One thing I always find unique about US policy debates is the bipartisan consensus that there are no programs that should be paid for by broad taxation. Everything from BBB to Medicare for all should be covered by targeted taxes on the wealthy (or shouldn’t exist to facilitate lower taxes in the wealthy if you are in the GOP). The obvious ‘fix’ for both Medicare & Social Security is a bump in the payroll tax, but somehow that is more toxic than cutting those programs.
I do wonder if Democrats should start talking about investing in major programs to lay the groundwork for more sustainable funding mechanisms in future debates - otherwise I feel like a lot of the welfare state gains of the last decade will be pared back in the coming ‘fiscal responsibility’ movement.
If you look back to when ACA was passed, there was a concurrent big concern with inequality being the most pressing social issue of our time. I feel like that drove a lot of the feeling that taxing the rich (and only the rich) was sort of doing double work -- paying for programs for the poor and also just lowering the income/wealth of the rich was good on its own merits.
Now we've seen some significant lessening of inequality, but political ideas have inertia. I wouldn't be surprised if, if the trend to lower inequality continues, we start to have more enthusiasm for broader taxation.
All that said: I think it's also time to take another look at the idea that in fact America's overall lower-tax regime is... good? I remember back 15-20 years ago there were a bunch of people who strongly believed that Europe had a really good policy regime which would lead to steadily higher prestige in the world and greater economic prominence at America's expense. I don't think the last 20 years have been kind to that view.
I was one who was at the time also a lot more enamored with what Europe was doing. There's still a certain efficiency they've developed that it's hard not to pine for. However I think you're right, the experience of the teens and covid need to be a big gut check and the case that they're ahead of us in any aggregate way has gotten harder to make. If anything it's our continued insistence on kind of a swiss cheese state with lots of weird gaps and inconsistencies in taxation, welfare state, etc. holding us back from completely leaving them in the dust.
We mainly have a lot of historic path decency differences on where we come out on state capacity. It has become less clear to me over time how much of that is current structural difference vs just inertia from both past policies and historical contingencies.
Did we re-tax the rich? The capital gains and estate tax rates are still disgustingly low
And the inequality stats that were cited often - the 0.1%, the wealth of billionaires - do not seem to have lessened. When some people are born inheriting millions and others are born with nothing, then yes, inequality is a huge social issue of our time, holding us back from the ideal that all Americans are created equal.
A VAT is also not very effective against billionaires or wealth inequality, since only a tiny proportion of their billions are spent on consumption.
I think consumption inequality is probably what we should actually care about. But that won't stop people from hammering on the "X% of people hold Y% of wealth" type stats to say we live in a fundamentally rotten society.
We call our system “progressive taxation,” but when you add all local, state, and federal taxes together it’s not very progressive. Consumption or VAT taxes would end this charade, and there would be no more “well, poor people don’t really pay taxes.”
"We call our system “progressive taxation,” but when you add all local, state, and federal taxes together it’s not very progressive."
As with many things in the US, that varies a lot by state. Some are super regressive (like Washington) and some are fairly flat to slightly progressive so that overall taxation (state + federal) is still fairly progressive. No states are nearly as progressive as the federal tax system tho. See https://itep.org/whopays/
There is no reason the policy stakes need to be confined this way. It is technically very possible to tax wealthy people to pay for social security instead of laborers.
Congress can write a law to increase the estate tax rate. It can also write a law to give money to entitlement program funds.
I think there has been a successful attempt by the “elite” to have people think that funding entitlements is only possible by taxing labor. Some SB commenters are also willing to entertain taxing consumption. But these are not the only options. The country could fund government operations including entitlement programs by taxing the wealth of the wealthy, either directly, or indirectly through the estate and capital gains taxes.
The billionaire and 0.1% statistics haven’t lessened - but the much bigger issue, of the 10% being able to boss around the bottom 50% in various dehumanizing ways, has been lessening quite a bit in the last year or two.
Europe tends to have higher capital gains rates, and many countries have a wealth tax. The net effect to me seems to be that the wealthy in Europe pay a greater amount in taxes compared to the poor than is true for the wealthy in America. How is this less progressive?
Most of the European countries that tried having a wealth tax gave up on it, your information is decades out of date. Both Britain and France famously abandoned wealth taxes as unworkable
More in theory than practice. And then politicians use that idea to use tax money “for the people who pay taxes” instead of universal services (transportation, housing, health) that everyone needs.
When I said a while back that the US needed gigantic child benefits paid for with a 10-15 percent VAT (which would massively reduce child poverty and stop the population from falling) someone objected that VAT isn't the best kind of taxation.
But all the European countries with more generous welfare states have VAT along with income tax. I think one reason America's long-term prospects are better than the EU's is that this option is still available to be tapped for pronatalist welfare policies. I can easily see Europe sliding into a vicious circle of population decline, pension costs weighing on a tapped-out tax base, and resistance to large-scale immigration, all mutually reinforcing. It could happen in the US as well but the risk seems much lower.
Or perhaps the Euros are declining because of the VAT. Odd that with this social support that should make things easier, entrepreneurship does not seem to be their forte.
One of my ideas that I'm not sure I am actually for, as it remains totally half baked, is for the US to simply eliminate all tax deductions (maybe excepting EITC for low income) for people who have not married and had at least one child (including via adoption, surrogacy, fertility treatments etc.) by I dunno age 40.
No one should ever, ever be forced to start a family, and the decision of the individual is paramount. However I also don't think there should be a windfall for those who have for whatever reason decided not to invest personally in the next generation and the future of the country. I'm certainly open to all manner of caveats and exceptions on this, but seems like it might be a good way to either raise revenue or nudge fertility in a more sustainable direction, maybe both in the short term.
I think the idea is that people will make more children if the government makes it easier and more appealing to have more children by giving parents a fat break.
"my general view on this would be we should take current social security benefits, cut them in half, and then the remaining benefits should be allocated each year based on the social security earnings accrued by people who were the retiree's custodial children (or theirs)
this approach would be unkind to the involuntarily childless, but would also create a HUGE incentive for adoption.
that is, it would only actually exclude people who didn't have kids *and also* did not adopt/marry someone with kids
it would also mean losing custody of your kids would hammer your retirement benefits.
these all seem like pretty rational mechanisms to me."
Jesse, I know stupid comments are, like, your specialty, but this is probably the stupidest one I have ever seen you make on any comment of mine, here or other places where we have crossed paths.
This idea is bad and half baked. Most deductions are a subsidy to some socially favored objective which applies with equal force to the childless.
You can subsidize childbearing (if you want) by additional child tax deductions or direct cash transfers but it is nonsensical to do so by randomly removing all other tax subsidies from childless people.
I said removal of deductions at approx. age 40, so even childless would have them for a while, especially when it might help establish home ownership and other desirable things. But anyway your argument isn't that it's bad, it's that it isn't as high of a priority as other objectives. What priority is higher than the state sustaining the systems that produce a broad based high standard of living, which like it or not require a minimum level of population stability?
My argument is that blanket disallowing unrelated deductions is a random and terrible way to allocate a subsidy. Take the same approx revenue that would generate and construct a less insane and random subsidy to parents, like a higher tax credit. Same cost, non crazy way to implement it.
Is there a way for the tax man to differentiate between voluntary and involuntary "selfishness"? I don't think my aunt who never married or had children through no fault of her own (complicated story involving childhood illness should get hammered by the IRS.
Maybe. I said I'm open to nuance. I also never used the word selfishness. But I don't know why people who are going to benefit from programs like SS, Medicare, etc. that rely on at least some degree of population stability shouldn't contribute more financially to sustain those programs when they haven't created any future tax payers (which again, must always be completely 100%, discretionary).
The proposal isn't about sin or punishing anyone or anything, just an acknowledgement that on current trajectories beneficiaries stand to get a lot more out than they put in, which puts increasing strain on future, smaller generations. We need to think about ways to navigate that.
A low-tax and high deficit regime never made any sense. Democrats made big mistakes in not at least trying to make Republicans pay a political price for the Reagan, Bush and Ryan-Trump deficits that their tax cuts for the rich generated.
My recollection is that they correctly pushed back on the argument that the cuts would pay for themselves (in the case of corporate taxes that the cuts would not increase investment) , but not on how damaging deficits are to long term growth or even the size of the income transfer up the income scale.
After living in Denmark and experiencing a 25% VAT on all goods and services, a special flat tax at 33% on income (it would have effectively been 45% without it), and taxes on unrealized capital gains, I have come to the conclusion that Americans are undertaxed. All the whining about taxes in the U.S. is silly. I make more now and pay less in taxes than when I was earning less in Europe.
Americans want the government to provide things but they don’t want to contribute.
I honestly cannot see how taxes on unrealized capital gains are defensible even in principle -- it's not actual money people have to spend, it's neither income nor consumption, valuation prior to sale for anything that isn't a publicly traded asset is various shades of hocus pocus, and if we're taxing unrealized capital gains symmetry would suggest that we grant tax breaks on unrealized capital losses -- which would in turn seem to be giving free money to, e.g., people who bought BTC when it was on its way down from 40k or so. And if we want to claw this back we introduce a huge amount of retrospective look-back requirements that are an administrative nightmare.
Surely the easier *and more conceptually just and coherent* solution is to just tax actual capital gains....
I'm in favor of getting rid of the capital gains tax and just going with a VAT for financial transactions, sometimes called a financial transaction tax.
If we're going to try to move to a VAT system, we might as well start with the financial system, since it seems easiest to implement (everything digital, heavily watched and regulated industry...)
Taxing unrealized gains is pretty similar to a wealth tax, just focusing on assets that can be easily valued. As with a wealth tax, liquidity can be an issue.
I think it’s more that average Danish voters don’t save and don’t think about it. Danes are very insular and will invest usually through Danish brokers who automatically do the tax stuff. It’s when you have overseas assets that things get really weird and the single Danish tax bureaucrat goes “I have never seen this before.” And it’s not like the IRS where they can just give you the forms, no the Danish government has to figure out how to set up how you report it.
If we will not tax unrealized gains, then we must renounce concern for wealth inequality.
If we wish to use wealth inequality measures as a barometer for the health of our society, then we must do something about some people having a lot more appreciated asset value than others.
A modest reform to the estate tax -- eliminating the step-up at death -- would accomplish this without the need for a dramatic re-reading of the 16th Amendment. Add some changes to trust laws (GRATs, mostly) and the estate tax will have a significant effect on inherited inequality.
If it doesn't go down before the sale goes through, sure. But since you don't have the money until the sale goes through, the logical thing to do is to wait until that event occurs. But that's just regular capital gains tax.
You’re going to crimp people’s long term investment growth if every year a stock goes up you trigger a tax that means you will need to divest some of the shares.
Are you going to tax realized capital gains? What if you realize gains in order to pay an unrealized tax? Will you be taxed double? What if I sell another asset in order to pay tax on an unrealized asset, do you pay capital gains tax in order to pay capital gains tax then?
What if the unrealized gains have dissipated and you didn’t actually realize any of them? Seems pretty asinine if you’re paying for gains you no longer have.
I agree there's a case that Americans in 2023 are somewhat too lightly taxed (I'm not sure this was the case in 2015), but much of this is simply downstream from wanting less government. Americans could have a lot more government if they wanted it, and were willing to vote accordingly. But if they got a lot more government and didn't raise taxes by heaps and heaps, the resulting inflation would probably be ruinous. The Danes don't pay higher taxes mainly because they're so much more virtuous about debt. They pay more taxes because they want government to do a lot more than Americans do.
