The ACA in August 2016 2.

One means to control costs included in the Affordable Care Act (ACA) took the form of a mechanism for publicly reviewing requests for rate increases by insurance companies.[1]  In Summer 2016, health insurance companies began requesting large increases in premiums.[2]

A witness for one Pennsylvania health insurer observed that his company had about 250 clients who had signed up for coverage under the ACA, then received treatment worth about $100,000 each, and then had cancelled their policies immediately after receiving treatment.[3]  The cost of the care then had to be passed on to other clients.  In Montana, ten individual customers consumed more than $4 million in care in the first six months of 2016, for an average of about $70,000 a month each.  In this case, 1 percent of customers accounted for 30 percent of pharmacy bills.  Making matters worse, in the first years of the ACA, a federal program helped insurers pay the cost of some of the most expensive claims.  Now, according to a Department of Health and Human Services economist, that program is winding down.

What has been happening in Pennsylvania is not unique to the Keystone State.  In Montana in 2015, one insurer reported that it had paid out $1.26 in claims for every $1.00 in premiums.  Unable to sustain such losses, major insurance companies have had to choose between seeking much higher premiums and abandoning the health-insurance market places.  In 20 states, insurers have asked to raise their premiums by at least 25 percent.  In some other states, insurers seem to be abandoning the market places to more efficient or competitive insurers.

 

Who are the uninsured?[4]

More than half of the uninsured live in the 20 states that refused to expand Medicaid, many of them populous Southern states like Texas and Florida.  As a result, 39 percent of the uninsured have incomes below the federal poverty level.

In 2013, 28 percent of people between 19 and 34 years old were uninsured; today 18 percent are such “Millennials.”  Still, that 18 percent accounts for almost half of the total uninsured.

In 2013, 50 percent of the uninsured were white; now 41 percent are white.

In 2013, 36 percent of the uninsured were American citizens of Hispanic descent; today 29 percent of the uninsured are American citizens of Hispanic descent.[5]

In 2013, 13 percent of the uninsured were black; now 12 percent are black.

More than half (57 percent) of the working Americans without insurance work for small companies that were exempted from the requirement to provide insurance.

[1] It speaks volumes to the intellectual world inhabited by Democratic legislators that the NYT reporter Robert Pear can describe the process as intended to “shame” companies that requested increases.  Apparently, Democrats believe that immense profits by health insurers and exorbitant pay for executives explain high health costs.

[2] Robert Pear, “Health Insurers Use Reviews, Intended to Constrain Rate Jumps, to Justify Them,” NYT, 15 August 2016.

[3] The chief executive of the federal insurance market-place optimistically portrayed the join-spend-quit pattern as a one-time “decline in pent-up demand for services.”  In all likelihood, uninsured people will continue to pen-up their use of services, then join-spend-quit again.  Robert Pear and Reed Abelson, “As Insurers Balk, U.S. Makes New Push for Health Care Law,” NYT, 18 August 2016.

[4] Abby Goodnough, “Still Uninsured, Even With the Health Law,” NYT, 18 August 2016.

[5] However, the ineligibility of illegal immigrants for coverage means that the total Hispanic share without insurance has risen from 29 percent to 40 percent.

The ACA in August 2016.

Prior to passage of the Affordable Care Act (ACA), many Americans received their health insurance through their employers; many others bought individual insurance; and a relatively small percentage had no insurance at all.  As one part of the effort to extend health insurance to the uninsured, the ACA required everyone to have insurance, created a system of subsidies to make that insurance affordable for lower-income people, and encouraged the creation of market-places where individuals could purchase standard plans offered by insurance companies.[1]  (In essence, lots of younger, healthier, lower-income people would be constrained to buy insurance to pay for the care of older, sicker, and often higher-income people.)  Broad participation in the health-exchanges by the major insurance companies would create a competitive environment that would help hold down prices while providing a broad array of choices to customers.

In spite of the unfortunate early mishaps of the ACA (the botched roll-out of the web-site, the president’s terminological inexactitude about keeping one’s insurance, the Supreme Court’s invalidation of the portion of the ACA that tried to coerce states into expanding Medicaid), far more serious problems have begun to emerge.

