• Weep for the bros

    I have tried – hard – not to continue to talk about this issue. I think the “plight of the bros” is a distraction. It’s finding the apocraphyl few people who are 25, without parents who will put them on a plan, have great jobs that pay them a good wage so they don’t get a subsidy (but those jobs can’t be good enough to give them insurance), be childless, be single, be male, be perfectly healthy, have no family history of illness, not smoke, not do drugs, be thin, and live in California.

    Those few guys aren’t who health care reform is about. At least not to me. I’ll own that.

    But Adrianna McIntyre has pulled me back in. Austin already posted on her piece, and even pulled a chart. I want to pull a different one. Take a look at this:

    currentmktallincomes

     

    Weep for the bros, if you like, those “lucky duckies” who earn too much to qualify for subsidies. Me? I can’t believe how many of those who are 19-25 live in poverty. All of those red column young adults on the left side earn less than 138% of the poverty line. All of them would qualify for the Medicaid expansion. Yet many of them, possibly most of them, won’t get it because of all the states who are refusing the expansion.

    I think they are who health care reform was about. I think it’s pretty horrific that next year a large chunk of them will continue to be uninsured. But I guess the tragedy du jour will remain the “rate shock” for the bros.

    @aaronecarroll

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    • For the life of me – looking back through old posts and old comment threads – I cannot figure out why this is gendered. Why is it “bros” and not young mildly but not extremely well-off people generally?

      • Not sure if this is the full answer, but healthy, young women are judged by some to be more “in need” of health care coverage because they can become pregnant. Bros are as young and invincible as a human can get.

        • The reason is because of the WonkBlog post referencing washington nationals young phenom Bryce Harper…that’s a clown question, bro.

    • Pretty sure that one of the main concerns about the ‘plight of the bros’ is that if you aren’t getting young, healthy males to purchase insurance, you’ve got a real problem in terms of the risk profile of those who do get insurance (the sicker and the older). Having written a bit about ‘death spirals’ before, I can tell you this is going to be a problem if it comes to pass.

      • I’d really like to see specific numbers put to this death spiral story. I am aware of the literature that suggests such a thing is possible, but not aware of any quantitative work showing just how it would play out for ACA exchanges. For example, with what percentages to premiums rise if 10%, 25%, 50%, etc. of “bros” (or similar) don’t enroll?

        • I don’t know of any quantitative literature specific to the ACA, but the death spiral phenomenon is well understood by most, I think. I was at Heartland when we published ‘Destroying Insurance Markets’ (a case study on the 8 states with guaranteed issue and community rating), and I recall as part of the process of putting that book together having several briefings from the actuarial departments of a couple of insurers. I think the case for the existence of the phenomenon is well established (hell, the Obama administration argued for its existence as the reason why they needed the mandate), the only argument is if and to what degree it will occur under ACA.

          I will say this – the mandate should moderate somewhat the adverse selection that would otherwise occur, and subsidies will insulate many from the death spiral effects as well. But the unsubsidized (bro or not) and the lightly subsidized (many young people with moderate incomes will actually get fairly small subsidies because their OOP Max for premiums is close to the premium) will likely be priced even further out of the market than currently is the case because insurers are going to have to adjust their premiums higher if/when the bros don’t show up. So basically what we’re likely to see happen is a modified death spiral, with most subsidized persons not seeing the effects (at least not immediately – if overall costs rise beyond projections, then the subsidies get scaled back) but the unsubsidized bearing the full brunt of escalating premiums.

          • “to have to adjust their premiums higher if/when the bros don’t show up.”

            Isn’t this completely wrong? The number of well-off bros not showing up is going to be small, because the number of well-off bros is small. And the number of subsidized bros showing up is going to be very large. (Again, folks in the 19-25 age group tend to be at the start of their careers and not making a lot of money, so the vast majority of this group is going to be subsidized.)

            From the _insurers’_ standpoint, there’s no difference between a well-off bro and a subsidized bro. The insurer gets full payment from everyone.

            So unless the numbers are radically different from what (the above) common sense tells us they’re going to be, insurance as insurance is going to fly just fine, although the taxpayer will have to pay for the subsidies.

            (With my luck, someone else will have already said this further down the thread…)

    • It looks to me like the bulk of the bros would be “purchasing” insurance with Medicaid funds. The accounting might show them offsetting older sick folks, but it’s really be moving the money from one tax-payer funded pocket to another.

    • Increase the premium on the young so that older folk have a slightly lower premium. That sounds like a political solution.

      The trade off:

      -Younger people don’t enroll
      -Younger people don’t become accustomed to carrying insurance.
      -Death spirals can occur.

      The result:

      A partial failure of the ACA and its goals.

        • Aaron see my comment (1/6) at the same address.

          “Austin, I believe you to be absolutely correct that it is not necessary for young people to buy insurance and still have a stable market for those that want coverage. I think this is a more important point than many might realize and you seem to be astutely highlighting that fact.

          On the other side of the coin, if our goal is that everyone carry insurance, it is a good idea to promote insurance to the young because if they have it voluntarily when they are young they are more likely to carry it when they are older.”

          Nothing I said here contradicts that statement while at the same time I was agreeing with Austin had said.

          The ACA was to provide universal insurance. Failed… if the young refuse to sign up.

          The political solution of the ACA was to take money from the young and healthy and transfer that money to the older group. Another Failure of the ACA since that money will not be transferred if the young don’t buy it.

          Contempt for the law is created and can spread due to this problem of one group subsidizing another. That can lead to even less people being covered (Another Failure and even death spirals if the costs for the older groups get to high (Another Failure). The supposed savings then become Another Failure as well.