To put it another way, there's a difference between saying "Americans are shy about paying taxes and will likely suffer bigger deficits/higher inflation" and "Americans are shy about paying taxes and are willing to make do with fewer government services."
I'd say the latter sentence is a more valid description of current US political economy. I don't care what the opinion polls say: the US electorate regularly hands over 48-52% of the country's political power to a party dedicated to public sector shrinkage. You can have lower taxes than Europe when your public sector is a lot smaller than Europe's.
Part of the problem though is that if you just look at the stinginess of America's social programs or the amount of public infrastructure that gets built, you would conclude that the American government is much "smaller" that it actually is.
US government programs only cover healthcare for veterans, the elderly/disabled, and the very poor, yet they spend a similar amount *per American* as the UK NHS does per Brit, to cover the entire population. If the US got the underlying healthcare costs under control, it could have a European style healthcare system *with no increase in taxes or the deficit at all*.
Similarly, the US government spends orders of magnitude more for major infrastructure/public transit projects compared to peer countries. It could be building so much more, without spending more. And also, while this issue is not unique to the US by any means, the artificially created housing shortages in many American cities make it much more expensive for the government to provide housing subsidies or social housing, causing less of it to be provided than otherwise would.
I feel like it's a totally underrated issue in American politics that the government could be getting so much more for the money it already spends, on so many dimensions! And if the US managed to fix this, maybe Americans would have increased confidence in how their tax dollars were being spent and more open to a larger government with more social programs.
There's no way to decrease healthcare's share of the economy by 5 or 6 points of GDP *and* simultaneously provide or upgrade coverage for several tens of millions of uninsured or seriously underinsured Americans. I believe inefficiencies in the status quo might enable us to take care of these folks without substantially increasing healthcare's share of GDP. But a big decrease isn't in the cards.
I actually think this is a weird downstream consequence of George HW Bush losing the 1992 election. The most famous part of his 1988 campaign was "read my lips, no new taxes". Then he raised taxes to help balance the budget, lost in 1992 and the conventional wisdom (especially on the right) became he lost because he broke his no new taxes pledge when the real reason he lost is a recession hit at just the wrong time. If recession was just a few months later, GHWB probably wins and raising taxes doesn't become nearly as toxic especially on the right.
Also, as is my remit, this substack is committed to (rightly) saying not everything is about the race, but my (slight) pushback* is that unfortunately a lot of things in the US really is about race or at least downstream of a more racists past. When John Stossel (famously libertarian) used to use his segment to say "it's your money", the unsaid last part of the statement was "going to 'those people'". It's not a mistake that European welfare states were created at a time when most European countries were way more homogeneous than the US. Seeing the rise of some pretty explicit anti-immigrant (and to be honest bigoted) parties in various European countries is a giant sign to me that you probably couldn't create the expansive welfare state/tax regimes in a variety of European countries today. Unfortunately, you can't talk about US' aversion to both taxes and expansion of welfare state without touching the very particular role race has played in American history.
* I actually think Matt would agree with my take here.
I agree with your general point, but that recession would've needed to arrive earlier to help Bush, not later. That recession arrived in the summer of 1990 and was over by the spring of 91. What did Bush in was the very weak early *recovery* (and also, I think, "third term vote share drop"). Had it arrived later (say, the summer of 1991) he'd likely have lost by a larger margin.
Yeah I should have said earlier not later. I think I was getting mixed up with FDR in 36 of all things. But yeah, if recession was done sooner, the public likely starts to actually feel the effects of a non-recessionary environment more and blame GHWB less. And yeah basic thermostatic opinion is probably the other factor; people just kind of over GOP being in the White House so long. Suspect this at least part of the reason why Labour may actually gain power again in U.K. after being out of power for so long.
It's my hope and worry about 2024. Matt has made a pretty convincing case to me that if we look at other countries' leaders in Canada and Europe, Biden's approval rating being low is all about inflation. No matter which party is in power in various countries around the world, people are voting against the party in power and the common thread is almost certainly inflation. Given inflation is continuing to come down and will likely come down further, I'm hoping a year is enough time for the public at large to actually really notice; especially if it comes with even a modest Fed rate cut.
>The obvious ‘fix’ for both Medicare & Social Security is a bump in the payroll tax, but somehow that is more toxic than cutting those programs<
It's possible that's what we'll learn in a few years. But hardly guaranteed. We don't really know either way, I think, because the relevant trust funds haven't run out yet. In other words, crunch time hasn't arrived. When it does get here, I suspect deep cuts to these programs are likely to be even more unpopular than raising payroll taxes.
No, shift the financing of Medicare and Social Security (and unemployment insurance and ACA, and a child tax credit) to aVAT. A flat tax on wages made sense in the 1940 before the invention of the VAT, but its still a tax on income, not consumption. The logic of these programs is to support consumption of people in specific life circumstances -- old age, sickness, unemployment, rearing children -- and we should tax the _consumption_ of others not in those situations to do so, not income (consumption + saving) and especially not wage income (and more especially in the case of SS, CAPPED wage income).
What's so bad about taxing wages (as part of the mix)? FWIW I'd like to see the US adopt a VAT, but I wouldn't replace payroll taxes with a VAT, I'd *augment* them. AFAIK all the major social democracies rely substantially on wage taxes to fund pensions and healthcare. There has to be some merit to doing so. I'd guess that "merit" in part is tax code progressivity. Another is (depending on structural specifics) the incentive to participate in the paid labor force (to quality for the pension). I think there's also a perception of fairness, universality and solidary (ie, all "workers" are covered, and indeed rewarded for the productive labor they contribute).
The problem with a VAT in the U.S. is that we have an economy designed around encouraging people to consume more, not less. If we are taxing consumption higher, then people will consume less, and the economy will slow. I am not an expert on tax policy, but I do know that in the U.S., you can avoid paying some income taxes if you spend your income on certain large purchases, incentivizing consumption.
I don't know if its good or bad, but I think it is likely the U.S. will continue to rely heavily on personal income tax and payroll taxes for the majority of its funding.
I do not think we have "an economy designed around encouraging people to consume more, not less," but if that were the case we should change the design. Most people are already inclined to consume today rather than save to consume more tomorrow. Public policy, especially taxes, ought to "encourage" in an offsetting way.
I guess you are talking about ACA. It should have raised taxes then and there and been designed to chip away at employer purchase of health insurance, at least for low wage workers.
I wish I could triple like this one. While being of the opinion that the ACA didn't go far enough, due to the nature of the American political system (Madisonian, federalized) it is the best path towards improving healthcare police, coverage, and access, and I hate how much of an orphan it's become.
Just to give a small example that I think people take for granted, the ACA, by getting more people covered with some kind of insurance with stronger minimal coverage requirements, plus a bunch of incentives in the ARRA, has been the driver of the massive expansion we've seen of retail-like urgent care centers and similar clinics. It's mundane, and they aren't perfect, but they are also enormously important for supply side.
Anyway I think it's important to make peace with the idea that healthcare is always going to look a little different here than Europe, always be a little more tiered, and a little more commercial in nature. But there's just no case for trying to take it away. The near miss on repeal shows just how flat out bad the GOP is on policy, both because it's completely unconstructive with respect to real problems and also because it has no ideas whatsoever (remember, it was repeal and replace, but replace with what? no one ever said).
>I think it's important to make peace with the idea that healthcare is always going to look a little different here than Europe<
There is no single "look" to European healthcare, but several major templates and lots of variations within. Add to that Canada, Australia, Japan, Taiwan, South Korea, Singapore...
I personally won't be "at peace" until all Americans have reasonably robust healthcare coverage from cradle to grave that can never be taken away by the vicissitudes of life. I don't believe this is unachievable. I'm pretty agnostic on the particulars of what that ultimately looks like.
I can't tell if you are disagreeing with me or not.
Edit to add, I understand there are multiple systems in Europe, but as I'm sure you also know the 'robustness' varies quite widely in the list of countries you gave.
It also probably saved quite a few rural hospitals. Medicaid is pretty stingy when it comes to paying for hospital care but stingy is far better than writing off the entire bill because the patient has no money. ACA plans pay more than Medicaid so that’s even better. Rural hospitals also often have outpatient clinics and newly covered patients are probably going to use those clinics more once they have coverage
One thing that bothers me about the left's arguments in the ACA debate is they refuse to acknowledge or address that it did make things worse for some people.
Don't get me wrong, the ACA was wonderful for poor people who couldn't afford insurance before and got access to it through Medicaid or subsidies. Pre-existing conditions and lifetime maximums were capped. That's all awesome, and shouldn't be repealed.
However the reports I'm hearing from middle class or up people who buy their own insurance (tradesmen, small business owners, etc) was that their premiums and deductibles shot up massively after ACA implementation, and for that money they didn't get any new access to medical services they found useful. This has been a *massive* cause of frustration with the Democrats for many in this demographic.
Also in general, requiring insurance plans to cover a minimum amount of services seems generally counterproductive to me *unless* it's coupled with a serious effort to control underlying costs, which the ACA wasn't. You're not doing people favors if you "raise the bar" for health insurance - but then price them out of it unless they can get subsidies.
One could argue that overall, the bill did more good than bad - generally well off tradesmen/small business owners pay a bit more in exchange, but that's outweighed by all the the truly struggling people who paid less or got access to insurance for the first time. Fair enough. But, in terms of health policy the issues of Medicaid and insurance regulation seem pretty separate, it would seem much more productive to at least acknowledge there were to downsides to the ACA for some people and propose a solution, than to tell them they're crazy and the ACA was all sunshine and rainbows for everyone.
>> "premiums and deductibles shot up massively after ACA implementation"
It'd be interesting to see some hard data on this.
I had a grandfathered pre-aca underwritten policy that finally got discontinued by the insurance company (10 years after ACA - if you like your plan you can keep your plan was real for at least some people).
The premiums on the old grandfathered plan were about 30% higher than the premiums on the new replacement plan (no subsidies). The coverage and deductibles of both plans were roughly equivalent. The main difference between the plans was that the provider network of the grandfathered plan was much much better than the replacement ACA plan.
IMO, most of the people complaining about massive premium hikes on ACA plans previously had crap insurance plans that excluded drug coverage and had very limited benefits for catastrophic stuff like cancer.
Many of the cheap plans people got tricked into buying pre-aca were like some of today's dental plans. They provided generous coverage for the first few hundred dollars of care (eg for cheap things like a doctor visit for a cold), but capped coverage for big catastrophic stuff like cancer treatment. Since most people go to the doctor for small stuff once and while but don't get cancer, they mistakenly thought they had good coverage but they really didn't.
My biggest complaint about the ACA plans is that all the options seem to have crappy provider networks. That's the biggest loss for me between my old grandfathered plan and the replacement ACA plan.
I do remember my dad mentioning that some people were unhappy that there weren't some options for truly catastrophic coverage that had little-to-no regular coverage. (i.e. you'd pay out of pocket for even vaccines etc but be covered on the back end for cancer)
If you were high income/well off but wanted downside risk protection then you might be worse off this way (ignoring the pre-existing condition/life-time limit parts)
I don't think that's a large segment of the population but it's not zero.
(I _would_ be in that section except I don't mind having my vaccines/routine appointment covered - but I do want a high-deductible plan that pays basically _nothing_ until I have a really bad year)
In principle, I agree that it would have been better to allow plans without preventative coverage, especially for young people. OTOH, for most people the cost of preventative coverage is a relatively small part of annual premiums. Healthcare spending for a 45 year old averages about 8k per person per year in the US. Preventative stuff like vaccines, physical exams, and routine blood work runs around $200-300. So the added premium for preventative stuff is under 5%.
