Thursday, September 17, 2009
"actuarial value" BLEG (first time I've ever used that ugly-sounding work) Emptywheel at firedog lake wrote up a post about Max Baucus' health care plan and part of it was excerpted: (emp add) As a general matter, if an employee is offered employer-provided health insurance coverage, the individual would be ineligible for a low income premium tax credit for health insurance purchased through a state exchange. An employee who is offered coverage that does not have an actuarial value of at least 65 percent or who is offered unaffordable coverage by their employer, however, can be eligible for the tax credit. Unaffordable is defined as 13 percent of the employee‘s income. For purposes of determining if coverage is unaffordable, salary reduction contributions would be treated as payments by the employer. The employee would seek an affordability waiver from the state exchange and would have to demonstrate family income and the premium of the lowest cost employer option offered to them. Employees would then present the waiver to the employer. The employer assessment would apply for any employee(s) receiving an affordability waiver. Within five years of implementation, the Secretary must conduct a study to determine if the definition of affordable could be lowered without significantly increasing costs or decreasing employer coverage. "at least 65 percent" of what? Is "actuarial value" a measure of a health plan or a measure of affordability? I can't find more on this (at least not quickly). Speaking of how to measure a health plan, there would have to be some standard or every employer would provide, or every individual could be steered to, a ridiculous plan (one bandaid, two aspirin, and a bottle of eye drops per year for $15). In any event, "actuarial value" appears to be a key variable when crafting a good, or terrible program. It would be nice to know what it is.
posted by Quiddity at 9/17/2009 01:56:00 AM
3 comments
Back in 1986 I attended a 3-day federal tax law seminar following Reagan's major tax act of that year. The third day got draggy after lunch and many of the approximately 1,000 lawyers/CPAs in attendance were drowsy. The first speaker that afternoon introduced himself: "I am an actuary. You're probably wondering why I am here as a speaker. Well, actuaries are an important part of this new tax act. Now just what is an actuary? Well, an actuary is a person who wanted to become a CPA but lacked the personality." Even the CPAs in the audience laughed as we were all awakened and alert for the rest of the afternoon.
I find it interesting that there is going to be both a low bound and high bound on allowable insurance coverage.
If your health insurance has an "actuarial value of [under] 65%", then you lose it and are forced into the public exchange.
If your health insurance is "gold plated" -- then you are taxed on it so that you cannot afford it and have either reduce your health insurance coverage or go into the public exchange.
Of course the end goal is for everyone to have exactly the same health insurance, except for those people wealthy enough to laugh at the "gold plated" insurance tax.
Thus we are being placed in the equivalent of a vise. Watch for Congress to start turning the vise. Higher taxes on "gold plated" insurance. Bigger tax credits for the "actuarily underinsured". Soon we will all be equal because we will have the one same government choice.
Well, it does say that existing plans are grandfathered. It also indicates four levels, with bronze at the bottom and gold at the top. I believe it also allows states to have different insurance regulations and licensing, meaning that there will be 50+ different state arrangements, and within each state there could be dozens of different plans that meet the Minimum for Creditable Coverage, and many of them can avoid getting to the "gold" level. So I wouldn't say that it is moving to where we all have the same coverage.
You have to look at where the problems are. One problem is where insurance companies offer what claim to be good plans but which don't protect people from the risks of catastrophic or in many cases normal health care costs. So the "minimum" is there to solve that problem. The states and free market haven't done it, so it must be up to the Federal Gov, or else we pretend it's not a problem.
The other extreme is where highly paid workers receive extravagant pre-tax benefits (like health care) rather than additional (taxable) cash salary. If this bill is an attempt to say that, above a certain level, the costs can't be excluded from tax, then yes it results in a slightly higher tax but it gets rid of one of the excesses. I suppose another alternative would be to eliminate the health insurance tax exemption for employer contributions to health care insurance, which would also mean that those working for small business would no longer be at a disadvantage, and probably make it more likely that people will strike out on their own to start a new business rather than stay in a job they don't like.
It would be better if HCR were trying to simplify things (like the tax code) instead of adding one more niggling regulation or condition or exception.
The Baucus bill might be better than no health care reform, but it's not clear to me how much better. My main criteria is whether health care costs as a whole go down. In other words, if there were no subsidized health care for the poor, how much less would this plan cost the country as a whole (e.g. as percentage of GDP) than the "don't make any changes" option.
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