more on ACA subsidies

[baltimorened]

slow day, so thought I'd do a little more digging on why we need subsidies for those enrolled in ACA
It seemed to me that in the beginning the ACA was supposed to pay for itself and return a savings of about $2500/year to each family. Neither of things have happened.

Remember thee ACA was passed only with democrat votes, the Republicans decided to sit this one out (so they have nobody to blame but themselves)

So if the ACA was supposed to pay for itself, what happened? A little from Google: Was the ACA supposed to pay for itself?

Yes, the Affordable Care Act (ACA) was designed to be budget-neutral and even reduce the federal deficit through taxes, fees, and cost savings, with the Congressional Budget Office (CBO) projecting significant deficit reduction over the first decade, though later repealed taxes (like the "Cadillac" tax and individual mandate penalty) and increased subsidies have impacted its net savings over time, shifting its fiscal impact.
How it was supposed to pay for itself:

• New Taxes & Fees: The ACA introduced taxes on high-cost employer plans (the "Cadillac Tax"), medical device manufacturers, and insurance companies, along with fees on certain health sector entities, to fund coverage expansions.
• Savings in Medicare: The law included provisions to slow Medicare spending growth, generating savings.
• Individual Mandate: The penalty for not having insurance aimed to bring healthier, younger people into the market, balancing risk pools.

Changes & Impacts Over Time:

• Repealed Taxes: Congress repealed several revenue-raising provisions, including the individual mandate penalty and the Cadillac Tax, adding billions to the deficit.
• Increased Subsidies: Enhanced premium subsidies, especially during the pandemic, significantly increased federal spending on marketplace plans, although they also greatly expanded coverage.
• CBO Projections: While initial CBO estimates showed substantial deficit reduction, subsequent analyses, especially after tax repeals, show a mixed picture, though some studies still project overall deficit reduction in later years.

In essence, the ACA was structured to balance its costs with new revenue and savings, but legislative changes and shifts in subsidy costs have altered its fiscal path, making it a subject of ongoing debate.

There was one other item in the back of my mind concerning the student loan program so I asked: was student loan takeover by the federal government calculated in the ACA revenues?

google again:
Yes, the federal takeover of student lending, ending private bank involvement, was a key funding mechanism for the Affordable Care Act (ACA) in 2010, with the Congressional Budget Office (CBO) projecting significant savings (around $61 billion) from this change, which were used to offset ACA costs, though the actual savings and long-term fiscal impact have been highly debated and often criticized as unrealized or reversed by rising default costs.
How it worked:

• The Change: The Health Care and Education Affordability Reconciliation Act of 2010 (part of the ACA legislation) ended the Federal Family Education Loan Program (FFELP), which used private banks, and moved all new federal student loans to the Direct Loan Program.
• The Projection: The CBO estimated that eliminating the middleman (private lenders) would save taxpayers billions over a decade, with these "savings" counted as revenue to help pay for the ACA.
• The Goal: The idea was to cut costs by removing subsidies for private lenders and having the government directly lend to students, generating revenue from interest payments.

The Reality vs. Projections:

• Initial Savings: While initially touted as a way to fund healthcare reform, the promised savings never fully materialized as projected.
• Increased Costs: Critics argue the move led to increased defaults, ballooning debt, and higher tuition, ultimately costing taxpayers far more than the projected savings, turning a supposed revenue source into a significant expense.

In essence, the "takeover" was treated as a budget offset, with its anticipated financial benefits factored into the ACA's overall cost calculations, despite later criticisms about its financial accuracy and outcomes.
The end result of this "revenue source" was forgiveness of approximately $188billion.

Remember I posted in another thread, that healthcare costs have increased by 96% since implementation of the ACA.

So, in fact was supposed to be a revenue neutral program with reduced premiums and savings has turned out to be neither.

 

[UrHuckleberry]

slow day, so thought I'd do a little more digging on why we need subsidies for those enrolled in ACA
It seemed to me that in the beginning the ACA was supposed to pay for itself and return a savings of about $2500/year to each family. Neither of things have happened.

Remember thee ACA was passed only with democrat votes, the Republicans decided to sit this one out (so they have nobody to blame but themselves)

So if the ACA was supposed to pay for itself, what happened? A little from Google: Was the ACA supposed to pay for itself?

Yes, the Affordable Care Act (ACA) was designed to be budget-neutral and even reduce the federal deficit through taxes, fees, and cost savings, with the Congressional Budget Office (CBO) projecting significant deficit reduction over the first decade, though later repealed taxes (like the "Cadillac" tax and individual mandate penalty) and increased subsidies have impacted its net savings over time, shifting its fiscal impact.
How it was supposed to pay for itself:

• New Taxes & Fees: The ACA introduced taxes on high-cost employer plans (the "Cadillac Tax"), medical device manufacturers, and insurance companies, along with fees on certain health sector entities, to fund coverage expansions.
• Savings in Medicare: The law included provisions to slow Medicare spending growth, generating savings.
• Individual Mandate: The penalty for not having insurance aimed to bring healthier, younger people into the market, balancing risk pools.

