When Reality Doesn’t Go Away

Science fiction is for teenagers, and for adults who know their life peaked in their senior year in high school, when absolutely everything was vital and important, and for whom it’s been all downhill ever since, or so it seems. That may be most Americans, given what’s posted on Facebook by old folks worked up about who took whom to the prom way back when and what they’re up to now, but that’s not all Americans. Others moved on, and most everyone who once loved science fiction – speculative tales about the future – settled for tales of reality. The studios out here in Hollywood know this. Star Wars in the seventies, and the new Star Trek movies now, and films like Blade Runner – based on an odd novel by Philip K. Dick – are pitched to the 18-24 demographic. No one else cares. Do Androids Dream of Electric Sheep? That was the Philip K. Dick novel. It’s also a stupid question. It’s kids’ stuff.

Philip K. Dick knew this. He didn’t consider himself a great writer. He just liked to fool around, to speculate – and it paid damned well. He also had a healthy respect for reality. “Reality is that which, when you stop believing in it, doesn’t go away.” That’s from How to Build a Universe That Doesn’t Fall Apart Two Days Later – a speech he gave in 1978 about how science fiction writers really don’t know much about anything. He was a bit cynical about his profession, if that’s the right word for his career-choice. It’s just that reality is annoyingly persistent. It just won’t go away. There’s not that much you can do about that.

Someone really should tell the Republicans about that. They’re not going to defund Obamacare. The Senate, controlled by the Democrats, won’t agree. The president is not going to dismantle his signature achievement either. The Republicans can force a government shutdown over this, crippling the economy, or a default on the nation’s debt, collapsing the world’s economy, but they’ll be forced to give in quickly. No one wants either of those things, and even they know both are stupid – the backlash would ruin their party. The reality of the thing is the problem – the Affordable Care Act was passed fair and fair and square, long ago, by both houses of Congress, and survived a Supreme Court challenge too. It’s the law, and there are normal procedures for repealing a law. You find the votes to pass something else in its place, perhaps a law insisting that what the law was supposed to do never is done, ever – but if you don’t have the votes, you don’t have the votes. A temper tantrum is no substitute for those votes.

Science fiction won’t do either. That’s what the Ted Cruz twenty-hour fake filibuster was. The junior senator from Texas, the new Tea Party hero, was dealing in speculative fiction. Congress should deny the funds to implement that one law, and at once point Cruz cast Obama as Hitler, a mad tyrant bent on taking over the world, this time by making sure thirty or forty million more Americans have the chance to buy low-cost subsidized health insurance from private-sector parties – which isn’t exactly killing six million Jews and rolling massive armies into all of Western Europe and taking over, then invading Russia. Making sure most Americans, and eventually all Americans, have access to affordable healthcare doesn’t seem like a move toward world domination and the suppression and subjugation of all peoples, everywhere. It seems like a policy difference, but some people like science fiction. Cruz also completely misunderstood the Seuss Green Eggs and Ham story – for what that’s worth.

This really was kids’ stuff, and it didn’t delay the vote on the matter either. Cruz was spinning yarns, killing time. The Democrats indulged him. Why not? He made the Republicans look foolish after all, and almost everyone in his own party, except for the ever-odd Sarah Palin, seethed – Cruz was helping the other side. They’d rather not be seen as the party of speculative nonsense.

That may, however, be a question of tactics, and style. They still want to defund Obamacare, or at least delay its implementation, and a shutdown of the government might force that, but there’s a slight problem. Even if they do shut down the government, Obamacare will roll on. Linda Feldmann is on the case:

If the government shuts down, does that also delay implementation of Obamacare?

In a word, no, says David Simas, deputy senior adviser for communications at the White House.

“In terms of the outreach, we are good to go,” says Mr. Simas, speaking at a breakfast Wednesday sponsored by Third Way, a centrist Democratic think tank in Washington.

“The marketplaces will be stood up,” he says, referring to the government-run online “exchanges” where people can shop for a plan and potentially qualify for a subsidy or even free coverage. “The folks on the ground are ready to go. The 8,000 community health centers are staffed up and ready to provide the guidance. The commercials on television are going to be ready to go, up and running.”

Reality doesn’t go away:

The ACA is funded mostly through multiyear and mandatory spending, so a failure to agree on annual appropriations wouldn’t touch its funding.

Oops. Their whole premise was wrong. No one checked the actual funding mechanisms? It seems not. What they want to do would do nothing they want done, but they really, really, really want to do it anyway. They really are the party of speculative nonsense.