A bronze HSA plan with a 60% actuarial value (likely $8k deductible) comes very close to being a truly catastrophic plan. You'll pay around $6-7k in premiums, get a few hundred refunded for preventative stuff, and then only get additional reimbursement if your healthcare costs exceed $8k.
I put in numbers for a 47 year old with no dependents(I have them but I wanted to just see a sample individual plan) and sufficient income for no discounts.
Interestingly, the summary at the start says Bronze: 512/month, Silver: 748/month, Gold: 676/month (Wonder why gold was less.... maybe Silver was all PPO)
Yeah there's a sample Bronze in my area for $5,500 a year with a deductible of $9,500 that's _also_ the out-of-pocket maximum, so that's definitely a "catastrophic plan"
You have to budget up to $15k a year for it but if you can swing that you're good.
Interestingly, a gold POS plan was max $18,156 a year, but with a $1,500 deductible, so potentially lower costs.
... I then tried with dependents, same theoretical income, and my monthly payments went DOWN, the tax credit was so large. That was unexpected. (Total costs did go up because family deductible is the standard 2x individual but much less than I thought) Thanks Obama.
"Unfortunately, the media tends to treat these kinds of questions that involve the dispositions of hundreds of billions of dollars and the health care of millions of people as relatively minor and unimportant."
A thing I've harped on a lot is that one of the things that became extremely clear to me post 2016 is how much of MSM media coverage (or at least coverage from the biggest and best paid names) is driven by what personally effects them most. Hence a huge part of the reason there is excessive focus in national press on the goings on in New York City (I'm sorry, there is no way the death of a homeless man on the New York subway becomes a week long national story if wasn't for the fact that a ton of journalists personally use the New York subway at some point in their lives). So a big reason there has been so much focus on excess of the far left (not even talking about Israel/Palestine, really don't want to drag that topic into these comments) is partly it gets clicks from a mostly older left of center audience but partly because for a number of superstar reporters, they feel more personally threatened by left wing activism. Glenn Thrush works for the New York Times and such gets a ton of criticism from the right I'm sure as being part of the biased media. But his actual career was threatened because of "me too" movement which is decidedly more of a left wing movement. I can't imagine this doesn't effect Times reporters writing decisions, especially the more prestigious writers.
Which gets to my point. Most Times/CNN/NBC News etc. employees are going to have health coverage through their employer. And likely good health coverage that doesn't result in catastrophic bills or coverage being denied. If ACA is actually repealed, most reporters health coverage isn't effected one bit. They'll just revert back to a pre 2010 paradigm and probably not see any difference. Matt continually notes on Twitter and on this very Substack how much media incentive matter and why he thinks it will result in editorial decisions that subtly boost Trump's candidacy. Well other incentives matter too and I think is a reason possible ACA repeal doesn't get coverage it should.
I think the other basic fact is most reporters probably don't really understand the true nuts and bolts of ACA or Medicaid. It's one of the reasons I first gravitated to reading Matt and Ezra Klein. I'm pretty sure Ezra was the one who while reading his blog you can sort of see the dawning realization on his part that even the reporters who supposedly cover health care policy don't actually know much about the health care actually works.
Good points but I suspect the growth of Substack and other self-employment, and the general precarity of media jobs, mean "journalists don't have a stake in Obamacare" is probably less true now than it was in 2010.
I see your point. But end of the day most reporters aren't on Substack and only have a big enough audience if they had a previous journalism career that boosted their profile. But we'll see, if this model continues to expand, maybe we will see more chatter for lack for better word about ACA if more reporters have to deal with it personally.
The other even more basic issue is that GOP primary is obviously a nothingburger. Which means it's not in the news as much and Turmp is not as front and center either. Also probably a small part of the reason his poll numbers are surprisingly strong. I'm going to guess the Biden team will make sure health care is in plenty of campaign commercials once actual general election gets going.
1. Voting in a Democratic governor isn't the only way to expand Medicaid. A ballot measure can also force expansion. Utah, Maine and Nebraska have taken this route while under Republican control. In some sense, this is better for Republicans because something popular like Medicaid expansion could occur without voting in a Democrat.
2. The ACA limits the profitability of insurers through a minimum loss ratio. Basically, what this means is that for every dollar received in premiums, 80 cents must go out to pay claims. That means the insurer is left with 20 cents to pay all administrative costs and hopefully have a little left over for profits. There is no incentive for the insurer to reduce claims below a certain level because they'll just have to give it back through a premium rebate. Also, with stability, the market is fairly competitive, and thus it is difficult to price gouge the consumer.
3. Matt briefly compares premiums in the individual market to the employer market and notes the tax subsidy in the employer market. The US Bureau of Labor Statistics estimates that employers pay 67% of health premiums on average (as of March 2022). So, basically an employee should triple their monthly employee contribution to get an estimate of the total cost of insurance and compare that to the individual market place. I suspect this is something many people do when evaluating whether they stay with their employer or go out on their own. Yes, they'll make more contracting themselves out, but they'll now have to cover that employer subsidy (in addition to buying office supplies etc.). The key is that they can now calculate that difference. It is known and it is likely to stay stable. Lastly, while the US subsidizes employer premiums through tax deductibility, there are more direct subsidies in the ACA market depending upon the income of the individual. If you're low income, most if not all your premium will be paid by the US government.
4. Insurers are mostly worried about adverse selection, which is purchasing insurance after the individual becomes sick. In the pre ACA days, that's what drove high costs. Since only the sickest purchased insurance, premiums were sky high. ACA used carrots and sticks. The carrot was subsidized premiums. The stick was the penalty for being uninsured. Republicans removed the penalty back in 2017, but because the subsidies kept premiums sufficiently low, the penalty stick wasn't necessary.
What would be most interesting is an analysis of the impact of the ACA on the employment marketplace and lifting wages. Because the ACA guaranteed coverage, employees could leave their jobs and not worry about getting insurance. Yes, they have to worry about affordability, but they didn't have to worry about whether insurance would be there. How many people went back to school, became part-time Uber drivers etc because they knew that they could get subsidized health insurance. Removing uncertainty works for both the insurer and for the individual.
On point #1, it's not an option for all states. Of the 10 remaining Medicaid expansion holdouts, seven have no option whatsoever, and two others (FL & MS) are by onerous constitutional amendments only. Wyoming's the only state left where this would be really viable.
There’s also the carrot-stick of community rating, which lowered costs for people with imperfect health and prevents insurers from pretending they compete on price when they actually compete on filtering out higher risk individuals.
Yep, there are also Risk Transfer payments that are zero sum and take place between the insurance companies that disincentivize getting all the healthiest members
What's really amazing is that Medicaid expansion got done in NC with both houses of the General Assembly majority Republican (now a super-majority but not at the time of passage). Certainly Roy Cooper (a Dem) had something to do with passage, but I think a lot of it came down to the R's seeing ACA as here to stay and that passing the expansion would not be a political liability anymore.
It is kind of odd that Matt said "Republicans are sincerely very hostile to Medicaid expansion, and the only way to get it done is to beat them" when it seems that actually, NC enacted Medicaid expansion without beating the lawmakers who were actually in control of whether or not that happened. So *do* you have to beat them?
I dunno, my experiences with pet insurance has pretty much been the most straight forward insurance can get. Got quotes pretty easily from a few providers when I got my puppy, uploaded medical records and invoices when needed (no forms?!), got a check in the mail that cut the cost of the ER visit in half. As long as you're thinking about it as "emergency" insurance rather than "cover every type of health related cost" insurance, it seems to be pretty easy.
My experience with it was basically that it was surprisingly expensive, hard to shop around for, and not all that helpful in limiting/reducing costs, so we decided to forego it until it becomes more necessary. The experience did remind me of how human healthcare insurance used to work, pre-ACA.
The major difference is that while most people are willing to have the government help with the public's healthcare costs, most people (I think) wouldn't be excited to subsidize insurance for other people's pets. Outside of subsidies, the price of insurance is just the price of the risk to the insurer. Which sucks, but otoh pet insurance didn't even really exist 10 years ago, and 50 years ago the idea of advanced medical care for a family pet didn't much exist either.
So I don't know, I guess what I'm trying to say is that it's expensive b/c pet medicine has become expensive just like health insurance is expensive b/c health care is expensive. You can spread the costs around to the general public around but you can't eliminate them.
Doesn't that assume that the underlying drivers of increased costs are the same? I'm not sure I buy that - which I mean quite literally - for example, we obviously have a physician shortage, but do we have a vet shortage?
I personally found it straightforward, but there is a long list of exclusions and ‘WTF, that can’t be right’ situations in the small print. And they bump up the price every year so you have to shop around, and there is always a two week period where you have no insurance for illnesses.
I would guess that's because it's so easy to take advantage of. Documentation and anti-fraud measures are far less organized and developed, and the total sums per policy are not big enough to justify investigative measures to prevent fraud.
So you basically end up with a large fraction of people noticing that their pet has a problem, realizing it will be expensive, and then buying insurance and lying about when the problem kicked in. Or coming up with any of a dozen of other simple schemes with virtually no chance of being penalized for being caught.
It's a competitive market, after all, so if there was a way to sell it more cheaply and grab marketshare I'm fairly confident somebody would.
Pre-ACA healthcare was abysmal. The ACA basically turned vicious insurance companies into pets. They do sometimes bite and soil the rug but overall recognize that the tame path keeps them fed and cared for while the feral path gets them put down.
Though I can say that I've never had a problem with my pet insurance ever. It just gets impractically expensive when pets get older.
Health insurance for people is partly pure insurance, to pay for unusually high health care cost in one year rather than another. But for a weird historical accident during WW2, it came to be a way also of paying compensation. But medical insurances in the case of Medicaid is also to take account of medical costs rising sharply with age. Together these encouraged bad decision making by prescribers and patients not to be concerned with balancing costs and benefits. Lots of tax resources go into this system and leaves many other people uninsured or without public resources to partly pay for their insurance, a huge injustice. Medicaid (inadequately) addresses this problem for the very poor and ACA tries to pick up the other "uninsured" and make a few reforms aimed at improving the cost/benefit balance.
Yes, your dog falls into the no-employer purchased, not covered by Medicare or Medicaid market segment. :)
ACA repeal is important. Promising to undermine democratic institutions is important. Proclaiming that you'll destroy the international security structure that has kept the peace is important. Abortion is important. Threatening the rights of powerless minority groups is important. Putting hyper-religious Christian nationalists in positions of power is important.
Yup. All true.
My question is, how do you win the election? I wish Matt had answered my question when I posed it to him last week so I'll ask it again: if you can *only* highlight three issues that can be stated in a simple sentence (like above) and those issues you'll pound home continuously and with discipline until Election Day, which issues do you choose and which do you relegate to the bench? Because that's the way electoral persuasion works.
This a healthcare policy article and not a tax policy article, but I do want to make a quick observation: in the United States, rather than making a list of desired government services and then devising the most efficient and painless system of financing them, we use tax policy to express a moral judgment about the virtuosity (or lack thereof) of accumulated wealth. We really should stop doing that.
It seems to me that if the Democrats can make the 2024 election about healthcare: the ability of women to get reproductive care, and the ability of everyone to have healthcare coverage, the Democrats should win the White House and the House, and might even hang onto control of the Senate by their fingernails.
GOP: The Demon-rats want drag queen story hour for all our children!!!
Democrats: The GOP is literally trying to take your health insurance away.
I agree that this is a much better strategy with voters than engaging in the drag queen debate, et al. Make it all about policy because even the dumbest voters know that policies are what the government is for. We don't need to rise to their level of hyperbole, we just need to be the grown ups, speak softly, state facts.
