Uncloaking the Two Percent

Should the Affordable Care Act be repealed so that over a million people making more than $123,000 per year can avoid paying $3,000 in taxes beginning in 2016?  And should they be allowed to pass on the cost of their health care to everyone else?

This week, a local newspaper quoted a lifelong Florida Democrat as saying she might vote for Mitt Romney because she believed ACA offered “a costly giveaway to freeloaders.”

The irony is that the law actually does just the opposite – and Mitt Romney knows this better than most.  It requires nearly all health care “freeloaders” either to get insurance or pay a tax penalty.

Eighty percent of those affected will get insurance.  But the Congressional Budget Office reported last week that it expects 6 million people to owe the tax penalty beginning in 2014.  The $8 billion the penalty will eventually raise will help defray the cost of uncompensated care.

Six million people make up less than 2% of our total population.  Should the Affordable Care Act be repealed because of them?

Like that Florida Democrat, at least half of us seem to think so.

According to a CNN poll taken just after the June Supreme Court decision upholding the tax penalty, 51% opposed the so-called individual mandate.  According to a Kaiser Family Foundation July tracking poll, 61% opposed collecting the tax penalty.  And according to a Rasmussen poll released this week, 52% still want to repeal the whole Act, largely because of this provision.

Just who are these 2%, for whom our collective hearts bleed?

They are hiding among the 30 million people who will still be uninsured after the Affordable Care Act takes full effect. 

The vast majority of those 30 million are exempt from the mandate, because they are Native Americans, undocumented immigrants, individuals who are so poor that their insurance premiums would exceed 8% of their income, and people who will be granted hardship exemptions.

The remaining 6 million comprise the 2%.  And most are fairly well-off.  In today’s dollars:

• 69% have Adjusted Gross Incomes (AGIs) of at least $46,100 for a family of four, roughly equal to the median household income in America;
• 49% have AGIs of at least $69,150;
• 31% have AGIs of at least $92,200; and
• 20% have AGIs of at least $115,250.

How much will it cost the 6 million to buy health insurance?  Not as much as you might think.

Beginning in 2014, a family with $69,150 in income will get a tax credit of $10,385 if they have to buy their own health insurance, limiting their total net insurance cost to just under $540 per month.

And families with incomes of $46,150 will get tax credits of $14,014.  They’ll pay just $237 per month net for their health insurance.

The 2% is made up almost entirely of these two groups.  The first is people with six figure incomes who can afford to buy insurance.  The second is lower income people who will be offered tax credits so big that their net cost of insurance will be far less than what many people are paying out-of-pocket today.

What these two 2% groups have in common is a sense of entitlement – a belief that if they become seriously ill then the rest of us should pay their health care bills as well as our own.

Or, as Mitt Romney characterized it for Glenn Beck in 2007, they want “free care paid for by you and me.  If that’s not a form of socialism, I don’t know what is.”

Is that fair?

As the Affordable Care Act is written, the free ride ends.  1.2 million wealthier people who today make more than $115,200 per year and choose not to buy health insurance will pay, on average, a tax penalty of around $3,160 per year when the penalty is fully phased-in in 2016 – to help cover health care costs that average more than five times that. 

And the 1.2 million middle-income people making between $46,100 and $69,150 will pay a tax penalty averaging around $583 per year– about the same as what other middle income people will pay for insurance every month or two.

Maybe people who oppose the penalty think it is too small.  I doubt it.

I think they’ve more likely been mesmerized by the wizardry of politicians and pundits, who are using the cloak of repeal to protect an entitled 2% at the expense of everyone else.

Questions or comments?  Post them below, or email gionfriddopaul@gmail.com.

Why ACA Has Become Politically Irrelevant in the 2012 Campaign

Why did the health care debate in this year’s election campaign pivot so quickly from the Affordable Care Act to Medicare?

It may well be because of this:  While people still feel strongly about ACA, they don’t really see it as relevant to them.  But Paul Ryan made Medicare relevant to everyone when he proposed changing the program for the under-55 population.

Some new data from the U.S. Census Bureau may explain why most people don’t see ACA as relevant to them.

We learned this month that the number and percentage of people without health insurance changed modestly in the year after ACA passed.  The number of uninsured people went from 50 million to 48.6 million.  The percentage of uninsured decreased from 16.3 percent to 15.7 percent.

These changes were small, as were some others.  The percentage of people with employer-based insurance decreased slightly, from 45.7% in 2010 to 45.1% in 2011, and the percentage of people who purchase private insurance directly remained the same, at 3.6%.

Despite rumors of a “government takeover” of health insurance, government programs also experienced modest changes.  The Medicaid population grew from 48.5 million, or 15.8% of the population, to 50.8 million, or 16.5%.  Medicare recipients grew by 2 million, from 44.9 million people (14.6%) to 46.9 million people (15.2%).   

And the populations experiencing the biggest gains because of ACA aren’t very big when compared to the population as a whole.