Feldmann also mentions “the Koch-brothers-funded Generation Opportunity campaign aimed at getting young adults to pay a fine rather than sign up for health insurance” – a way to screw the system by ruining the whole Individual Mandate thing. For Obamacare to work everyone has to buy health insurance or pay a fine, to create a large enough risk-pool so that no one’s paying all that much and those who run into health problems get the treatment they need. It’s an actuarial thing – if everyone chips in, modestly, no one gets screwed, catastrophically – and it could be you who gets hit by a bus after all. If, however, few chip in, everyone has to pay more, and the fewer who chip in the more and more it will cost those who do buy insurance, eventually making it so expensive that it all falls apart.

That’s the plan. Generation Opportunity is a nationwide campaign to convince young people to refuse to buy health insurance, to refuse to be insured at all. Pay the fine. Help make Obama’s one big thing fall apart. Even if you do get hit by a bus, and the cost of fixing you up bankrupts you, it’s worth it to embarrass Obama – and it’s a matter of freedom too. The government can’t tell you to buy this or that. That’s un-American.

That’s what was argued before the Supreme Court – under the Commerce Clause the federal government is supposed to regulate trade in many ways, restricting and allowing this and that, but the argument was that the Affordable Care Act was something entirely new, the government requiring the purchase of a specific product, or at least a type of product. Buy it or pay a fine. In the oral arguments, Scalia and the other conservatives on the bench sneered that upholding the Individual Mandate of Affordable Care Act would mean the federal government could force everyone to eat broccoli, for God’s sake. It was an impossible intrusion on the freedom of folks to do what they damned-well pleased, as long as it didn’t hurt anyone else. The counterargument was that not buying insurance actually did hurt everyone else. Everyone else ended up paying for treatment of the uninsured anyway, when they flooded the emergency rooms. That drove healthcare costs sky-high. Why not rationalize the system? Scalia ended up sputtering that any young person who bought health insurance was a fool. You buy health insurance when you need it – when you’re old and sick – everyone knows this. Maybe you buy homeowner’s insurance when your house catches fire, but never before. Scalia has an odd concept of how insurance works.

Scalia lost that argument. The Koch-brothers-funded Generation Opportunity campaign is trying to revive it – but reality doesn’t go away. Young people who have previously been unable to buy health insurance will probably buy it – better safe than sorry.

Feldmann also mentions this:

What about the proposal to delay implementation of the individual mandate for a year? Not a chance, Simas suggests.

“It would result in 11 million fewer people having coverage in 2014… and it will increase premiums,” he warns. A delay would also be “destabilizing” to the “tens of millions of folks with preexisting conditions who frankly have delayed long enough.”

Whatever damage the Republicans threaten, there will be no one-year delay either. Too many people would get hurt. Maybe they’d all be fine with getting hurt, badly, just to embarrass Obama, but probably not. Reality’s funny that way.

There’s more. With the start of open enrollment in Obamacare starting next week, the Department of Health and Human Services (HHS) released a report summarizing the cost of premiums in states where the exchanges will be run by the federal government, and the premiums are coming in below the predictions of the Congressional Budget Office:

Individuals will have an average of 53 qualified health plan choices in states where HHS will fully or partially run the Marketplace. …

Premiums before tax credits will be more than 16 percent lower than projected. The weighted average second lowest cost silver plan for 48 states (including DC) is 16 percent below projections based on the ASPE-derived Congressional Budget Office premiums. …

Tax credits will make premiums even more affordable for individuals and families. For example, in Texas, an average 27-year-old with income of $25,000 could pay $145 per month for the second lowest cost silver plan, $133 for the lowest cost silver plan, and $83 for the lowest cost bronze plan after tax credits. For a family of four in Texas with income of $50,000, they could pay $282 per month for the second lowest cost silver plan, $239 for the lowest silver plan, and $57 per month for the lowest bronze plan after tax credits.

Reality’s a bitch, and it gets worse for Republicans, as Kaiser Health News notes here that many red states will have relatively low premiums:

One of the report’s most striking findings is that states like Texas and Florida, where the law has faced fierce opposition despite high rates of uninsured residents, will see rates at or below the national average.

“There is no clear political pattern to these premiums,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a nonpartisan research organization. …”Some conservative, anti-Obamacare states have lower-than-average premiums, and some pro-Obamacare states have higher-than-average premiums.”

Oops. Republicans also said there was a train-wreck coming, but Matthew Yglesias sees this:

HHS reports that in about 94 percent of cases the CBO overestimated how high premiums would be.

Specific premiums are going to vary quite widely from state to state and according to your age and the size of your family. But nationwide health care spending has grown more slowly than people had expected over the past couple of years, and in most states insurance companies have offered fairly aggressive bids to participate in the exchanges. Obviously this could all change 18 months from now when people are actually in the plans, but for now it looks like Obamacare will be cheaper for families and taxpayers than was thought at the time Congress voted on it.