Andy Beshear ran a devastating commercial in his re-election campaign this Fall in which a young woman stated she was raped by her stepfather when she was 12, and his opponent, Daniel Cameron would’ve forced her to carry the resulting pregnancy to term. Commercials featuring real people discussing how GOP policies effect them personally can be extremely effective.
I would somewhat disagree with Matt's specific claim here regarding media faults:
>>>"Unfortunately, the media tends to treat these kinds of questions that involve the dispositions of hundreds of billions of dollars and the health care of millions of people as relatively minor and unimportant."<<<
It strikes me that the difficulty with healthcare media coverage isn't that healthcare is unimportant -- I think few would make that claim -- it's that it's a very hard problem with little domestic consensus about what the best (or even desired) solution is and an agreement that ground-up radical restructuring of our current weird, path-dependent mess would be a massive change to a system that presently works "okayish" for most employed persons and seniors (and I say this as someone one who has few firm beliefs about what the best healthcare situation looks like beyond "employer-provided health insurance is a bad idea and should not have been adopted."). Some single-payer systems appear to be creaking elsewhere (in particular, based on the tenor of media coverage, Canada and the NHS are sort of at the breaking point) and any attempt to emulate them in part would, at minimum, have huge tax and market consequences for somewhat uncertain prospective gains. Meanwhile, the highly technocratic nuts and bolts holding the present mess together are arcane, opaque, and sensitive to specific tweaks and commercial arrangement idiosyncrasies.
The TL;DR version of it is that there's no present consensus for burning it down, there's a presumption that most changes have very large tax consequences, the remaining tweaks are highly technocratic rather than amenable to easy sloganeering or (often) convenient explanation.
I'm by no means sure for how many people I speak but at least for me healthcare is -- *despite* being a pocketbook and basic QoL issue of enormous fiscal significance both individually and nationally --an issue where my beliefs about both desirable marginal and (especially) desirable terminal changes are relatively weakly-held because the entire thing is technocratic and opaque, (and "we're not just going to leave this to the private market" is a sort of implicit table stakes).
The media should present what it can of the factual and policy implications of various proposals and their proposed expense, but there are only so many partisan points you can wring out of a subject that *notwithstanding its importance* is a Gordian knot of horrible interdependencies.
To that end good on Matt for at least making highlight Medicaid as a fair clear D/R split along the traditional lines of "higher taxes / more services" vs. "lower taxes (plus a lot of idiotically inflationary spending) / fewer services."
I think that perhaps the best article that a sensible left-type reporter in a mass market paper like USA Today could run, from the perspective of both truth and their political leanings, would be a serious pre-ACA retrospective. Focus it not on the poor but on the reality of employer-provided coverage for middle class folks in the era of "preexisting conditions" and "lifetime maximums."
Trot out the statistics about what percentage of needed care was uncovered and slather it in a layer of relatable "we did everything right" sob stories, then find some families with kids born before the cut-off who got the care they needed only because of the ACA. A 3- or 4-part series to keep it in the public eye for a while, and release it week-by-week in October 2024.
Don't discuss Medicaid, don't feature a single poor person, no one obese or even vaguely unsympathetic, just a stark reminder that the old system fucked over a huge number of the folks who did everything "right" by its rules despite their best efforts.
The hedonic treadmill has led everyone to forget how *terrible* the old system was over the last decade. My parents have forgotten that neither of them would have gotten basically any of their recent major care given that it's downstream of old injuries or chronic conditions. They can't admit even when pressed that my daughter's minor heart defect basically means she'd never have private insurance under the old structure and never again will if the pre-existing condition protections the ACA provided are repealed. My parents are utterly unpersuadable but my bet is that a lot of persuadable folks have also memory holed the old system and need a reminder.
The other issue I see a lot of is that the 2020 primary was all healthcare, all the time, which made lots of younger people think that ACA did literally nothing because that debate proceeded as if it didn’t exist.
So there are lots of zombie memes out there about healthcare and I worry this means people will be less interested in defending it than they should be.
The closest I come to holding an accelerationist view is that if the GOP succeeds in undoing the ACA, maybe the young people will learn to not be fucking idiots over the course of fighting to get it back?
This was my partner's family growing up. She was raised by a single mother who ran a modest, but successful, small business, and healthcare was eating up around half of their income (a lot of health problems). The ACA, in my partner's words, was "life changing." They cried when it passed. It made decent medical care actually affordable to them, and my partner will get very annoyed when their peers talk about what a disappointment Obamacare was.
It should be extraordinarily easy to find 2 families with profitable small businesses who couldn't get insurance at all back then, 2 salaried professionals whose insurances denied major claims for bullshit "pre-existing conditions," and 2 full-time hourly workers whose children were born with conditions requiring treatment that they couldn't access until the ACA.
But no one is going to write that article. If anything similar is written, I can almost guarantee the subject will be a profoundly unsympathetic, morbidly obese, checked-out single mother with five kids through five fathers, surviving on SSDI and child support from three of them, who has to be cajoled and nursemaided through getting her kids on Medicaid and then spends the whole article bitching about having to take them to appointments on time and doctors telling her what to do.
Because I've seen that article a dozen freaking times.
Yes, those kinds of people deserve healthcare too, because everyone does, especially the kids they're busily failing. But they're not how you sell policy on this front, so stop fucking talking about them.
This seems like a sound idea. To be honest I think it was non-obvious that pre-existing condition reform wouldn't break the insurance market by creating overwhelming adverse selection problems, but AFAICT in practice all it did was cut down on a massive implicit subsidy to the industry and more-or-less come out of rents.
ED: Oh hell, I think I just managed to convince myself of a meaningful argument in favor of employer-provided health insurance, which is that it significantly mitigates adverse selection for conditions that don't preclude employment by decoupling insurance provision from risk pools. Ugh.....
There was a huge amount of work put into risk pooling and behind-the-scenes tax and subsidy transfers between insurers to ensure no one got screwed by the adverse selection problems, which is why it came to nothing, as least as far as my limited understanding goes.
Definitely non-obvious to me. I assumed that the pre-existing condition reform would only work with the mandates, one reason I heavily supported the mandates (the least popular part of it).
I was pleasantly surprised when the end of the mandates did _not_ end it all.
100% agreed that it was very surprising that the individual mandate did not turn out to be a load-bearing structure. (At least at the time of its repeal?)
I suppose in a roundabout way this is another point in defense of epistemic humility by the media: healthcare is *weird.*
A responsible MSM outlet would accompany this straight then-vs-now coverage with some hard-hitting editorials (more than one, to drive home the point) about just how awful healthcare would become again and how many millions would lose coverage if Trump and the Repubs had their way.
Regarding that first article... Since it was published it's become clear that the hold the hard left has on a lot of comfortable young people is largely contingent on convincing them, or them convincing themselves, that they are actually historically badly off. The second they stop being broke or understand that they never were, they bail, which is basically why most of our cohort has tossed any semblance of economic populism overboard, with only some residual post-liberalism remaining as a sign of our post-'08 vague radicalism, and even that tide seems to be receding.
A lot of the kids a few years younger than us making $60-120k a year are genuinely convinced that the Danish model would make them better off instead of taxing the shit out of them to pay for services for families with two adults and 2-3 kids making $60-120k.
Two thoughts ... (1) Total agree. The 2020 shift to Medicare 4 All was a terrible choice. M4A offers upside to like 15% of the population and downside risk to the rest. (2) When Pod Save America thinks your article is a frothy, hyperbolic mess ... that's really saying something. I think Matt's media point is specifically going after (1) Kagan and (2) The Atlantic's upcoming dystopian series about Trump's potential return - both being a complete waste of digital ink.
"In the January/February issue of The Atlantic, 24 writers explain how Donald Trump could destroy America’s civic and democratic institutions, including its courts, national political culture, and military, if he succeeds in returning to the Oval Office."
>> The 2020 shift to Medicare 4 All was a terrible choice. M4A offers upside to like 15% of the population and downside risk to the rest.
I thought the idea for M4A involved adding a Medicare-like public plan to the exchanges that's priced at cost. The M4A plan would leverage Medicare's provider agreements, cost structure, and claims processing infrastructure. This shouldn't affect the finances of Medicare at all because any subsidies on the exchange M4A plans would be paid through ACA just as they are today.
What's the source of the downside risk to the rest?
I'd love to be able to buy into an ACA Medicare plan at full cost just to be able to use the Medicare provider network instead of the crappy networks available with today's ACA plans.
I guess this would be more accurately called the public option, but it seemed like a pretty straightforward way to clean up a big problem that the ACA exchange plans have created for some of us.
Exactly. That's what's so maddening. Sander's 2016 public option proposal that Clinton picked up was perfect. He was still campaigning on it in 2017. I'll never understand his leap further left into a mandatory single payer system in 2020. He lost my vote on this alone.
Indeed. My only theoretical concern about a public option was that the government might be forced (politically) into outcompeting private insurers and that this would have unintended consequences on the system, but at least the first-order consequences seemed entirely reasonable.
The NHS’ problems seem to stem from its sheer size in the budget, which encourages politicians to look at ways they can raid it for short term priorities. This has led to a cost efficiency drive that appears to have failed, really, except insofar as it was cutting service in the long run.
This is one reason I’ve come to like the hybrid system ACA created: there’s just less ability for the legislature to reduce the quality of healthcare as a means to pay for things which are major immediate priorities politically.
indeed, we see the issue you highlight with respect to Medicare. It’s a big beast, and a unified single program. Hence it’s a target for those looking for a piggy bank.
We can bang on the media, and they’d deserve it. But why don’t politicians who care about this issue (surely there are some) have any way to get their attention? The media love fights. Is there no way to pick one?
I really, really want to like D leadership more. But I keep getting the impression that they are tired, too cautious, or simply without conviction. Given the stakes it’s incredibly frustrating.
This is a technical question about why the provider networks on ACA exchange plans are so limited. I've searched high and low for a good explanation, but haven't found one. The SB commentariat has very diverse expertise. Maybe there's an expert here that can answer this?
Prior to ACA my family had an individual market plan with a very broad nation-wide Blue Cross provider network. The plan was expensive and we had to go through the arduous underwriting process to get it, but once we passed through that gauntlet we had great coverage and could see most any provider we wanted (with a high deductible of course).
When ACA was passed, I thought the provision limiting insurer profit to 20% of the total cost of care would incentivize insurers to offer at least some plans with great provider networks that come with higher premiums. After all, more costly plans that have higher plan premiums mean more profit (because of the limit that insurer profit can only be 20% of the cost of care).
Instead, what happened is that all the individual market plans on offer are HMO plans with very limited provider networks.
Why don't insurers want to offer at least some plans that cost more but have wide provider networks similar to what employer plans offer?
It did a good job covering why narrow networks are so popular with insurers trying to compete for price sensitive shoppers on the exchanges, but it doesn't dig into why insurers ONLY offer limited network plans. That's my real question here.
It makes sense for insurers to offer some narrow network plans to snag price sensitive shoppers. But I'm still mystified why insurers don't offer at least one broad network plan that's more expensive (and more profitable) to snag shoppers who aren't price sensitive but want a quality network.
Maybe there just aren't enough consumers willing to pay more for a broad network, but according to the article you quoted, the cost savings from narrow networks is only 10 to 20 percent. That doesn't seem like enough difference to deter less price sensitive shoppers. It definitely wouldn't deter me. and so for me, the mystery remains.
I suspect that the ACA marketplaces are overwhelmingly dominated by very cost-conscious buyers. It's just the case that dominantly in America if you are relatively well-off, you probably have employer-provided insurance. (There are of course counterexamples such as Matt, but I think they're like 0.1% of the ACA markets.)