In what seems to have come as a surprise to Democrats and the New York Times (“but I repeat myself” as Mark Twain once said), it turns out that people really are economic animals.  First, for many potential customers, the price of health insurance is too high for what it would buy.  While it had been projected that about 21 million people would be enrolled in health exchanges by 2016, only about 10 million have enrolled.  That’s a lot of premiums that never get paid to insurers.  In 2015, half of the people who did buy insurance in the market-places bought the cheapest possible plan.[2]  Those who buy the more expensive plans tend to be people with serious medical conditions.  Furthermore, many of these customers don’t care about choice of physician or the size of the network of providers. They have opted for plans offered by smaller insurance companies.  Some of these companies already had deep experience dealing with Medicaid payments.  They knew low income customers and they knew how to keep down costs.  Part of this involved limiting choice of care to doctors and hospitals that were willing to accept a low level of payment.

Second, private enterprise runs on a profit and loss basis.  Having run health insurance policies for employer-provided health insurance, the major insurance companies assumed that their new customers would want the same range of choice of physicians and hospitals.  They didn’t.  Anticipating large numbers of customers, many without serious health needs, the insurance companies priced many of their policies too low.  Getting half as many customers, many with serious health issues, the insurance companies suffered heavy early losses.  Facing continuing huge losses in this sector of their business, major insurers like United Health Group, Humana, and Aetna have either decided to pull out of the health-exchange market or limit their participation.  The insurers who remain in the health exchange market place plan to steeply raise premiums for 2017.  This may well drive even more price-sensitive customers out of the market place.  A health care expert at the Urban Institute rationalized that “you can’t lower costs without breaking some eggs.”  In this case, the “eggs” are companies owned by stock-holders as an investment of their assets.  The big insurers need to learn the market or to get out.

One solution would be to let the experienced low-cost providers take over this market.

[1] Reed Abelson, “Health Insurers Lose as Clients Focus on Costs,” NYT, 13 August 2016.

[2] “Bronze,” like coffin handles.

Campaign Issues 2016 3.

Hind-sight is 20/20; foresight is not.  The basis of the Affordable Care Act (ACA) lay in a plan to require many younger, healthier, and lower income people to pay premiums that would subsidize the health-care costs of older, sicker, and wealthier people.[1]  Even so, support for the ACA has grown with the passage of time.  In 2013, less than a third (32 percent) approved of the ACA, while 61 percent disapproved.    By July 2015, 47 percent approved, 44 percent disapproved, and only 9 percent “didn’t know.”  Opponents of the ACA have been the big losers here, bleeding away almost a third of their numbers to either supporters or to “don’t know.”[2]

Before the Affordable Care Act (ACA) went into effect, 17.1 percent of Americans had no health insurance.  By 2013, the share without health insurance had fallen to 13.3 percent; in 2014, 10.4 percent of Americans had no health insurance.[3]  By Spring 2015, that number had fallen to 11.9 percent, a reduction of 5.2 percent.[4]  (This seems like a lot of hassle just to reduce the number of uninsured by one-third. )  In March 2015, the Congressional Budget Office (CBO) predicted that 21 million people would have signed up for coverage by state exchanges under the ACA by late 2015. This would be a pretty extraordinary jump: only 9 million people were registered in late 2014.  By late October 2015, only an additional million people had enrolled.

The great thing about a market economy is that it forces sellers of any good to find a price that is high enough for them to make a profit and low enough to attract customers.  The first years of the ACA have seen insurers searching for that sweet spot.[5]  One big problem is that many people remain outside the insurance market, regardless of the individual mandate.  The newly-insured have turned out to be sick people, rather than a broad range of the population.  Costs for insurance companies have gone up more than have income from premiums.  As a result, health insurance premiums rose by 5 percent for 2016.  Now, major insurance companies are seeking an average 10 percent increase in premiums for 2017.[6]  (The desired rates for Washington, DC and New York City are 16 percent.)  At some point, the insurance companies will find the right price.  Where is that price?  Will premiums continue to rise after 2017?  It’s difficult to say.  Why do uninsured people not enroll?  Young, healthy, and less-well-off people seem to be staging a libertarian revolt against the mandate that everyone have health insurance.

The ACA is a substantial extension of the entitlements safety-net for the benefit of poor people at the expense of not-so-poor people.  The federal government subsidizes to varying degrees many of the insurance premiums.  This means that higher premiums will increase federal spending on health care.  At some point, even in America, taxes are going to have to go up to pay for spending or spending is going to have to come down to what the country is willing to pay.[7]  However, people with higher incomes who buy insurance on the market-place lose the subsidies, so they are going to feel the sticker shock.  If it comes to higher taxes, Democrats are going to favor preserving the entitlement by taxing the one-percent, while Republicans are going to favor sending the ACA in front of a “death-panel.”

[1] This sounds like a Republican plot, but Republicans had no voice in the ACA.  This is all Democrats.

[2] “Poll Watch,” The Week, 10 July 2015, p. 17.