Things didn’t get worse. In fact they got better, even better than when Congress was in chaos with the original vote, although Jonathan Cohen notes that it’s all a little complicated:

The HHS report spotlighted only silver and bronze plans, which are the ones people are most likely to buy. Based on a quick skim, the most expensive unsubsidized policies I saw were in Jackson, Mississippi, and Cheyenne, Wyoming. In those places, a family of four too wealthy for subsidies will pay more than $1200 a month for the second-cheapest silver plan. The least expensive were in Nashville, Tennessee, where the full “sticker price” of the second cheapest silver plan will be $559 a month.

There’s a lot less variation for families whose incomes qualify them for those subsidies. And that’s very much by design: The law effectively tries to dictate what people will pay for the second-cheapest silver plans, no matter where they live. For a family of four with income of $50,000, the cost for such a plan in almost every city and state is $282 a month. But because of the way the subsidies work, applying those subsidies to even cheaper plans can reduce premiums even more – and at varying levels, depending on location. In Philadelphia, Pennsylvania, that family of four making $50,000 a year could get the cheapest bronze plan for $96 a month. A similar family living in the Virginia suburbs of Washington, D.C., could get one for nothing.

Kevin Drum adds this:

I don’t suppose Ted Cruz will be mentioning any of this in his speechifying… But it’s worth taking a look at those numbers. After tax credits, that family of four in Texas will pay $3,384 per year for the second-lowest-cost silver plan. According to the Kaiser Family Foundation, the average family with employer health coverage pays $4,565 per year in contributions. Those aren’t directly comparable, but they’re close. What it means is that although Obamacare is hardly free, it does allow individuals to buy coverage for roughly the same amount they’d have to pay with an employer plan. No one is shut out of the market any longer.

That was the whole point, and one must also remember this is not about the majority of Americans, those who get their health insurance through their employer or who have retired and have Medicare, or who are disabled and have Medicaid. All this has nothing at all to do with them. Why should they even pay attention to any of this? This is about the six or seven percent of Americans who don’t have one of those three things, those who the insurance companies wouldn’t cover before, except at an extraordinary price if they did. Now they will, because they smell big profits. It’s hard to see what the big fuss is.

Still, if you want to find a problem, and many Republicans do, Duncan Black finds one that would please Republicans:

Something I’m looking for and not finding is an estimate of the effective marginal tax rates on people in the exchanges who are eligible for subsidies. A problem with means-testing programs is that as you earn more income your benefits go away, meaning that effectively you’re paying a pretty high tax on each additional dollar earned. Your company giveth, and Uncle Sam taketh away.

Ah, it’s a tax-hike. That should give the Republicans something to work with, but Kevin Drum says not so fast there:

The subsidies are calculated so that you never have to pay more than a certain percentage of your income in health premiums. That percentage rises with income according to a formula, so it’s pretty easy to figure out the subsidy at different income levels and then calculate the effective marginal tax rate caused by the fact that the subsidy level goes down.

I used the Kaiser subsidy-calculator to get the subsidy for a family of three at various income levels. (The exact subsidy level varies depending on family size, but this provides a pretty good estimate for an average family.) As you can see, as you gain more income, you get less of a subsidy, which produces an effective marginal tax rate of 12-16 percent at most income levels. When your income gets high enough, the subsidies are so low that there isn’t much left to lose, so the effective marginal rate goes down. At 400 percent of the poverty level, the subsidies decline to zero.

Why, then, would you ever want to earn more money? Why not be a Taker not a Maker? Actually that might be a problem, but Drum sees a way out:

The moral of this story, of course, is that you should avoid means testing if you can, since it provides a negative incentive to earn more money. Unfortunately, means testing is often the only practical way of providing benefits to the poor, so we put up with it even though everyone agrees it’s suboptimal. However, in the case of healthcare we could solve this problem easily by simply adopting a national health care plan that provided coverage for everyone at no charge. Since it’s a flat benefit, it wouldn’t distort work incentives. Taxes would have to go up to pay for this, of course, but those taxes would almost certainly produce less distortion at low income levels than Obamacare does.

Someday we might have a sensible system like that.

That day is a long way off, but it may come, eventually. For now, this odd tax issue could give the Republicans some leverage – if they can get anyone to understand it. Talk about marginal tax rates and their hypothetical relationship to incentives to earn more money and people’s eyes will glaze over. It’s better for the Republicans to be general about this all, to say they just don’t believe in Obamacare. They just don’t believe in it.

Fine, but reality is that which, when you stop believing in it, doesn’t go away, and Obamacare is our reality now. It’s not going away. Grow up. Science fiction is for goofy teenagers.

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About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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