Saturday Links

Posted on by John C. Goodman

Paper straws have more forever chemical than plastic straws.

CMS: ACOs saved Medicare $1.8 billion. That is 2/10ths of 1% of total Medicare spending. Think how much more would have been saved if ACOs were allowed to convert to become Medicare Advantage plans.

CRFB: the federal government can save $370 billion over ten years by allowing health insurance subsidies for rich people in the (Obamacare) exchanges to expire by 2026.

As a senator, Joe Biden voted to raise the retirement age and impose a tax on Social Security benefits.

Should it be health care or healthcare? And why is it CMS rather than CMMS?

6 thoughts on “Saturday Links”

  1. From the article: “ there is absolutely no definitional difference between “health care” and “healthcare,”

    Agree. And yet the two terms are almost always used incorrectly. Because everyone complains about the cost of “healthcare” even though healthcare is free, or so nearly free that its cost is no impediment to getting it. The real impediments to health are poor diet, lack of exercise, insufficient sleep, drug and alcohol abuse, smoking, etc., etc. Improvine healthcare requires removing or lessening those impediments.

    Yet what most people actually mean by “healthcare” is either medical care or medical insurance. Medical care is most definitely costly, which is the reason medical insurance is also costly. They are related but not synonymous. The cost of medical care drives the cost of medical insurance, not the other way around. And if medical care were not so expensive, neither would medical insurance be expensive.

    Mixing up all these different elements in one bowl and calling the whole thing “healthcare” is an obstacle to analysis because it disguises the problem that needs to be solved: specifically, why is the cost of delivering medical care in the US so high, and what part does the general heath of our population play? Answers won’t be found if we don’t understand what problem we are trying to solve.

    Even in articles written by those who must know better, you’ll often see the term healthcare used interchangeably for medical care and medical insurance – sometimes in consecutive paragraphs, if not in consecutive sentences. So in addition to the confusion over terms, there is confusion among experts who the public relies on to lead on policy.

    I think this confusion of terms is an important factor in the failure of the country to make headway on solving the actual problem for more than 60 years. There is no clear grasp, much less general agreement, on what, exactly, the problem is.

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  2. The CRFB article on ACA subsidies is gated, but I am going to comment on it anyways because I know the subject pretty well.

    There are two ways whereby affluent people can get ACA subsidies.

    1. They live off assets and have a low declared income. (sort of like Jeff Bezos taking a loan from Amazon and not paying much income taxes.)

    When I sold ACA plans, this was a pretty tiny group.

    2. They face very high ACA premiums, usually because they are between 60 and 65.

    Say you have a husband and wife in New York state. The ACA premium is $25,000 for any silver plan.

    Say that their income is $200,000. The premium of $25K exceeds 8.5% of their income, so they get a subsidy of about $5,000.

    This is a narrow bank of people. If their income goes up to $300,000, they get no subsidy.

    Again this is a small group. Most people who make this much work for a corporation and get an employer plan.

    Without parsing the article, I don’t know where they got their cost estimate of $37 billion a year for these subsidies. It sounds exaggerated to me.

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  3. Bob, thanks for explaining (or at least speculating on) what’s behind the paywall. To me, a 20% subsidy on a guaranteed-issue insurance premium seems modest, and certainly lower than the tax benefit for employer sponsored insurance. Attempting to cap the subsidy would be to add another incomprehensible bubble to effective tax rates.

    It sounds like they are trying to find a way to levy an IRMAA tax on people who are not yet eligible for Medicare.

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  4. Thanks for comments, Bart. You raise a good point, in that some of the people who complain mightily about a new $5000 ACA subsidy for a well-off entrepreneur make no complaints at all when a well-paid corporate employee gets an even larger subsidy.

    I lost track on your last paragraph though. The IRMAA tax is harmful to a well-off person, whereas the new ACA subsidies are helpful to the well-off.

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    1. Thanks Bob, I meant that if the original article was about eliminating a $5000 subsidy for the wealthy, it would be comparable to imposing an IRMAA tax on ACA coverage. $5000 is roughly the fourth IRMAA bracket.

  5. Note that many of the “wealthy” using ACA are actually early retirees who have dropped employer coverage but are not yet eligible for Medicare. They may not be particularly wealthy, but instead have incomes that are temporarily bloated by Roth conversions as they try to reposition assets ahead of starting Medicare and Social Security.

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