[3] “Noted,” The Week, misplaced the exact reference.  Sorry.

[4] “Noted,” The Week, 24 April, 2015, p. 16.

[5] Reed Abelson and Margot Sanger-Katz, “Obamacare Premiums Are Rising, Not a Little,” NYT, 16 June 2016.

[6] These sorts of developments have been predicted by Republican critics from the beginning.  Some of them have predicted that it will end in a “death spiral” as rising premiums force people out of the market.   Democrats derided this as partisan fear-mongering.

[7] I realize that this is a disturbing new way of looking at things.

The Syrian Refugee Crisis.

A civil war between the Sunni majority and the Shi’ite minority has been ravaging the Middle East. Since the outbreak of the Syrian civil war in 2011, more than four million refugees have fled the country.[1] While many went first to all the surrounding countries (Lebanon, Jordan, and Iraq), most went to Turkey. By late 2011, the number of refugees in Turkey reached 7,600. By the end of 2012 the number of refugees in Turkey topped 135,000; the number in Egypt passed 150,000. In summer 2014 the appearance of ISIS in eastern Syria and western Iraq sent the number of refugees soaring. By August 2014 the number of refugees in Turkey reached an estimate 850,000. Then the CrISIS just exploded in the second half of 2014. Western aid workers were decapitated, a Jordanian pilot was burned to death, and Yazidis were enslaved. Huge numbers of Syrians “loaded up the truck and moved to Turkey-ey.” By early 2015, Turkey had 2.1 million Syrian refugees within its borders. Camps expanded and proliferated.

Then, in late summer 2015, hundreds of thousands of Syrian refugees suddenly sought to scale the walls of the European Union (EU). More than 300,000 refugees from Syria entered the EU between January and July 2015. It accelerated from there, with 100,000 refugees entering the EU during July 2015. Now hundreds of thousands are pressing their noses against the glass in Hungary, Croatia, and Slovenia. Media attention has focused on the appalling human suffering in the West.

How did hundreds of thousands of refugees get from camps in southern Turkey to either the Greco-Turkish frontier near Edirne or to the Turkish coast opposite the nearby Greek island of Lesbos? Most of the refugee camps are in Hatay Province in the far south. There is a railroad station in Iskenderun in Hatay province. The line from Iskerderun runs through Adana, Konya, Afyon, and Izmir (Smyrna) to the port of Dikili, on the Aegean. Dikili faces the island of Lesbos, the nearest Greek land. Lesbos has been swamped in refugees crossing from Turkey. How has the Turkish government failed to perceive or resist this huge movement of people? Are the Turks actually trying to organize the movement of refugees from the camps to the coast?

The 100,000 refugees to be taken in by the United States in the next several years seem ridiculous compared to the need. However, the Gulf states have taken in no Syrian refugees. None, nada, zip. They have pitched in a bunch of money to support the refugees. Those sums are piddly compared to what the United States has contributed. The refugee-aid sums provided by Kuwait, Saudi Arabia, the United Arab Emirates, and Qatar amount to 60 percent of what the US alone has contributed. In short, the Sunni Arab states aren’t concerned.

The Syrian refugee migration is best understood as part of the larger civil war in the Muslim world between Sunnis and Shi’ites. The Sunni Turks and the Sunni Saudis want the Alawite (a sect of Shi’ism) government of Bashar al-Assad gone. Shi’ite Iran wants the Assad regime to remain in place. How to get the western powers to intervene more effectively against the Assad regime? How about you cause them a bunch of problems? Hence, the refugee crisis.

Western states are deluged in migrants. These refugees are unwelcome in the West. It would be best if they went home. How to get them to go home? We’ll, no one is going home if the Assad government or ISIS is in a position to do them harm. So, get rid of Assad and ISIS. The Sunni states (Turkey, Saudi Arabia) are muscling the West by indirect means to overthrow the Assad regime. The Syrian refugee crisis is an act of aggression against the West by its nominal allies.

[1] https://en.wikipedia.org/wiki/Refugees_of_the_Syrian_Civil_War

Character Test.

Eduardo Porter has argued that Americans have been guided by a shared disdain for collective solutions and a belief individual responsibility. The conservative argument offered by Charles Murray and others is that the welfare state has undermined the character of its beneficiaries. The liberal argument offered by Eduardo Porter and others is that America has relied on continuing prosperity instead of a real welfare state. When long-term economic troubles hit, many Americans plunged through the cob-web of a “safety net.”[1]

On the right, in line with the moral corruption argument made by Murray, Republicans propose to repeal the Affordable Care Act and cut a bevy of other programs for the poor. This will end the culture of dependency that many conservatives blame for creeping social pathologies that came to light after the recent Baltimore riots that followed the arresting-to-death of Freddy Grey. The Republican budget plans seem like a dead-end. For one thing, they target relatively low-cost programs aimed at the poorest Americans. In reality, defense, Medicare/Medicaid, and Social Security are the big drivers of government spending. As Willy Sutton explained when asked why he robbed banks, “That’s where the money is.”