I would have guessed one of the larger cohorts buying ACA policies would be self-employed folks and afaik they have significantly higher median incomes than non self-employed people.
Maybe that gets offset by lower income folks with crappy jobs with no insurance on the bottom end, but anyone earning less than 138% of the federal poverty level usually gets shuttled off to a Medicaid plan. So I'd think that'd push median income for ACA subscribers up a bit compared to the general population.
But I really don't know. I did some googling looking for some demographic info but I didn't find any. Your theory would help explain the lack of more expensive offerings, although you'd think insurers would still try to skim some cream off the top. As of 2019, something like a third of ACA plan subscribers didn't qualify for subsidies. That means they earned at least 400 percent of the federal poverty level or $120k for family of 4. Not rich, but that's just the minimum income for that upper income 1/3.
I'm not sure if any of the ACA plans I've seen have "wide" provider networks or not. We buy my MIL a BCBS plan on the PA exchange (expensive but works way better than shit short-term plans), and I've never noticed a particular shortage of providers.
So I think at least part of the answer to this question is that for a newly insured person this doesn't matter a lot, they just find providers who are in network. Only if you came to the table with doctors already in mind does it strike me as a salient feature.
You're probably right about most people not valuing this.
For me it's less about specific providers or the ability to find a good enough provider.
It's more about quality than quantity. As an example, there's a prestigious cancer center within an hour of where I live that used to be in network with my old grandfathered plan, but isn't anymore. I don't have any reason to use it, but it was nice to know it was an option. Now if bad luck happens, I don't have that option.
Just for the sake of accuracy, I'll point out that the Democratic Governor of Kentucky who expanded Medicaid was Steve Beshear (2007-2015), Governor Andy Beshear's father. Medicaid expansion is so popular that the one term GOP Governor between the Beshears, Matt Bevin, never tried to outright repeal it even with a GOP majority in the state legislature, but instead tried to make it shittier by eliminating the state based individual marketplace, Kynect (which worked from day one, unlike the federal marketplace) and ran for reelection on implementing a work requirement to qualify for expanded Medicaid, which was dropped when he lost to Andy.
"Why do so many Republicans want to collaborate with Trump? Not just for fun. Because they have policy ideas that they know cannot withstand public scrutiny."
This is the crux of everything with the GOP - whether Trump, or Pro-Life activism, or the Anti-Woke movement, Gay/Trans-mania, or whatever else they are doing - everything, literally everything they do and say is and always has been a distraction from the fact that the GOP would lose every election until the end of time if it actually talked about its actual policy agenda.
No wonder some of them are starting to openly state they think Democracy is a failed idea, and that dictatorship could be really swell. They are as tired of their own lies as we are.
One thing I always find unique about US policy debates is the bipartisan consensus that there are no programs that should be paid for by broad taxation. Everything from BBB to Medicare for all should be covered by targeted taxes on the wealthy (or shouldn’t exist to facilitate lower taxes in the wealthy if you are in the GOP). The obvious ‘fix’ for both Medicare & Social Security is a bump in the payroll tax, but somehow that is more toxic than cutting those programs.
I do wonder if Democrats should start talking about investing in major programs to lay the groundwork for more sustainable funding mechanisms in future debates - otherwise I feel like a lot of the welfare state gains of the last decade will be pared back in the coming ‘fiscal responsibility’ movement.
If you look back to when ACA was passed, there was a concurrent big concern with inequality being the most pressing social issue of our time. I feel like that drove a lot of the feeling that taxing the rich (and only the rich) was sort of doing double work -- paying for programs for the poor and also just lowering the income/wealth of the rich was good on its own merits.
Now we've seen some significant lessening of inequality, but political ideas have inertia. I wouldn't be surprised if, if the trend to lower inequality continues, we start to have more enthusiasm for broader taxation.
All that said: I think it's also time to take another look at the idea that in fact America's overall lower-tax regime is... good? I remember back 15-20 years ago there were a bunch of people who strongly believed that Europe had a really good policy regime which would lead to steadily higher prestige in the world and greater economic prominence at America's expense. I don't think the last 20 years have been kind to that view.
I was one who was at the time also a lot more enamored with what Europe was doing. There's still a certain efficiency they've developed that it's hard not to pine for. However I think you're right, the experience of the teens and covid need to be a big gut check and the case that they're ahead of us in any aggregate way has gotten harder to make. If anything it's our continued insistence on kind of a swiss cheese state with lots of weird gaps and inconsistencies in taxation, welfare state, etc. holding us back from completely leaving them in the dust.
We mainly have a lot of historic path decency differences on where we come out on state capacity. It has become less clear to me over time how much of that is current structural difference vs just inertia from both past policies and historical contingencies.
Did we re-tax the rich? The capital gains and estate tax rates are still disgustingly low
And the inequality stats that were cited often - the 0.1%, the wealth of billionaires - do not seem to have lessened. When some people are born inheriting millions and others are born with nothing, then yes, inequality is a huge social issue of our time, holding us back from the ideal that all Americans are created equal.
The 0.1% and the wealth of billionaires are not responsive to taxes on W2 income, which are the policy stakes here.
So let's take the wage tax off the table. Permanently. A VAT will collect more from billionaires than the wage tax does
A VAT is also not very effective against billionaires or wealth inequality, since only a tiny proportion of their billions are spent on consumption.
I think consumption inequality is probably what we should actually care about. But that won't stop people from hammering on the "X% of people hold Y% of wealth" type stats to say we live in a fundamentally rotten society.
But VAT doesn’t just tax consumption, it also taxes production...that’s why it’s “value added”...we already have consumption (sales) taxes.
We call our system “progressive taxation,” but when you add all local, state, and federal taxes together it’s not very progressive. Consumption or VAT taxes would end this charade, and there would be no more “well, poor people don’t really pay taxes.”
"We call our system “progressive taxation,” but when you add all local, state, and federal taxes together it’s not very progressive."
As with many things in the US, that varies a lot by state. Some are super regressive (like Washington) and some are fairly flat to slightly progressive so that overall taxation (state + federal) is still fairly progressive. No states are nearly as progressive as the federal tax system tho. See https://itep.org/whopays/
There is no reason the policy stakes need to be confined this way. It is technically very possible to tax wealthy people to pay for social security instead of laborers.
Please elaborate.
Congress can write a law to increase the estate tax rate. It can also write a law to give money to entitlement program funds.
I think there has been a successful attempt by the “elite” to have people think that funding entitlements is only possible by taxing labor. Some SB commenters are also willing to entertain taxing consumption. But these are not the only options. The country could fund government operations including entitlement programs by taxing the wealth of the wealthy, either directly, or indirectly through the estate and capital gains taxes.
A VAT
The billionaire and 0.1% statistics haven’t lessened - but the much bigger issue, of the 10% being able to boss around the bottom 50% in various dehumanizing ways, has been lessening quite a bit in the last year or two.
My parents’ dog is part of the top 10% of households and she is still very bossy.
My cats act like we’re in the top 1% with their renal diet cat food but they certainly aren’t. Socialized vet care!!!
Edit: they really act like they’re old world leisure class nobility. Fat asses.
Yes, and the 10% are quite fucking put out about it.
Loudly, performatively put out about it.
The US has a way more progressive tax system than Europe
Europe tends to have higher capital gains rates, and many countries have a wealth tax. The net effect to me seems to be that the wealthy in Europe pay a greater amount in taxes compared to the poor than is true for the wealthy in America. How is this less progressive?
Most of the European countries that tried having a wealth tax gave up on it, your information is decades out of date. Both Britain and France famously abandoned wealth taxes as unworkable
More in theory than practice. And then politicians use that idea to use tax money “for the people who pay taxes” instead of universal services (transportation, housing, health) that everyone needs.
Yuros are all poor (I joke.)
I mean, compared to Americans they are. The only richer ones are the Swiss and Norwegians, and Norway is the UAE of the Arctic.
When I said a while back that the US needed gigantic child benefits paid for with a 10-15 percent VAT (which would massively reduce child poverty and stop the population from falling) someone objected that VAT isn't the best kind of taxation.
But all the European countries with more generous welfare states have VAT along with income tax. I think one reason America's long-term prospects are better than the EU's is that this option is still available to be tapped for pronatalist welfare policies. I can easily see Europe sliding into a vicious circle of population decline, pension costs weighing on a tapped-out tax base, and resistance to large-scale immigration, all mutually reinforcing. It could happen in the US as well but the risk seems much lower.
Or perhaps the Euros are declining because of the VAT. Odd that with this social support that should make things easier, entrepreneurship does not seem to be their forte.
The lack of entrepreneurship and innovation in Europe probably has more to do with labor rules, but the tax structure doesn't help.
I think the U.S. poaches their best talent and pays them 2-3X as much
I hope so!
One of my ideas that I'm not sure I am actually for, as it remains totally half baked, is for the US to simply eliminate all tax deductions (maybe excepting EITC for low income) for people who have not married and had at least one child (including via adoption, surrogacy, fertility treatments etc.) by I dunno age 40.
No one should ever, ever be forced to start a family, and the decision of the individual is paramount. However I also don't think there should be a windfall for those who have for whatever reason decided not to invest personally in the next generation and the future of the country. I'm certainly open to all manner of caveats and exceptions on this, but seems like it might be a good way to either raise revenue or nudge fertility in a more sustainable direction, maybe both in the short term.
What do you think the political reaction to this idea would be on the left and right?
Probably really bad for a bunch of reasons.
It could help. But I think paying cash to parents is the most transparent way to do it.
Would “Kash for Kids” work?
i have one kid and I don’t think there’s any amount of money that the government could give me to have a second. A million dollars maybe.
Sure but you still want revenue to fund and balance against inflationary pressures from those kinds of programs.
I think the idea is that people will make more children if the government makes it easier and more appealing to have more children by giving parents a fat break.
Late to the party because I had a busy day, but this reminds me of one of Lyman Stone's patented wild takes:
https://twitter.com/lymanstoneky/status/1529520275171295237
"my general view on this would be we should take current social security benefits, cut them in half, and then the remaining benefits should be allocated each year based on the social security earnings accrued by people who were the retiree's custodial children (or theirs)
this approach would be unkind to the involuntarily childless, but would also create a HUGE incentive for adoption.
that is, it would only actually exclude people who didn't have kids *and also* did not adopt/marry someone with kids
it would also mean losing custody of your kids would hammer your retirement benefits.
these all seem like pretty rational mechanisms to me."
"Hey women, go through the danger of childbirth, or get taxed more."
Jesse, I know stupid comments are, like, your specialty, but this is probably the stupidest one I have ever seen you make on any comment of mine, here or other places where we have crossed paths.
I'm quite OK being on the side of not wanting to punish women for not having babies quick enough for your liking, which is what this comes down too.
This idea is bad and half baked. Most deductions are a subsidy to some socially favored objective which applies with equal force to the childless.
You can subsidize childbearing (if you want) by additional child tax deductions or direct cash transfers but it is nonsensical to do so by randomly removing all other tax subsidies from childless people.
I said removal of deductions at approx. age 40, so even childless would have them for a while, especially when it might help establish home ownership and other desirable things. But anyway your argument isn't that it's bad, it's that it isn't as high of a priority as other objectives. What priority is higher than the state sustaining the systems that produce a broad based high standard of living, which like it or not require a minimum level of population stability?
My argument is that blanket disallowing unrelated deductions is a random and terrible way to allocate a subsidy. Take the same approx revenue that would generate and construct a less insane and random subsidy to parents, like a higher tax credit. Same cost, non crazy way to implement it.