• Nearly 3 million young adults under the age of 26 are covered on their parents’ insurance plans as a result of ACA, but they represent less than 1% of the population – and some were already on their parents’ plans before ACA passed because they were still in school.
• Approximately 3.6 million Medicare donut hole recipients saved drug money in 2011 because of ACA, but they also represent only about 1% of the population – and they were already on the Medicare program anyway.
• 4.5 million early retirees remained on employer plans after ACA – but many of these had been on those plans anyway; it was the plans that became eligible for financial relief under ACA.
• Approximately 13 million people got insurance rebates because of ACA in 2012, but many of those rebate dollars were credited to employers, not to individuals.  Perhaps another 1% of the population – one third of those covered by individual insurance only – actually received the full value of the rebate in the form of a check.

These numbers are just big enough to elicit a yawn from more than 95% of the population.

And most of us may keep yawning in the future.  According to 2012 data from the Center for Medicare and Medicaid Services, the percentage of our nation’s health care bill paid by private insurance in 2011 was 34%.  The percentage private health insurance will be paying in 2021, after ACA is fully implemented, will be 33%.

Just as ACA changed the political landscape in 2010 because of how much people worried about what it might do, it may have little effect in 2012 because of how much it hasn’t done.

And even after ACA is fully implemented in 2014, many of us might not notice.  Up to 30 million uninsured people may gain insurance – an extraordinarily significant number – but they still represent less than 10% of the population.

When you add it all up, here is one way to quantify the change to which we can look forward.

Out of every 20 people today, 9 have employer-based insurance only, 1 has individual insurance only, 3 are on Medicare (sometimes in combination with Medicaid), 2 are on Medicaid alone, 1 has another type of government plan, 1 has a combination of coverage, and 3 are uninsured. 

When ACA is fully implemented, in that same group of 20 the number of people purchasing insurance directly will eventually increase from 1 to 2, the number on Medicaid will increase from 2 to 3, and one will still be uninsured.

That’s it.

That’s why the campaign debate has pivoted to the future of Medicare.  

When Paul Ryan proposed making changes to Medicare that affect the under-55 population and when Mitt Romney chose him was his vice-presidential candidate, they took a program that until now has mattered mostly to the 55+ population (Medicare and near-Medicare recipients) and made it relevant to everyone.

And just like that, the political landscape shifted.

If you have questions about this column or wish to receive an email notifying you when new Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.

Haley Marie is Born

I am writing this column just a few hours after the birth of my second grandchild, Haley Marie.  Haley Marie looks like her father.  She is long and thin, and she is going to be very pretty when she is older.

Our first grandchild, Noah, was born four months ago.  He’s in the 5^th percentile in weight, and my wife and I joked that it would be hard for Haley to beat that when she came along.

She did.  She weighed in at two pounds and eleven ounces, which means that, according to the Annie E. Casey Foundation Kids Count project, she is one of the 1.5% of all U.S.  babies who are born each year at “very low birth weight,” or less than 1500 grams (3 pounds, 4 ounces). 

So Haley Marie will spend her first days in a hospital neonatal intensive care unit. 

Haley is fortunate.  She was beyond thirty-two weeks of gestation.  Her Apgar scores were stellar.  She is strong and has good lungs.  I can also offer direct testimony that she is alert and responsive to light.  I learned this when I snapped a picture of her at five hours without turning my camera flash off!

But not every baby born at very low birth weight gets off to as good a start as Haley.

We all say we care for babies, but here is something we don’t like to mention:  low birth weight babies have a higher risk of dying.  Very low birth weight babies have a 24% chance of dying during their first year of life.

I’m a worrier by nature.  So statistics like this have always worried me.  Even before there were children and grandchildren in my life back when I was a state legislator, I stressed constantly over how to help reduce our too-high infant mortality rates.

Prevention and good prenatal care are answers.  But sometimes – as in Haley’s case – a baby is born at low birth weight even though her mom has taken good care of herself during pregnancy and received high quality prenatal care.

Neonatal intensive care, thankfully, is another answer.  But neonatal care is expensive. 

In 2005, the Institute of Medicine found that most of the $26 billion annual cost of premature birth  - or over $51,000 per child – was for neonatal intensive care.  Haley’s parents can’t afford this, nor could most of us.

Thank goodness we have insurance to pick up the slack.  But relying on private insurance to pay our neonatal intensive care bills is a double-edged sword.  Insurers often charge hefty co-pays, and the amounts can change unpredictably.  As Michelle Andrews pointed out in an article in Kaiser Health News in January, 2011, “fewer parents-to-be realize that they may be in for a nasty surprise if their baby is premature or for some other reason needs special care immediately after birth: The neonatal intensive care unit (NICU) personnel at their in-network hospital may be out-of-network.”

Here’s something that may offend some people, but I’m going to write it anyway:  Relying on private insurance alone to pay for health care is too big a gamble when children’s lives are at stake. 