          • @Emily:

            I think the problem with your argument stems from your assertion that the “transfer” is from young and healthy to the older group.

            More likely it will be from the healthy to the non-healthy. I took “young” out of your assertion. Since the larger sum is spent on the truly sick, and the greater income of the insurers comes from the covered employed (who are typically not the young and this has been the case for a long time), the participation of the young will not be as large as your concern warrants. If it were then the ability of a family to continue coverage to children up to 26 would be a fatal flaw. Seeing this part of the law being as popular as it is, and it is not causing anything like a spiral, it does not appear the evidence favors the scenario you predict.

            • @ Eric: “More likely it will be from the healthy to the non-healthy.”

              What proof do you have?

              Historical evidence of related things frequently demonstrates the opposite of what you suggest.

    • It’s worth pointing out that the cost of pregnancy and preventing it falls on women. The bros are almost all getting a free ride thanks to biology, but paying for pregnancy, prevention, and childbirth are things that they benefit from, too, given that no women incurs these costs without a man involved.

      Traditionally, marriage and shotguns were the way to make sure that young men paid their share.

      • It is also worthwhile to note that women live longer and thus collect more years of social security and Medicare. Do you wish to incorporate that into the equation? I don’t think so. I think the war on who has more, on men or women, on race are all futile wastes of time, but it seems all to many spend too much time trying to divide the nation.

        • I don’t think that anyone is trying to “divide the nation” by pointing out that women get pregnant and men don’t. Men are, however, at least briefly involved in each pregnancy even with current technology. As such they are free riding on young women’s health insurance. Young women do pay more for insurance whether or not they are likely to live a few years longer forty years in the future. What would you think would be fair?

          • “I don’t think that anyone is trying to “divide the nation” by pointing out that women get pregnant and men don’t.”

            I reject the the concept of what is ‘fair’ because that term means so many things to so many different people. Women get pregnant and that is a fact of life, but has little to do with my comment that deals with dividing the nation into warring factions because women and men are different, and that individuals have different incomes, races, longevity and so many more differences. Trying to make things equal doesn’t work. The government cannot manage all these problems. It has a hard enough time making sure that every individual is equal under the law.

            (You discussed that premiums were higher for woman at younger ages. That disparity I believe reverses at higher ages. Women live longer than men. The average Medicare payment is around $10,000 per year. The average social security payment is around $15,000. That means on average women receive ~$125,000 in entitlement benefits more than men. Several decades ago it would have been ~$200,000 based upon today’s benefits and dollars)

    • IMHO one problem is that Republicans want to do nothing and Democrats what to do anything no matter how inefficient. PPACA is very messy and inefficient but the democrats support it because they think it is all that they can get

      BTW Libertarians want deregulation and reduction of medicare and medicaid but they are too few to matter.

      • Floccina,

        How about refundable tax credits that has existed for a long time. They replace regressive subsidies based upon tax deductibility that increase the more insurance one buys and burdens those that are self employed or part time.

    • It bears repeating that it is, in fact, possible to simultaneously support wealth transfers to help the poor and unhealthy get the healthcare they need *and* a payment model with HSA’s and catastrophic plans at its core.

      How? Transfer money directly to the poor or unhealthy to help mitigate the costs of non-catastrophic care, and make both the transfered funds and the accumulated HSA balances transferrable between family members.

      There we have it – a mechanism to help the poor and the unhealthy that (1)makes the transfer of resources both fairer and more effective by predicating it on individual need rather than age (2) eliminates the distortions that turning insurance premiums into mechanisms for wealth transfers introduces into underwriting the premiums, (3) doesn’t force people to buy more coverage than they want or need, (4) more closely aligns the incentives of the patient, provider, and public than comprehensive, low-deductible coverage.

      • JayB, what you say seems to make excellent sense. It has the potential of reducing costs so that more money is actually left to the truly needy, the ones that both the left and the right say they wish to help. One could even try compromise leaving Medicaid as a government insurance plan for the very ill or those that slip through the cracks. With subsidies one could create skin in the game and even permit those on Medicaid to pay a lesser fee and go private. We should be integrating the poor into society, not treating them as a separate class that through the wrong incentives keep them from joining society.

        I don’t know what the objection is to pursuing that type of plan. The major problems that were supposed to be addressed by the ACA were costs which now seem will be significantly higher than predicted and the uninsurable. Unfortunately we are seeing that the ACA hasn’t handled the uninsurable problem as only a small percentage of the ones at risk are enrolled and the program has run out of funds.

        • “I don’t know what the objection is to pursuing that type of plan.”

          I wonder if the CBO has ever scored a catastrophic + subsidized HSA plan for Medicaid. I’ll ask on Twitter as well. If it doesn’t score particularly well, that diminishes its attractiveness politically.

          Anyway, the source of objections could come from work of the type I summarized recently: http://theincidentaleconomist.com/wordpress/the-longest-ever-study-of-consumer-directed-health-plans/. From the research, the CDHP paradigm is a mixed bag, with strengths and limitations. That’s true of everything, of course. But toss in status quo bias and I think you have your answer.

          FWIW, if anything, I’ve taken a more pro-CDHP than anti- of late, but with error bars that overlap agnosticism.

          • “I don’t know what the objection is to pursuing that type of plan.”

            Based upon the CBO’s record and the fact that the inputs they use are directed by Congress would they be the best to make this type of judgement? Their predictive abilities have not been demonstrated to be stellar.

            Looking from a purely economic fashion wouldn’t it be best to have multiple types of plans to suit the diversity of our citizenry and to compete with one another? Doesn’t competition lead to better products and lower costs? (I read the longest ever…). Why should we assume that there is only one best health care plan for everyone?