Is there a way for the tax man to differentiate between voluntary and involuntary "selfishness"? I don't think my aunt who never married or had children through no fault of her own (complicated story involving childhood illness should get hammered by the IRS.
Maybe. I said I'm open to nuance. I also never used the word selfishness. But I don't know why people who are going to benefit from programs like SS, Medicare, etc. that rely on at least some degree of population stability shouldn't contribute more financially to sustain those programs when they haven't created any future tax payers (which again, must always be completely 100%, discretionary).
The proposal isn't about sin or punishing anyone or anything, just an acknowledgement that on current trajectories beneficiaries stand to get a lot more out than they put in, which puts increasing strain on future, smaller generations. We need to think about ways to navigate that.
A low-tax and high deficit regime never made any sense. Democrats made big mistakes in not at least trying to make Republicans pay a political price for the Reagan, Bush and Ryan-Trump deficits that their tax cuts for the rich generated.
They didn't try? I always felt like this was an argument they made.
My recollection is that they correctly pushed back on the argument that the cuts would pay for themselves (in the case of corporate taxes that the cuts would not increase investment) , but not on how damaging deficits are to long term growth or even the size of the income transfer up the income scale.
The vast, vast majority of American voters are completely unaware of conditions in the European economy over the past 20 years…
After living in Denmark and experiencing a 25% VAT on all goods and services, a special flat tax at 33% on income (it would have effectively been 45% without it), and taxes on unrealized capital gains, I have come to the conclusion that Americans are undertaxed. All the whining about taxes in the U.S. is silly. I make more now and pay less in taxes than when I was earning less in Europe.
Americans want the government to provide things but they don’t want to contribute.
I honestly cannot see how taxes on unrealized capital gains are defensible even in principle -- it's not actual money people have to spend, it's neither income nor consumption, valuation prior to sale for anything that isn't a publicly traded asset is various shades of hocus pocus, and if we're taxing unrealized capital gains symmetry would suggest that we grant tax breaks on unrealized capital losses -- which would in turn seem to be giving free money to, e.g., people who bought BTC when it was on its way down from 40k or so. And if we want to claw this back we introduce a huge amount of retrospective look-back requirements that are an administrative nightmare.
Surely the easier *and more conceptually just and coherent* solution is to just tax actual capital gains....
I'm in favor of getting rid of the capital gains tax and just going with a VAT for financial transactions, sometimes called a financial transaction tax.
If we're going to try to move to a VAT system, we might as well start with the financial system, since it seems easiest to implement (everything digital, heavily watched and regulated industry...)
Thanks for mentioning this, I missed the word "unrealized" in his post.
Oh, and like the U.S. SKAT claims all income earned globally. Even the gains on that 401k from your previous employer.
Of course no foreigner would avoid declaring these to SKAT…
Taxing unrealized gains is pretty similar to a wealth tax, just focusing on assets that can be easily valued. As with a wealth tax, liquidity can be an issue.
If we were taxing consumption progressively, unrealized capital gains would not be taxed as neither would undistributed business profits.
The Danes exempt private pension plans but don’t view. 401ks or IRA as private pensions.
The big reason for this is Danes don’t really save privately (some of the highest levels of personal debt in the OECD.)
So is the idea that the Danes tax unrealized capital gains because nobody has any so it doesn't matter? What about non-retirement brokerage accounts?
I think it’s more that average Danish voters don’t save and don’t think about it. Danes are very insular and will invest usually through Danish brokers who automatically do the tax stuff. It’s when you have overseas assets that things get really weird and the single Danish tax bureaucrat goes “I have never seen this before.” And it’s not like the IRS where they can just give you the forms, no the Danish government has to figure out how to set up how you report it.
So many headaches.
"The big reason for this is Danes don’t really save privately (some of the highest levels of personal debt in the OECD.)"
This seems bad.
If we will not tax unrealized gains, then we must renounce concern for wealth inequality.
If we wish to use wealth inequality measures as a barometer for the health of our society, then we must do something about some people having a lot more appreciated asset value than others.
A modest reform to the estate tax -- eliminating the step-up at death -- would accomplish this without the need for a dramatic re-reading of the 16th Amendment. Add some changes to trust laws (GRATs, mostly) and the estate tax will have a significant effect on inherited inequality.
Of course they have it to spend. If my SPY goes up 10% and I want to buy something I can just sell it.
If it doesn't go down before the sale goes through, sure. But since you don't have the money until the sale goes through, the logical thing to do is to wait until that event occurs. But that's just regular capital gains tax.
You’re going to crimp people’s long term investment growth if every year a stock goes up you trigger a tax that means you will need to divest some of the shares.
Are you going to tax realized capital gains? What if you realize gains in order to pay an unrealized tax? Will you be taxed double? What if I sell another asset in order to pay tax on an unrealized asset, do you pay capital gains tax in order to pay capital gains tax then?
SKAT just taxes your salary income more the next fiscal year.
What if the unrealized gains have dissipated and you didn’t actually realize any of them? Seems pretty asinine if you’re paying for gains you no longer have.
My home state of Colorado is a great example of >>Americans want the government to provide things but they don’t want to contribute.<<
We have a thing called the Tax Payer's Bill of Rights. You can read all about it here: https://www.bellpolicy.org/wp-content/uploads/2017/11/Understanding-TABOR.pdf
Ah, TABOR. Is it in third rail status there like Prop 13 is in California, or no sales tax in Oregon, or no income tax in Washington?
What has you thinking that?
I agree there's a case that Americans in 2023 are somewhat too lightly taxed (I'm not sure this was the case in 2015), but much of this is simply downstream from wanting less government. Americans could have a lot more government if they wanted it, and were willing to vote accordingly. But if they got a lot more government and didn't raise taxes by heaps and heaps, the resulting inflation would probably be ruinous. The Danes don't pay higher taxes mainly because they're so much more virtuous about debt. They pay more taxes because they want government to do a lot more than Americans do.
To put it another way, there's a difference between saying "Americans are shy about paying taxes and will likely suffer bigger deficits/higher inflation" and "Americans are shy about paying taxes and are willing to make do with fewer government services."
I'd say the latter sentence is a more valid description of current US political economy. I don't care what the opinion polls say: the US electorate regularly hands over 48-52% of the country's political power to a party dedicated to public sector shrinkage. You can have lower taxes than Europe when your public sector is a lot smaller than Europe's.
Part of the problem though is that if you just look at the stinginess of America's social programs or the amount of public infrastructure that gets built, you would conclude that the American government is much "smaller" that it actually is.
US government programs only cover healthcare for veterans, the elderly/disabled, and the very poor, yet they spend a similar amount *per American* as the UK NHS does per Brit, to cover the entire population. If the US got the underlying healthcare costs under control, it could have a European style healthcare system *with no increase in taxes or the deficit at all*.
Similarly, the US government spends orders of magnitude more for major infrastructure/public transit projects compared to peer countries. It could be building so much more, without spending more. And also, while this issue is not unique to the US by any means, the artificially created housing shortages in many American cities make it much more expensive for the government to provide housing subsidies or social housing, causing less of it to be provided than otherwise would.
I feel like it's a totally underrated issue in American politics that the government could be getting so much more for the money it already spends, on so many dimensions! And if the US managed to fix this, maybe Americans would have increased confidence in how their tax dollars were being spent and more open to a larger government with more social programs.
There's no way to decrease healthcare's share of the economy by 5 or 6 points of GDP *and* simultaneously provide or upgrade coverage for several tens of millions of uninsured or seriously underinsured Americans. I believe inefficiencies in the status quo might enable us to take care of these folks without substantially increasing healthcare's share of GDP. But a big decrease isn't in the cards.
Why not? Other countries do it.
Path dependency.
Maybe, but that political party has not actually shrunk the government anytime it has been in power.
I brought this up not to show how government in the US is shrinking (it's not), but to highlight the difficulty of expanding it.
We don’t all want the government to provide things.
Ok. Some nutters don’t want functioning sewer infrastructure and paved roads with visible signage.
As famously parodied here:
https://www.youtube.com/watch?v=chMCU5VSuqw
I actually think this is a weird downstream consequence of George HW Bush losing the 1992 election. The most famous part of his 1988 campaign was "read my lips, no new taxes". Then he raised taxes to help balance the budget, lost in 1992 and the conventional wisdom (especially on the right) became he lost because he broke his no new taxes pledge when the real reason he lost is a recession hit at just the wrong time. If recession was just a few months later, GHWB probably wins and raising taxes doesn't become nearly as toxic especially on the right.
Also, as is my remit, this substack is committed to (rightly) saying not everything is about the race, but my (slight) pushback* is that unfortunately a lot of things in the US really is about race or at least downstream of a more racists past. When John Stossel (famously libertarian) used to use his segment to say "it's your money", the unsaid last part of the statement was "going to 'those people'". It's not a mistake that European welfare states were created at a time when most European countries were way more homogeneous than the US. Seeing the rise of some pretty explicit anti-immigrant (and to be honest bigoted) parties in various European countries is a giant sign to me that you probably couldn't create the expansive welfare state/tax regimes in a variety of European countries today. Unfortunately, you can't talk about US' aversion to both taxes and expansion of welfare state without touching the very particular role race has played in American history.
* I actually think Matt would agree with my take here.
I agree with your general point, but that recession would've needed to arrive earlier to help Bush, not later. That recession arrived in the summer of 1990 and was over by the spring of 91. What did Bush in was the very weak early *recovery* (and also, I think, "third term vote share drop"). Had it arrived later (say, the summer of 1991) he'd likely have lost by a larger margin.
Yeah I should have said earlier not later. I think I was getting mixed up with FDR in 36 of all things. But yeah, if recession was done sooner, the public likely starts to actually feel the effects of a non-recessionary environment more and blame GHWB less. And yeah basic thermostatic opinion is probably the other factor; people just kind of over GOP being in the White House so long. Suspect this at least part of the reason why Labour may actually gain power again in U.K. after being out of power for so long.
It's my hope and worry about 2024. Matt has made a pretty convincing case to me that if we look at other countries' leaders in Canada and Europe, Biden's approval rating being low is all about inflation. No matter which party is in power in various countries around the world, people are voting against the party in power and the common thread is almost certainly inflation. Given inflation is continuing to come down and will likely come down further, I'm hoping a year is enough time for the public at large to actually really notice; especially if it comes with even a modest Fed rate cut.
I should add to my second point that honestly this Kevin Drum post sums things up pretty well when it comes to the inflation issue. https://jabberwocking.com/heres-the-definitive-short-answer-about-why-were-unhappy-with-the-economy/
I can tell you from experience that the Danish welfare state is created for Danes and paid for by non-Danes who are ineligible for the benefits.
Which non-Danes? People with work visas or other?
>The obvious ‘fix’ for both Medicare & Social Security is a bump in the payroll tax, but somehow that is more toxic than cutting those programs<
It's possible that's what we'll learn in a few years. But hardly guaranteed. We don't really know either way, I think, because the relevant trust funds haven't run out yet. In other words, crunch time hasn't arrived. When it does get here, I suspect deep cuts to these programs are likely to be even more unpopular than raising payroll taxes.
I have a suspicion that we aren't going to know anything about what the sentiments actually are until about 2032.
No, shift the financing of Medicare and Social Security (and unemployment insurance and ACA, and a child tax credit) to aVAT. A flat tax on wages made sense in the 1940 before the invention of the VAT, but its still a tax on income, not consumption. The logic of these programs is to support consumption of people in specific life circumstances -- old age, sickness, unemployment, rearing children -- and we should tax the _consumption_ of others not in those situations to do so, not income (consumption + saving) and especially not wage income (and more especially in the case of SS, CAPPED wage income).
