.

For our mother in this story who has heart disease, the real cure is not going to be found in health care. For her, solving the health care insurance problem is only a stop gap measure which does not maximize the efficiency of her life such that her cost to us is as close to free as it can be. To accomplish such, she needs money in hand. Only money in hand can allow her the ability to make the type of decisions that will reduce her risk and thus cost to us. Simultaneously, solving just the money in hand will not solve her health issues. She is one entity in different economic time/space. We can accept such or, we can keep ignoring the realm in which the solution to the Theory of Everything is found and keep treating economics as physics: A science with a mathematical dichotomy between the small and large.

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