For another thing, these categories of spending are widely popular with the American middle class. Once again, as with opposition to gay marriage and to immigration reform, Republicans are picking the losing side of an argument. Takes Social Security as an example. As the Baby Boom retires, it places a mounting pressure on the system. When current revenue through withholding is inadequate to meet obligations, the System draws on the Social Security trust-fund (built up from revenue surpluses in the past). At the moment, the trust-fund is expected to be exhausted by 2033. After that happens, retiree benefits will be reduced to perhaps 75 percent of expected benefits.[2] Senators Elizabeth Warren and Bernie Sanders favor raising or removing the cap on Social Security withholding to greatly increase revenue for the supplemental retirement income system. However, they favor going beyond stabilizing the finances of the present system to create an expanded national pension system.[3]

This seems likely to emerge as a powerful issue in future elections. In 2005, 26 percent of still-working Americans expected “to rely on Social Security as a major source of income” in retirement. In 2015, 36 percent of still-working Americans “expect to rely on Social Security as a major source of income” in retirement. Among currently retired people, 73 percent are receiving reduced benefits because they retired early.

There are several possible explanations for the growing place of Social Security in the retirement income of Americans. One explanation could be that the Great Recession devastated both the savings and the income of ordinary Americans. Another explanation could be that a decade of aging forced many Baby Boomers to confront their own lack of thrift over the course of a lifetime. Similarly, the huge number of people who took early retirement could be explained by either the moral corruption argument or by the ravages of globalization over the last 25 years.

If conservatives want to sustain the moral corruption argument, they will have to openly apply it to middle class entitlements. Of course, cannibalizing the Affordable Care Act could provide some of the revenues to shore up middle class entitlements. However, this would require the middle class to turn its back on the poor. So, a test of character.

[1] Eduardo Porter, “Income Inequality Is Costing The Nation on Social Issues,” NYT, 29 April 2015.

[2] “Social Security worries mount,” The Week, 22 May 2015, p. 32.

[3] This strikes me as equivalent to the sort of defined-benefit system that American companies found to be unsustainable and abandoned in favor of the defined-contribution systems. Perhaps I’m wrong.

Still More American Public Opinion.

What do Americans think of the Affordable Care Act (ACA)? The polls have been blurry. In March 2014, 41 percent of people approved of the ACA, while 53 percent of people disapproved. There was a big partisan break-down: 72 percent of Democrats approved it, while only 8 percent of Republicans approved it. Those figures raise their own puzzles. Why are 28 percent of Democrats opposed to the law or unsure if they approve it? If 72 percent of Democrats and 8 percent of Republicans approve the law, where do Independents stand? In another poll in May 2014, 61 percent that they either wanted Congress to leave the ACA in place or—at most—tinker with any flaws. In contrast, 38 percent of people wanted the law repealed.[1] Approval of the ACA appears to have shot up from 41 percent to 61 percent, opposition to have fallen from 53 to 38 percent. Did this mark a sea-change in attitudes toward the ACA or a polling error?

What do Americans think about race relations? In 2009, after the election of Barack Obama to be President of the United States, 66 percent of people thought that race relations were good. Then came the shooting of Michael Brown in Ferguson, MO. In August 2014, 80 percent of African-Americans thought that the shooting “raises important questions about race that need to be discussed.” Only 37 percent of whites agreed. Almost half of whites—47 percent—thought that race was “getting more attention than it deserves.” In December 2014, 85 percent of African-Americans disapproved of the decision by the grand jury to not indict Darren Wilson, the police officer who shot Michael Brown. Overall, 45 percent of Americans disapproved of the decision, while 48 percent approved it. By January 2015, 40 percent of people believed that race relations were “fairly good” or “very good.”[2] There is a rough similarity between the figures for those who had believed that race was getting too much attention, for those who approved the decision not to indict, and for those who believe that race relations are good.