What's so bad about taxing wages (as part of the mix)? FWIW I'd like to see the US adopt a VAT, but I wouldn't replace payroll taxes with a VAT, I'd *augment* them. AFAIK all the major social democracies rely substantially on wage taxes to fund pensions and healthcare. There has to be some merit to doing so. I'd guess that "merit" in part is tax code progressivity. Another is (depending on structural specifics) the incentive to participate in the paid labor force (to quality for the pension). I think there's also a perception of fairness, universality and solidary (ie, all "workers" are covered, and indeed rewarded for the productive labor they contribute).
The problem with a VAT in the U.S. is that we have an economy designed around encouraging people to consume more, not less. If we are taxing consumption higher, then people will consume less, and the economy will slow. I am not an expert on tax policy, but I do know that in the U.S., you can avoid paying some income taxes if you spend your income on certain large purchases, incentivizing consumption.
I don't know if its good or bad, but I think it is likely the U.S. will continue to rely heavily on personal income tax and payroll taxes for the majority of its funding.
I do not think we have "an economy designed around encouraging people to consume more, not less," but if that were the case we should change the design. Most people are already inclined to consume today rather than save to consume more tomorrow. Public policy, especially taxes, ought to "encourage" in an offsetting way.
Agree to disagree on the current design of the economy. I do agree with you that our economy should be better designed to encourage sustainability.
Democracies are responsive to the will of the voters, yes
I guess you are talking about ACA. It should have raised taxes then and there and been designed to chip away at employer purchase of health insurance, at least for low wage workers.
"[T]he original sin of American healthcare is ESHI."
East Side Hebrew Insitute?
Employer-supplied health insurance.
I wish I could triple like this one. While being of the opinion that the ACA didn't go far enough, due to the nature of the American political system (Madisonian, federalized) it is the best path towards improving healthcare police, coverage, and access, and I hate how much of an orphan it's become.
Just to give a small example that I think people take for granted, the ACA, by getting more people covered with some kind of insurance with stronger minimal coverage requirements, plus a bunch of incentives in the ARRA, has been the driver of the massive expansion we've seen of retail-like urgent care centers and similar clinics. It's mundane, and they aren't perfect, but they are also enormously important for supply side.
Anyway I think it's important to make peace with the idea that healthcare is always going to look a little different here than Europe, always be a little more tiered, and a little more commercial in nature. But there's just no case for trying to take it away. The near miss on repeal shows just how flat out bad the GOP is on policy, both because it's completely unconstructive with respect to real problems and also because it has no ideas whatsoever (remember, it was repeal and replace, but replace with what? no one ever said).
>I think it's important to make peace with the idea that healthcare is always going to look a little different here than Europe<
There is no single "look" to European healthcare, but several major templates and lots of variations within. Add to that Canada, Australia, Japan, Taiwan, South Korea, Singapore...
I personally won't be "at peace" until all Americans have reasonably robust healthcare coverage from cradle to grave that can never be taken away by the vicissitudes of life. I don't believe this is unachievable. I'm pretty agnostic on the particulars of what that ultimately looks like.
I can't tell if you are disagreeing with me or not.
Edit to add, I understand there are multiple systems in Europe, but as I'm sure you also know the 'robustness' varies quite widely in the list of countries you gave.
It also probably saved quite a few rural hospitals. Medicaid is pretty stingy when it comes to paying for hospital care but stingy is far better than writing off the entire bill because the patient has no money. ACA plans pay more than Medicaid so that’s even better. Rural hospitals also often have outpatient clinics and newly covered patients are probably going to use those clinics more once they have coverage
One thing that bothers me about the left's arguments in the ACA debate is they refuse to acknowledge or address that it did make things worse for some people.
Don't get me wrong, the ACA was wonderful for poor people who couldn't afford insurance before and got access to it through Medicaid or subsidies. Pre-existing conditions and lifetime maximums were capped. That's all awesome, and shouldn't be repealed.
However the reports I'm hearing from middle class or up people who buy their own insurance (tradesmen, small business owners, etc) was that their premiums and deductibles shot up massively after ACA implementation, and for that money they didn't get any new access to medical services they found useful. This has been a *massive* cause of frustration with the Democrats for many in this demographic.
Also in general, requiring insurance plans to cover a minimum amount of services seems generally counterproductive to me *unless* it's coupled with a serious effort to control underlying costs, which the ACA wasn't. You're not doing people favors if you "raise the bar" for health insurance - but then price them out of it unless they can get subsidies.
One could argue that overall, the bill did more good than bad - generally well off tradesmen/small business owners pay a bit more in exchange, but that's outweighed by all the the truly struggling people who paid less or got access to insurance for the first time. Fair enough. But, in terms of health policy the issues of Medicaid and insurance regulation seem pretty separate, it would seem much more productive to at least acknowledge there were to downsides to the ACA for some people and propose a solution, than to tell them they're crazy and the ACA was all sunshine and rainbows for everyone.
>> "premiums and deductibles shot up massively after ACA implementation"
It'd be interesting to see some hard data on this.
I had a grandfathered pre-aca underwritten policy that finally got discontinued by the insurance company (10 years after ACA - if you like your plan you can keep your plan was real for at least some people).
The premiums on the old grandfathered plan were about 30% higher than the premiums on the new replacement plan (no subsidies). The coverage and deductibles of both plans were roughly equivalent. The main difference between the plans was that the provider network of the grandfathered plan was much much better than the replacement ACA plan.
IMO, most of the people complaining about massive premium hikes on ACA plans previously had crap insurance plans that excluded drug coverage and had very limited benefits for catastrophic stuff like cancer.
Many of the cheap plans people got tricked into buying pre-aca were like some of today's dental plans. They provided generous coverage for the first few hundred dollars of care (eg for cheap things like a doctor visit for a cold), but capped coverage for big catastrophic stuff like cancer treatment. Since most people go to the doctor for small stuff once and while but don't get cancer, they mistakenly thought they had good coverage but they really didn't.
My biggest complaint about the ACA plans is that all the options seem to have crappy provider networks. That's the biggest loss for me between my old grandfathered plan and the replacement ACA plan.
I do remember my dad mentioning that some people were unhappy that there weren't some options for truly catastrophic coverage that had little-to-no regular coverage. (i.e. you'd pay out of pocket for even vaccines etc but be covered on the back end for cancer)
If you were high income/well off but wanted downside risk protection then you might be worse off this way (ignoring the pre-existing condition/life-time limit parts)
I don't think that's a large segment of the population but it's not zero.
(I _would_ be in that section except I don't mind having my vaccines/routine appointment covered - but I do want a high-deductible plan that pays basically _nothing_ until I have a really bad year)
In principle, I agree that it would have been better to allow plans without preventative coverage, especially for young people. OTOH, for most people the cost of preventative coverage is a relatively small part of annual premiums. Healthcare spending for a 45 year old averages about 8k per person per year in the US. Preventative stuff like vaccines, physical exams, and routine blood work runs around $200-300. So the added premium for preventative stuff is under 5%.
A bronze HSA plan with a 60% actuarial value (likely $8k deductible) comes very close to being a truly catastrophic plan. You'll pay around $6-7k in premiums, get a few hundred refunded for preventative stuff, and then only get additional reimbursement if your healthcare costs exceed $8k.
I put in numbers for a 47 year old with no dependents(I have them but I wanted to just see a sample individual plan) and sufficient income for no discounts.
Interestingly, the summary at the start says Bronze: 512/month, Silver: 748/month, Gold: 676/month (Wonder why gold was less.... maybe Silver was all PPO)
Yeah there's a sample Bronze in my area for $5,500 a year with a deductible of $9,500 that's _also_ the out-of-pocket maximum, so that's definitely a "catastrophic plan"
You have to budget up to $15k a year for it but if you can swing that you're good.
Interestingly, a gold POS plan was max $18,156 a year, but with a $1,500 deductible, so potentially lower costs.
... I then tried with dependents, same theoretical income, and my monthly payments went DOWN, the tax credit was so large. That was unexpected. (Total costs did go up because family deductible is the standard 2x individual but much less than I thought) Thanks Obama.
"Unfortunately, the media tends to treat these kinds of questions that involve the dispositions of hundreds of billions of dollars and the health care of millions of people as relatively minor and unimportant."
A thing I've harped on a lot is that one of the things that became extremely clear to me post 2016 is how much of MSM media coverage (or at least coverage from the biggest and best paid names) is driven by what personally effects them most. Hence a huge part of the reason there is excessive focus in national press on the goings on in New York City (I'm sorry, there is no way the death of a homeless man on the New York subway becomes a week long national story if wasn't for the fact that a ton of journalists personally use the New York subway at some point in their lives). So a big reason there has been so much focus on excess of the far left (not even talking about Israel/Palestine, really don't want to drag that topic into these comments) is partly it gets clicks from a mostly older left of center audience but partly because for a number of superstar reporters, they feel more personally threatened by left wing activism. Glenn Thrush works for the New York Times and such gets a ton of criticism from the right I'm sure as being part of the biased media. But his actual career was threatened because of "me too" movement which is decidedly more of a left wing movement. I can't imagine this doesn't effect Times reporters writing decisions, especially the more prestigious writers.
Which gets to my point. Most Times/CNN/NBC News etc. employees are going to have health coverage through their employer. And likely good health coverage that doesn't result in catastrophic bills or coverage being denied. If ACA is actually repealed, most reporters health coverage isn't effected one bit. They'll just revert back to a pre 2010 paradigm and probably not see any difference. Matt continually notes on Twitter and on this very Substack how much media incentive matter and why he thinks it will result in editorial decisions that subtly boost Trump's candidacy. Well other incentives matter too and I think is a reason possible ACA repeal doesn't get coverage it should.
I think the other basic fact is most reporters probably don't really understand the true nuts and bolts of ACA or Medicaid. It's one of the reasons I first gravitated to reading Matt and Ezra Klein. I'm pretty sure Ezra was the one who while reading his blog you can sort of see the dawning realization on his part that even the reporters who supposedly cover health care policy don't actually know much about the health care actually works.
Good points but I suspect the growth of Substack and other self-employment, and the general precarity of media jobs, mean "journalists don't have a stake in Obamacare" is probably less true now than it was in 2010.
I see your point. But end of the day most reporters aren't on Substack and only have a big enough audience if they had a previous journalism career that boosted their profile. But we'll see, if this model continues to expand, maybe we will see more chatter for lack for better word about ACA if more reporters have to deal with it personally.
The other even more basic issue is that GOP primary is obviously a nothingburger. Which means it's not in the news as much and Turmp is not as front and center either. Also probably a small part of the reason his poll numbers are surprisingly strong. I'm going to guess the Biden team will make sure health care is in plenty of campaign commercials once actual general election gets going.
This is an interesting point.
A couple thoughts on the piece.
1. Voting in a Democratic governor isn't the only way to expand Medicaid. A ballot measure can also force expansion. Utah, Maine and Nebraska have taken this route while under Republican control. In some sense, this is better for Republicans because something popular like Medicaid expansion could occur without voting in a Democrat.
2. The ACA limits the profitability of insurers through a minimum loss ratio. Basically, what this means is that for every dollar received in premiums, 80 cents must go out to pay claims. That means the insurer is left with 20 cents to pay all administrative costs and hopefully have a little left over for profits. There is no incentive for the insurer to reduce claims below a certain level because they'll just have to give it back through a premium rebate. Also, with stability, the market is fairly competitive, and thus it is difficult to price gouge the consumer.