Changes & Impacts Over Time:

• Repealed Taxes: Congress repealed several revenue-raising provisions, including the individual mandate penalty and the Cadillac Tax, adding billions to the deficit.
• Increased Subsidies: Enhanced premium subsidies, especially during the pandemic, significantly increased federal spending on marketplace plans, although they also greatly expanded coverage.
• CBO Projections: While initial CBO estimates showed substantial deficit reduction, subsequent analyses, especially after tax repeals, show a mixed picture, though some studies still project overall deficit reduction in later years.

In essence, the ACA was structured to balance its costs with new revenue and savings, but legislative changes and shifts in subsidy costs have altered its fiscal path, making it a subject of ongoing debate.

There was one other item in the back of my mind concerning the student loan program so I asked: was student loan takeover by the federal government calculated in the ACA revenues?

google again:
Yes, the federal takeover of student lending, ending private bank involvement, was a key funding mechanism for the Affordable Care Act (ACA) in 2010, with the Congressional Budget Office (CBO) projecting significant savings (around $61 billion) from this change, which were used to offset ACA costs, though the actual savings and long-term fiscal impact have been highly debated and often criticized as unrealized or reversed by rising default costs.
How it worked:

• The Change: The Health Care and Education Affordability Reconciliation Act of 2010 (part of the ACA legislation) ended the Federal Family Education Loan Program (FFELP), which used private banks, and moved all new federal student loans to the Direct Loan Program.
• The Projection: The CBO estimated that eliminating the middleman (private lenders) would save taxpayers billions over a decade, with these "savings" counted as revenue to help pay for the ACA.
• The Goal: The idea was to cut costs by removing subsidies for private lenders and having the government directly lend to students, generating revenue from interest payments.

The Reality vs. Projections:

• Initial Savings: While initially touted as a way to fund healthcare reform, the promised savings never fully materialized as projected.
• Increased Costs: Critics argue the move led to increased defaults, ballooning debt, and higher tuition, ultimately costing taxpayers far more than the projected savings, turning a supposed revenue source into a significant expense.

In essence, the "takeover" was treated as a budget offset, with its anticipated financial benefits factored into the ACA's overall cost calculations, despite later criticisms about its financial accuracy and outcomes.
The end result of this "revenue source" was forgiveness of approximately $188billion.

Remember I posted in another thread, that healthcare costs have increased by 96% since implementation of the ACA.

So, in fact was supposed to be a revenue neutral program with reduced premiums and savings has turned out to be neither.

Removing the mandate, etc was certainly a big hit, as it was only really going to pay for itself if it increased paying enrollment, effectively spreading the cost out.

 

[dpic73]

Removing the mandate, etc was certainly a big hit, as it was only really going to pay for itself if it increased paying enrollment, effectively spreading the cost out.

Yep, as soon as that was tossed, all the healthy young people were out of the pool.

 

[bdgan]

Removing the mandate, etc was certainly a big hit, as it was only really going to pay for itself if it increased paying enrollment, effectively spreading the cost out.

Why was it a big hit? Who got hit?

 

[bdgan]

The ACA was supposed to save the average family $2,500 per year for two reasons:

1. Reduced reimbursement rates to providers would make insurance less expansive
2. Non profit government subsidized co-ops were supposed to compete with insurance companies to keep premiums low.

Neither of those things happened. Shortly after the ACA was passed congress passed a "Fix" to increase reimbursement rates. I think the concern was that some providers wouldn't take the insurance if reimbursements were too low. All of the co-ops failed because they couldn't compete with private insurers even though they were non profit and received subsidies.

The ACA was promised to not add one dime to the deficit. It's actually adding $200b/yr because costs are higher and a lot of the pay fors were never implemented.

1. Cadillac Tax on high end policies were never implemented because that was going to alienate government/union workers who tend to have such policies.
2. There was a supposed to be tax on insurance companies because the ACA was bringing them more business. That never happened because congress learned that higher taxes on insurance companies would be passed back to the public in the form of higher premiums.
3. There was also supposed to be a tax on medical devices but congress was concerned that those costs would also be passed on to policy holders.
4. I think the only taxes remaining are the additional 0.9% on income over $250k and an additional 3.8% on investment income over $250k.

Once the co-ops failed the ACA was little more than a huge costly expansion of Medicaid eligibility. One irony of the system is that the government actually pays states more to cover people with higher incomes than lower incomes. That's how the encouraged the states to adopt the expansion.

The Falsehoods of Obamacare: A Dozen Broken Promises, Seven Million Canceled Plans, and Hundreds of Billion in Debt

 

[bdgan]

The topic of ACA premium subsidies has been grossly misreported.