What do Americans think about opportunity in America? In November 2014, 24 percent of people believed that the economy is “fair to most Americans,” while 71 percent think that it “generally favors the rich.” A majority—57 percent–of those who earn more than $100,000 a year agree. However, 43 percent of those who did not vote in November 2014 were African-American or Hispanic-Americans, and 46 percent earned less than $30,000 a year.[3]

What do people think about getting anything accomplished in government? In January 2015, 60 percent of Americans believed that the Congress elected in November 2014 will not accomplish any more than the previous bums. Even more, 72 percent, doubted that the Republican majority in the Senate would accomplish anything more than did the Democratic majority. Some people seem frustrated with this situation, while others are satisfied. Thus, 46 percent of people believed that President Obama should wait on action by Congress to solve the immigration issue. According to the first poll, however, most people expect that such action will not come. In contrast, 42 percent of people favored the president issuing an executive order to deal with immigration. Finally, 59 percent of people favored building the Keystone XL pipeline. This included not only 83 percent of Republicans, but also 43 percent of Democrats.[4] The president vetoed that bill.

[1] “Poll Watch,” The Week, 4 April 2015, p. 15; “Poll Watch,” The Week, 23 May 2014, p. 15.

[2] “Poll Watch,” The Week, 29 August 2014, p. 17; “Poll Watch,” The Week, 12 December 2014, p. 19; “Poll Watch,” The Week, 16 January 2015, p. 17.

[3] “Poll Watch,” The Week, 14 November 2014, p. 19.

[4] “Poll Watch,” The Week, 23 January 2015, p. 17; “Poll Watch,” The Week, 28 November 2014, p. 15.

American Public Opinion.

So, regardless of what the politicians say, what do Americans think about some issues?

Back in September 2014, in the wake of the Islamic State’s over-running of much of Iraq, 53 percent of Americans approved of President Obama’s strategy for dealing with ISIS.[1] However, 64 percent of Republicans and 60 percent of Democrats approved. How did those higher numbers end up with an average of 53 percent? This suggests that there is a big group of Independents who don’t like the President’s policy.

In the November 2012 elections, 68 percent of Hispanic voters supported Democrats and 33 percent supported Republicans. In the November 2014 elections, 62 percent of Hispanic voters supported Democrats and 36 percent supported Republicans.

What do Hispanic voters care about? Not immigration reform. Only 16 percent of those polled in November 2014 ranked that as their primary concern. Health care came first for 24 percent. The economy in general came first for 49 percent.[2]

Two thirds of Americans are satisfied with the current US health-care system. [That’s a blurry response. Are they satisfied with the medical care they receive or are they satisfied with how the Affordable Care Act operates or both?] A whopping 74 percent of Democrats are satisfied, but even 60 percent of Republicans are satisfied.

The “war on guns” appears to be headed in the same direction as the “war on drugs.”[3] In 2000 only 29 percent of Americans favored preserving gun-rights over gun-control. By 2013, 45 percent favored gun-rights over gun-control; in 2015, 52 percent favored gun-rights over gun-control. This included 54 percent of African-Americans, up from 29 percent in 2012.

In the immediate aftermath of the “Charlie Hebdo” massacre in Paris, 63 percent of Americans believed that it was more important to preserve free speech than to not offend religious people. Only 19 percent thought it important to avoid offending other people.[4]

In early 2015, 49 percent of Americans identified as “pro-choice,” while 47 percent identified as “pro-life.” However, 84 percent favor liming abortion to the first three months of a pregnancy. This includes 69 percent of those who identify as “pro-choice.”[5]

This is a puzzler. Does it mean that a lot of pro-life people wouldn’t have an abortion themselves, but don’t really want to proscribe abortions for other women who find themselves in a jam? Does it mean that lots of pro-choice people think that abortion is a necessary evil, rather than a categorical right to be exercised at any time?

As of early 2015, 60 percent of Americans thought that middle-class people pay too much in taxes; 68 percent believe that the rich pay too little in taxes.[6]

A huge majority of Republicans—69 percent–agree with Rudy Giuliani that President Obama doesn’t love America. A huge majority of Democrats—85 percent—believe that does too love America.

One of several bizarre things here (aside from so many Republicans agreeing with that idiot Giuliani) is that apparently 15 percent of Democrats either believe that the President doesn’t love America or they’re not sure.

[1] “Poll Watch,” The Week,” 26 September 2014, p. 17.

[2] “Poll Watch,” The Week, 21 November 2014, p. 19.

[3] Timothy Williams, “Poll Finds That More Americans Back Gun Rights Than Stronger Controls,” NYT, 12 December 2014.

[4] “Poll Watch,” The Week 26 January 2015, p. 17.

[5] “Poll Watch,” The Week, 6 February 2015, p. 17.

[6] “Poll Watch,” The Week, 6 March 2015, p. 17.