It’s a good thing many children have the security of a public option, too.  Shame on the politicians who say they have a problem with this, and want to roll back or block grant Medicaid or SCHIP funding at Haley’s expense.

They have never walked in her tiny shoes; I hope they never even have to walk in mine.

The NICU providing care to Haley today was also built in large part through the investment of hundreds of millions of taxpayer dollars beginning fifty years ago.  I’ve lost faith that the “tax cuts at all costs” politicians of today would have the backbone to launch a similar project.

And for this Haley’s granddaughter could someday pay a price.

As a group, children born at very low birth weight face more challenges as they grow up.  According to Child Trends, they are more likely to have chronic health conditions and developmental delays.  They are also more likely to need special education services.  They are at greater risk of dropping out of school, and have lower earnings potential.

I’m not going to think about all this today, however.

Haley, I am sure, will be just fine.  So I’m just going to celebrate the miracle that is her life.

And acknowledge with gratitude the governments that protect us all, especially those, like Haley, who are most in need.

If you have questions about this column or wish to receive an email notifying you when new Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.

Please Vote for the Mental Health Association of Palm Beach County in the Chase Community Giving Campaign before Sept. 16th.  It just takes a couple of minutes to help win dollars for programs that prevent mental illness in children.  Click here to vote http://bit.ly/VoteMHA

Our Mental Health Policy Mistakes and the Sons and Daughters Who Pay For Them

We have made some big mental health policy mistakes in my lifetime.  And my son Tim is among the millions of our sons and daughters who have paid for them.

This is because he happens to be among the 6% of sons and daughters with serious mental illness.

We fail to see mental illnesses as often preventable and always treatable diseases.  And although half of us will be diagnosed with one during our lifetime and mental illnesses cost as much to treat as cancers, we more readily send people with mental illness to jails and prisons than we do to hospitals and health centers.  Meanwhile, we underfund mental health care, special education, and social services systems.

I explain what this has meant for my son in an essay just published by Health Affairs, the nation’s leading health policy journal. 

How I Helped Create a Flawed Mental Health System That’s Failed Millions – And My Soncovers over twenty years of Tim’s life in Connecticut, Texas, and California – a life now lived mostly in jail, in hospitals, or on the streets.  This isn’t because of his mental illness.  It is because of the way we treat his mental illness.

The article appears in the September 2012 issue of the print journal, but Health Affairs has also made it available free of charge online and via podcast.  There is a link at the end of this column.

In the essay, you will see that we former policymakers – along with educators and service providers – made a lot of mistakes that resulted in the isolation of people like Tim. 

And today’s policymakers aren’t just repeating the mistakes we made.  They are piling new ones on top of them.

As a Connecticut state legislator in the 1980s, I thought we had the right idea.  Close the archaic state psychiatric hospitals, and move people with chronic mental illnesses back to their homes, schools, and communities. 

There was a problem.  Closing the institutions was popular, but returning people with mental illness to communities wasn’t.  So we directed only some of the dollars we saved into services.  The rest we used to lower taxes.

We justified this because we made taxpayers happy and because we believed that whatever happened in the community would be better than the underfunded services in the institutions.

We were wrong.  Sometimes no services are worse.

Today, Americans with serious mental illnesses have life expectancies that are diminished by as many as 25 years.  They die from violence and suicide, and from ineffectively treated chronic illness.

Those who survive suffer from stigma and neglect.  This is because they often act differently from the rest of us, sometimes because of disease, sometimes because of the medications they take to manage disease, and sometimes because of the drugs they use when the medications don’t work. 

We are afraid of them. 

To make them less frightening, we use the term “behavioral illnesses” to describe what they have.  But this in turn feeds a fantasy to which unsophisticated people (some of whom serve as policymakers) cling – that mental illnesses are the same as bad behaviors, and people with mental illnesses could choose to will away their diseases if only they’d try.  As if someone with cancer or heart disease could will those away.

They can’t. 

I can’t defend what we did in the 1980s to shackle people with mental illness with neglect.  But it seems to me that today’s policymakers are doing worse.

They can see with their own eyes the results of neglect – people sleeping in our parks, lying on our sidewalks, and standing on our street corners begging.  So how can they possibly defend the $3.4 billion in cuts they’ve made to state mental health services in the last three years, or some of the other horrible policy decisions I write about in the essay?

Maybe they just choose to look the other way.

That’s what most people do who see my son Tim – and all our sons and daughters who are like him. 

And when they do, they miss seeing a gentle soul with an easy smile, a good heart, and an imperfect history who has accepted humbly the hand he has been dealt and graciously consented to me writing about it.

But what they miss most isn’t who they choose not to see, but an essential part of what makes us human – empathy.  We were made to do better than this.

To read the full Health Affairs Narrative Matters essay, click here.

For links to the sources of data cited in this column, please see the mental health section of my data links page.

If you have questions about this column or wish to receive an email notifying you when new Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.