• The premiums aren't going up 100+%. The premiums are the premiums. It's the tax credits that are possibly being eliminated.
• This doesn't impact 20+ million people. All of the original Obamacare premium tax credits remain. They are still available for people earning < 400% of the Federal Poverty Level which is roughly $125k for a family of 4.
• The enhanced subsidies were "justified" because some people lost their job due to covid.
• The CBO says that 1.4 "lawfully present" immigrants could lose coverage without the enhanced subsidies.
• Insurance is very expensive but it's especially expensive on the ACA exchange. People can do better shopping on their own but then they wouldn't receive the subsidies.
• Some people forego employer coverage because the tax credit makes the exchange less expensive.
• People can also opt for a bronze plan with higher co-pays and deductibles.

 

[UrHuckleberry]

Why was it a big hit? Who got hit?

Same reason its cheaper for employees of large corporations than small companies. I assume you know this, I guess you were making a point? (that sounds more aggressive than I am wanting but don't know of another way to put it).

 

[Paw Pad]

In other words, government getting involved never works like it is presented. TOTAL SHOCK!!!

 

[FLaw47]

In other words, government getting involved never works like it is presented. TOTAL SHOCK!!!

Indeed, we should evaluate only the mixed results of one program in one country instead of literally every other advanced country on earth.

 

[baltimorened]

In other words, government getting involved never works like it is presented. TOTAL SHOCK!!!

that's a major reason why single payer health care scares me. It will be all rosey as presented before passage, but less than rosy after passing. There will be a boom business for concierge doctors.

 

[bdgan]

Same reason its cheaper for employees of large corporations than small companies. I assume you know this, I guess you were making a point? (that sounds more aggressive than I am wanting but don't know of another way to put it).

I understand that a company with 100,000 employees might have more leverage with insurance companies than a company with 30 employees. But we have 24 million who purchase coverage on the exchange and I don't the leverage gets much better if that number climbs to 50 million.

The big issue with the mandate was to get more young people to balance the number of old people who use more services. That's fine but think about what you're doing. You're forcing young people to pay for old people. You're not lowering the cost, you're just shifting the burden.

Assume insurers reimburse providers an average of $10,000 to cover an old person but only $1,000 to cover a young person. That's $11,000 for two people for an average of $5,500. Assume no profit or overhead and the premium is $5,500. The old person gets $10,000 worth of services for $5,500 while the young person gets only $1,000 of services for $5,500. What did we really fix? How did actual costs get lower? We're complaining that young people are struggling with things like college debt and buying a home. What sense does it make to force them to overpay for healthcare in order to give older people a break?

 

[bdgan]

Indeed, we should evaluate only the mixed results of one program in one country instead of literally every other advanced country on earth.

That's a common flawed argument. There are reasons why other countries spend less per person. It's not as simple as saying the government can provide the same service for half the price because they are more efficient.

 

[scotchtiger]

Yep, as soon as that was tossed, all the healthy young people were out of the pool.

Do you think it’s fair to force healthy young people to subsidize healthcare for slobs who don’t take care of themselves and contribute an outsized portion to the risk pool?

 

[dpic73]

Do you think it’s fair to force healthy young people to subsidize healthcare for slobs who don’t take care of themselves and contribute an outsized portion to the risk pool?

You see everyone without a 32 inch waist and a BMI under 25 as a drain on everyone else but yes I do think everyone should have to carry their own insurance. Do you think its fair that we have to pay for all their unpaid emergency room bills?

 

[scotchtiger]

You see everyone without a 32 inch waist and a BMI under 25 as a drain on everyone else but yes I do think everyone should have to carry their own insurance. Do you think it’s fair that we have to pay for all their unpaid emergency room bills?

Nope, I don’t. Their wages should be garnished until the taxpayer is made whole.

I would be totally fine with the individual mandate if underwriters could rate people based on their controllable health conditions. We should all help pay for the kid who gets leukemia. Nobody should pay for a lazy slob who gets diabeetus.

Healthy young people should be able to get really really cheap health insurance. They shouldn’t be seen as a cash cow to milk so self-inflicted unhealthy people can get health insurance.

 

[FLaw47]

That's a common flawed argument. There are reasons why other countries spend less per person. It's not as simple as saying the government can provide the same service for half the price because they are more efficient.

Well I guess I just trust a mountain of evidence more than hand waving hypotheticals.

 

[m.knox]

that's a major reason why single payer health care scares me. It will be all rosey as presented before passage, but less than rosy after passing. There will be a boom business for concierge doctors.

Americans have no appetite for rationed healthcare, and that is what single payer becomes. Unlimited demand for a limited resource.......

I maintain that the best way forward is for the federal government to work with the private sector to increase supply of medical services by financing 1000 medical centers across America. Waiting 3 months for an MRI is ridiculous.