Should the Middle Class Pay More for a Loaf of Bread than the Poor?

Iowa seeks to become the first state to dump Obamacare in favor of a state-run program that will allegedly lower costs. I suggest Iowa's replacement plan can't work. My reason pertains to the title question.

With efforts to repeal the Affordable Care Act dead in Congress for now, a critical test for the law’s future is playing out in one small, conservative-leaning state.Iowa is anxiously waiting for the Trump administration to rule on a request that is loaded with implications for the law’s survival. If approved by the federal Centers for Medicare and Medicaid Services, it would allow the state to jettison some of Obamacare’s main features next year — its federally run insurance marketplace, its system for providing subsidies, its focus on helping poorer people afford insurance and medical care — and could open the door for other states to do the same.Iowa’s Republican leaders think their plan would save the state’s individual insurance market by making premiums cheaper for everyone. But critics say the lower prices come at the expense of much higher deductibles for many with modest incomes, and that approval of the plan would amount to another way of undermining the law.Iowa calls its request a stopgap plan that would allow the state to opt out of the federal health insurance marketplace, HealthCare.gov, for 2018 and create a state-run system that its insurance commissioner says would lower premiums for the 72,000 Iowans who currently have Obamacare health plans, including 28,000 who earn too much to get subsidies to help with the cost.But the cheaper premiums would come with a big trade-off: higher out-of-pocket costs. The only option for customers would be a plan with deductibles of $7,350 for a single person and $14,700 for a family. The proposal would also reallocate millions of federal dollars that the health law dedicates to lowering costs for people with modest incomes and use the money for premium assistance to those with higher incomes, no matter how much money they make.The individual insurance market is particularly fragile in Iowa, partly because the state has allowed tens of thousands of people to keep old plans that do not meet the health law’s standards. Aetna and Wellmark Blue Cross & Blue Shield, the state’s most popular insurer, are both withdrawing at the end of the year. The only insurer planning to remain, Medica, is seeking premium increases that average 56 percent, blaming Mr. Trump’s ongoing threats to stop paying subsidies known as cost-sharing reductions that lower many people’s deductibles and other out-of-pocket costs. Wellmark has said it will stay if the stopgap plan is approved.“What we are trying to address is a really large number of people being priced out,” said Doug Ommen, the state’s Republican insurance commissioner.

No Medical Insurance Available

Aetna and Wellmark Blue Cross & Blue Shield will both pull out of Iowa starting in 2018. Only one insurer, Medica, plans to remain. But Medica wants a 56% premium hike. Wellmark will stay if the stopgap plan is approved.

If the stopgap plan is not approved and Medica does not get approval for a 56% premium hike, the state will have no providers for individuals or families not in a corporate plan.

Step in the Wrong Direction?

Is this a good idea or a bad idea? The alternative might be no insurance providers to choose from.

But what percentage of families can afford $14,700 if something happens?

The proposal adds subsidies based on federal poverty levels to make things more affordable for low-income earners.

Federal Poverty Levels

Sock it to the Middle Class

Individuals making more than $48,240 and couples making more than $64,960 get crucified under the plan. The stopgap plan table shows why.

Cliff Synopsis

  • An individual, aged 25 making up to 150% of the poverty level ($18,090) will pay $108 per year.
  • An individual, aged 25 making up to 301%-400% of the poverty level ($48,240) will pay $792 per year.
  • An individual, aged 25 making up to 401% of the poverty level ($48,241) will pay $3,516 per year.
  • An individual, aged 60 making up to 150% of the poverty level ($18,090) will pay $300 per year.
  • An individual, aged 60 making up to 301%-400% of the poverty level ($48,240) will pay $2,136 per year.
  • An individual, aged 60 making over 400% of the poverty level ($48,240) will pay $9,504 per year.
  • A couple, both aged 60, making over 400% of the poverty level ($64,960) will pay $9,504 per year.

In addition. an individual would have a deductible of $7,350. A family would have a deductible of $14,700.

The article claims "The proposal would also reallocate millions of federal dollars that the health law dedicates to lowering costs for people with modest incomes and use the money for premium assistance to those with higher incomes, no matter how much money they make."

The posted table says otherwise.

Fatal Flaw

The fatal flaw in the pan should be obvious.Those making over 400% of the poverty level will opt out.

Those pie-in-the-sky premiums of a mere $300 a year for those aged 60 making the poverty level will never cover costs because a huge percentage of those making over 400% or the poverty level will opt out.

Should the Middle Class Pay More for a Loaf of Bread?

A major flaw in Obamacare is the notion that everyone should pay the same price. Under the plan, young and healthy millennials overpaid, effectively subsidizing older and/or physically obese persons. The millennials opted out.

The Iowa plan may capture millennials, but because of the screw job on the wealthy, those making over 400% of the poverty rate will drop out.

Effectively the state said if you can afford to pay more you must pay more. Imagine grocery stores charging $15 for a loaf of bread if you make $48,241 but only 48 cents if you make up to $18,090.

The idea is preposterous.

Insurance for those older should cost more than those younger. Insurance for unhealthy individuals should also cost more. But that's where it has to stop.

Obamacare is blowing up because it seeks to redistribute costs in a way that cannot possibly work. The Iowa replacement plan will fail for similar reasons. One plan screwed the young and the healthy, the other screws those the state deems to be able to afford to be screwed.

That cliff is a mere $48,240 for individuals and $64,960 for a couple.

A couple making $64,961 would have to pay over $24,000 out of pocket before insurance covered a dime.

This is a huge screw-job not on the wealthy, but on the middle class!

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Mike "Mish" Shedlock

sky-high premiums + enormous deductables... did they think people wouldn't notice this burden?

Hmm makes a good point. The US could emulate the Canadian health care system or one from almost any other developed country

They all cost much less than the US and the citizens are very happy with their health care, in spite of the systems not being perfect. Americans who tell you these other systems don't work are either uninformed, or simply spreading lies.

Just pay regular doctors $300/hour with a 15 minute minimum payment, surgeons $500/hour with a 30 minute minimum, and all hospital stays at $500/day, 1 day minimum. Regardless of procedure performed. Get rid of insurance altogether. Problem solved.

The "fatal flaw" is that somewhere in their thinking the retarded concept of 'ceteris paribus' was invoked when 'fairies' would have been perfectly adequate.

The problem isn't insurance costs. The problem is health care costs. Insurance is expensive because health care is expensive. Drug companies cannot be allowed to have a patent and charge whatever they want. If they want a patent, they have to have price limits. If they want to charge whatever they want, then they don't get a patent.

Obamacare wasn't designed to provide healthcare for all. It was designed as an extortion racket to make sure everyone pays the healthcare cartel. The federal government is the muscle. The same government that will throw you in a cage if you refuse to pay exempts the drug companies from anti trust laws, so they can pretty much fix prices at will. I'm pretty sure that also goes for the medical supply companies. Scrap it all.

Is the Middle Class already paying more for a loaf of bread?

Of course they are! The middle class is subsidising every EBT card utilized. The marked price maybe the same but the effective cost for the bread has an imputed tax to certain tax brackets. But I would also point out why would a 60yo participate in Iowa's plan? They can opt for Medicare @ 62.

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