Health Care Reform Leftovers

July 2nd, 2012 at 11:56 am

Lots of crazy stuff on the airwaves re the SCOTUS’s upholding of the ACA.

The Inane “Is It a Tax?” Debate: R’s are viciously attacking the ruling because it introduces a new “tax” on people who don’t have coverage.  As I and many others have stressed, this tax is a free-rider penalty.  It is a PRF—a personal responsibility fee for not saddling the rest of us with your health care costs, thereby imposing an implicit tax on the rest of us.  And it hits 1-2% of the population.

You thought personal responsibility was supposed to be a conservative value?  Not, apparently, when the dreaded tax word is invoked. 

But, really, a pox on both houses here.  Despite the fact that the SCOTUS ruling calls it a tax—I mean, it doesn’t just call it a tax, it says the reason we can do this is because Congress can tax–D’s are working overtime to not pronounce those dreaded three letters.  Weirdly, they now have an ally in this Kabuki theater, Gov Romney!

I get it: silliness pervades in an election year…but really?  Seriously?!?  Taxes happen in societies—according to a Supreme Court justice from a saner time, they’re “the price we pay for a civilized society.”  And in this case, they’re the price we pay to offset a negative externality by which the behavior of a small minority of citizens imposes a cost on everyone else.

To be ashamed to make that case is to cede the field to Norquist and co.

The SCOTUS Ruling’s Impact on the Cost of the ACA: Another unfortunate talking point evolved over the weekend that also makes no sense: based on changes to the law imposed by the SCOTUS, the ACA is now a “budget-buster.”  I heard Sen. Coburn make this argument on a Sunday show, and my conservative doppelganger Doug Holtz-Eakin made the point in a debate we had on Friday.  Doug’s argument was later picked up by the WaPo…unfortunately, because, as my CBPP colleague Paul Van de Water points out here, it’s got to be wrong.

First, you should know that the CBO scored the ACA as slightly reducing the budget deficit in the first decade of its existence and reducing it a lot more in its second decade.  So, what’s changed in the SCOTUS ruling that would lead R’s to make the claim that the law is no longer fully paid for?

The only change the SCOTUS made that has significant fiscal implications is making the Medicaid expansion optional for states.  If no states take them up on that, the CBO cost estimate stands.  But if states opt out, that means the law should cost less to implement, not more!  This is a bad thing as I see it, because it means less coverage for the poor.  But it saves money.

Clever Doug argues otherwise based on the following logic.  It’s true that people below 100% of poverty will now not benefit from the Medicaid extension in opt-out states.  But those between 100-133% of poverty–who would have been covered under the Medicaid expansion–will now be eligible for the federal subsidies to buy insurance from the state exchanges, coverage which Paul VdW says “may be more costly than Medicaid.”

The problem for Doug, Sen. Coburn and other who are making this case is that there are about four times more people potentially eligible for Medicaid below 100% than between 100 and 133%.  As the figure below—from some very timely Urban Institute research—reveals, there are 22.3 million uninsured poor and near-poor people who would be eligible for coverage under the Medicaid expansion.  But about 80% of them—17.8 million—are below 100% of poverty and therefore not eligible for subsidies.  It’s implausible that a much smaller group getting subsidies would cost more than a much larger group not getting on the Medicaid rolls.

Source: Urban Institute

In this regard, based on the SCOTUS ruling, the CBO cost estimate should now be considered an upper bound.  It’s the cost of the ACA if no states reject the Medicaid expansion.

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7 comments in reply to "Health Care Reform Leftovers"

  1. Chris says:

    So, to make the case that the Medicaid opt-out increases the cost of the ACA, conservatives must acknowledge that private health insurance is more costly than a public plan.

    In the end, the number of people eligible for subsidies is not really important (from a budget perspective). If the subsidy is smaller than the cost of fully covering the same person through Medicaid, then this would reduce the cost. If not, then it would increase the cost.

    If conservatives are now willing to accept that a public government run insurance program is cheaper than private plans, then the next step is clearly to propose a single payer health care system.

  2. Tom in MN says:

    These demonstrate a point you missed in your previous post about messaging: Don’t let facts get in the way of your sound bites.

    As you point out in your messaging post, you need simple concise messages. But I think you need to have a layered approach where you set the stage with facts like “medicare is government program,” etc. So that people are not so ignorant (no they are not stupid, but ignorance prevails these days) that they can’t see any of the logic. I don’t think you can jump to the final point — like stimulus, adding debt, is good — without laying some groundwork (such as “we never payed off WWII debt, we outgrew it”).

  3. fausto412 says:

    Can you talk about what taxes if any are going up and on who?
    income based ones?

  4. Bearpaw says:

    Yes, taxes are (part of) the price we pay for a civilized society. Some folks make me suspect that they’re not interested in — and perhaps actively opposed to — a civilized society. Or at least, not a civilized society they’re expected to share with, you know, those people.

  5. Bob Wyman says:

    You wrote: “a new ‘tax’ on people who don’t have coverage.” Well, the point about “free-riders” is that everyone actually *does* have coverage since the law requires that basic medical services be provided without prior proof of ability to pay. So, what’s really going on here is that we’re saying that nobody can get free medical care. You now must pay and you’ve got two ways in which payment may be made (choice is good)! You either pay for your medical care by obtaining an insurance policy or you pay in cash for minimal service via the “shared responsibility fee.” In any case, not having insurance isn’t a crime under ACA. The only thing that is a crime is not paying for your medical care.

    “No free lunch” or “Two ways to pay!” would, I think, be a messages much more easily understood than the garp about “We need to expand the risk pool to spread actuarial risk across heterogeneous populations… or whatever…”

  6. Jill Klausen says:

    I’m recommending the same thing, Jared: OWN the tax frame.

    I don’t see conservatives jumping up and down screaming because they have to pay taxes to protect them from a fire consuming their home or have police patrolling their neighborhoods. And we don’t even give them a CHOICE to hire their own private company to cover them in case of fire or burglary!

    With the PPA they have a choice: Hire their own security firm to cover them in the event their body catches on fire while they’re shot through the leg, or give taxpayers enough funds to put doctors on call for them just like firefighters and police are.

    Great post!

    BTW, here’s what Benjamin Franklin had to say about taxes:

    “All the property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.”

    Hear, hear!