Affordable Care Act QuestionsI found J.D. Kleinke’s defense of the Affordable Care Act so wrongheaded that I was convinced I’d have to write a detailed reply. But James Capretta has written a reply that does an excellent job of addressing Kleinke’s misapprehensions.
Eugene Steuerle of the Urban Institute, a scrupulously nonpartisan centrist who favors universal coverage and the individual mandate, has written one of the most compelling critiques of the Affordable Care Act:
This decision to ignore the math has created far-reaching consequences:
* Those in the exchanges will get substantially higher subsidies than will many households that remain in the less subsidized employer-provided insurance market, as well as those on Medicaid.
* To prevent too many employees from getting the new subsidy, employer penalties and other tactics try to keep people within the less subsidized employer network. Even so, droves of employees—potentially tens of millions—are likely to shift out of employer-provided insurance over the next decade or two, especially as newer firms and their employees find it more profitable to get the exchange subsidies than the subsidies for health insurance provided by the employer.
* To try to prevent small employers from bearing the burden of the new system, yet more subsidies and exemptions from employer penalties were created but not distributed fairly according to need.
* To prevent states from shifting from Medicaid, which they help fund, to the exchanges, which they don’t, still more restrictions and incentives were designed.
* If, despite all these provisions, these incentives cause too many people to shift to the new, most generously subsidized tranche (the exchange), the four-stream system becomes even more unsustainable from a budget perspective. After all, every person who receives a higher subsidy will impose additional cost on government
* The exchanges don’t just handle health insurance. Rather, they are expected indirectly to operate an entirely new “tax” system that collects another 9 or 10 cents from most insured household for every additional dollar earned and a new “welfare” system that tries to determine in advance and at various later stages households’ eligibility for different subsidies.
* It may not be possible for various employers, exchanges, Medicaid systems, and the IRS (which is expected to verify income statements to the exchanges on initial applications, but not later amendments) to share all the data needed to enforce the new subsidies. Think about the logistics of updating the information every time an individual becomes eligible for a higher subsidy because he or she marries, divorces, gains a dependent, moves, changes jobs, and earns less over a stretch of time.
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