3. Matt briefly compares premiums in the individual market to the employer market and notes the tax subsidy in the employer market. The US Bureau of Labor Statistics estimates that employers pay 67% of health premiums on average (as of March 2022). So, basically an employee should triple their monthly employee contribution to get an estimate of the total cost of insurance and compare that to the individual market place. I suspect this is something many people do when evaluating whether they stay with their employer or go out on their own. Yes, they'll make more contracting themselves out, but they'll now have to cover that employer subsidy (in addition to buying office supplies etc.). The key is that they can now calculate that difference. It is known and it is likely to stay stable. Lastly, while the US subsidizes employer premiums through tax deductibility, there are more direct subsidies in the ACA market depending upon the income of the individual. If you're low income, most if not all your premium will be paid by the US government.
4. Insurers are mostly worried about adverse selection, which is purchasing insurance after the individual becomes sick. In the pre ACA days, that's what drove high costs. Since only the sickest purchased insurance, premiums were sky high. ACA used carrots and sticks. The carrot was subsidized premiums. The stick was the penalty for being uninsured. Republicans removed the penalty back in 2017, but because the subsidies kept premiums sufficiently low, the penalty stick wasn't necessary.
What would be most interesting is an analysis of the impact of the ACA on the employment marketplace and lifting wages. Because the ACA guaranteed coverage, employees could leave their jobs and not worry about getting insurance. Yes, they have to worry about affordability, but they didn't have to worry about whether insurance would be there. How many people went back to school, became part-time Uber drivers etc because they knew that they could get subsidized health insurance. Removing uncertainty works for both the insurer and for the individual.
On point #1, it's not an option for all states. Of the 10 remaining Medicaid expansion holdouts, seven have no option whatsoever, and two others (FL & MS) are by onerous constitutional amendments only. Wyoming's the only state left where this would be really viable.
There’s also the carrot-stick of community rating, which lowered costs for people with imperfect health and prevents insurers from pretending they compete on price when they actually compete on filtering out higher risk individuals.
Yep, there are also Risk Transfer payments that are zero sum and take place between the insurance companies that disincentivize getting all the healthiest members
What's really amazing is that Medicaid expansion got done in NC with both houses of the General Assembly majority Republican (now a super-majority but not at the time of passage). Certainly Roy Cooper (a Dem) had something to do with passage, but I think a lot of it came down to the R's seeing ACA as here to stay and that passing the expansion would not be a political liability anymore.
It is kind of odd that Matt said "Republicans are sincerely very hostile to Medicaid expansion, and the only way to get it done is to beat them" when it seems that actually, NC enacted Medicaid expansion without beating the lawmakers who were actually in control of whether or not that happened. So *do* you have to beat them?
I mean Cooper is not chopped liver.
I realised how shit the pre-ACA US healthcare system was when I had to buy pet insurance for my dog.
I dunno, my experiences with pet insurance has pretty much been the most straight forward insurance can get. Got quotes pretty easily from a few providers when I got my puppy, uploaded medical records and invoices when needed (no forms?!), got a check in the mail that cut the cost of the ER visit in half. As long as you're thinking about it as "emergency" insurance rather than "cover every type of health related cost" insurance, it seems to be pretty easy.
Isn't buying pet insurance pretty straightforward?
My experience with it was basically that it was surprisingly expensive, hard to shop around for, and not all that helpful in limiting/reducing costs, so we decided to forego it until it becomes more necessary. The experience did remind me of how human healthcare insurance used to work, pre-ACA.
The major difference is that while most people are willing to have the government help with the public's healthcare costs, most people (I think) wouldn't be excited to subsidize insurance for other people's pets. Outside of subsidies, the price of insurance is just the price of the risk to the insurer. Which sucks, but otoh pet insurance didn't even really exist 10 years ago, and 50 years ago the idea of advanced medical care for a family pet didn't much exist either.
So I don't know, I guess what I'm trying to say is that it's expensive b/c pet medicine has become expensive just like health insurance is expensive b/c health care is expensive. You can spread the costs around to the general public around but you can't eliminate them.
Doesn't that assume that the underlying drivers of increased costs are the same? I'm not sure I buy that - which I mean quite literally - for example, we obviously have a physician shortage, but do we have a vet shortage?
Good question and I don't know anywhere near enough about veterinary medicine to answer.
I personally found it straightforward, but there is a long list of exclusions and ‘WTF, that can’t be right’ situations in the small print. And they bump up the price every year so you have to shop around, and there is always a two week period where you have no insurance for illnesses.
I would guess that's because it's so easy to take advantage of. Documentation and anti-fraud measures are far less organized and developed, and the total sums per policy are not big enough to justify investigative measures to prevent fraud.
So you basically end up with a large fraction of people noticing that their pet has a problem, realizing it will be expensive, and then buying insurance and lying about when the problem kicked in. Or coming up with any of a dozen of other simple schemes with virtually no chance of being penalized for being caught.
It's a competitive market, after all, so if there was a way to sell it more cheaply and grab marketshare I'm fairly confident somebody would.
Pre-ACA healthcare was abysmal. The ACA basically turned vicious insurance companies into pets. They do sometimes bite and soil the rug but overall recognize that the tame path keeps them fed and cared for while the feral path gets them put down.
Though I can say that I've never had a problem with my pet insurance ever. It just gets impractically expensive when pets get older.
Health insurance for people is partly pure insurance, to pay for unusually high health care cost in one year rather than another. But for a weird historical accident during WW2, it came to be a way also of paying compensation. But medical insurances in the case of Medicaid is also to take account of medical costs rising sharply with age. Together these encouraged bad decision making by prescribers and patients not to be concerned with balancing costs and benefits. Lots of tax resources go into this system and leaves many other people uninsured or without public resources to partly pay for their insurance, a huge injustice. Medicaid (inadequately) addresses this problem for the very poor and ACA tries to pick up the other "uninsured" and make a few reforms aimed at improving the cost/benefit balance.
Yes, your dog falls into the no-employer purchased, not covered by Medicare or Medicaid market segment. :)
Lazy freeloading beast ;)
ACA repeal is important. Promising to undermine democratic institutions is important. Proclaiming that you'll destroy the international security structure that has kept the peace is important. Abortion is important. Threatening the rights of powerless minority groups is important. Putting hyper-religious Christian nationalists in positions of power is important.
Yup. All true.
My question is, how do you win the election? I wish Matt had answered my question when I posed it to him last week so I'll ask it again: if you can *only* highlight three issues that can be stated in a simple sentence (like above) and those issues you'll pound home continuously and with discipline until Election Day, which issues do you choose and which do you relegate to the bench? Because that's the way electoral persuasion works.
Interesting question, thank you for posing it!
Matt does want Democrats talking more about healthcare: https://www.slowboring.com/p/democrats-should-talk-more-about
This a healthcare policy article and not a tax policy article, but I do want to make a quick observation: in the United States, rather than making a list of desired government services and then devising the most efficient and painless system of financing them, we use tax policy to express a moral judgment about the virtuosity (or lack thereof) of accumulated wealth. We really should stop doing that.
It seems to me that if the Democrats can make the 2024 election about healthcare: the ability of women to get reproductive care, and the ability of everyone to have healthcare coverage, the Democrats should win the White House and the House, and might even hang onto control of the Senate by their fingernails.
GOP: The Demon-rats want drag queen story hour for all our children!!!
Democrats: The GOP is literally trying to take your health insurance away.
I agree that this is a much better strategy with voters than engaging in the drag queen debate, et al. Make it all about policy because even the dumbest voters know that policies are what the government is for. We don't need to rise to their level of hyperbole, we just need to be the grown ups, speak softly, state facts.
Andy Beshear ran a devastating commercial in his re-election campaign this Fall in which a young woman stated she was raped by her stepfather when she was 12, and his opponent, Daniel Cameron would’ve forced her to carry the resulting pregnancy to term. Commercials featuring real people discussing how GOP policies effect them personally can be extremely effective.
I would somewhat disagree with Matt's specific claim here regarding media faults:
>>>"Unfortunately, the media tends to treat these kinds of questions that involve the dispositions of hundreds of billions of dollars and the health care of millions of people as relatively minor and unimportant."<<<
It strikes me that the difficulty with healthcare media coverage isn't that healthcare is unimportant -- I think few would make that claim -- it's that it's a very hard problem with little domestic consensus about what the best (or even desired) solution is and an agreement that ground-up radical restructuring of our current weird, path-dependent mess would be a massive change to a system that presently works "okayish" for most employed persons and seniors (and I say this as someone one who has few firm beliefs about what the best healthcare situation looks like beyond "employer-provided health insurance is a bad idea and should not have been adopted."). Some single-payer systems appear to be creaking elsewhere (in particular, based on the tenor of media coverage, Canada and the NHS are sort of at the breaking point) and any attempt to emulate them in part would, at minimum, have huge tax and market consequences for somewhat uncertain prospective gains. Meanwhile, the highly technocratic nuts and bolts holding the present mess together are arcane, opaque, and sensitive to specific tweaks and commercial arrangement idiosyncrasies.
The TL;DR version of it is that there's no present consensus for burning it down, there's a presumption that most changes have very large tax consequences, the remaining tweaks are highly technocratic rather than amenable to easy sloganeering or (often) convenient explanation.
I'm by no means sure for how many people I speak but at least for me healthcare is -- *despite* being a pocketbook and basic QoL issue of enormous fiscal significance both individually and nationally --an issue where my beliefs about both desirable marginal and (especially) desirable terminal changes are relatively weakly-held because the entire thing is technocratic and opaque, (and "we're not just going to leave this to the private market" is a sort of implicit table stakes).
The media should present what it can of the factual and policy implications of various proposals and their proposed expense, but there are only so many partisan points you can wring out of a subject that *notwithstanding its importance* is a Gordian knot of horrible interdependencies.
To that end good on Matt for at least making highlight Medicaid as a fair clear D/R split along the traditional lines of "higher taxes / more services" vs. "lower taxes (plus a lot of idiotically inflationary spending) / fewer services."
I think that perhaps the best article that a sensible left-type reporter in a mass market paper like USA Today could run, from the perspective of both truth and their political leanings, would be a serious pre-ACA retrospective. Focus it not on the poor but on the reality of employer-provided coverage for middle class folks in the era of "preexisting conditions" and "lifetime maximums."
Trot out the statistics about what percentage of needed care was uncovered and slather it in a layer of relatable "we did everything right" sob stories, then find some families with kids born before the cut-off who got the care they needed only because of the ACA. A 3- or 4-part series to keep it in the public eye for a while, and release it week-by-week in October 2024.
Don't discuss Medicaid, don't feature a single poor person, no one obese or even vaguely unsympathetic, just a stark reminder that the old system fucked over a huge number of the folks who did everything "right" by its rules despite their best efforts.
The hedonic treadmill has led everyone to forget how *terrible* the old system was over the last decade. My parents have forgotten that neither of them would have gotten basically any of their recent major care given that it's downstream of old injuries or chronic conditions. They can't admit even when pressed that my daughter's minor heart defect basically means she'd never have private insurance under the old structure and never again will if the pre-existing condition protections the ACA provided are repealed. My parents are utterly unpersuadable but my bet is that a lot of persuadable folks have also memory holed the old system and need a reminder.
The other issue I see a lot of is that the 2020 primary was all healthcare, all the time, which made lots of younger people think that ACA did literally nothing because that debate proceeded as if it didn’t exist.
So there are lots of zombie memes out there about healthcare and I worry this means people will be less interested in defending it than they should be.
The closest I come to holding an accelerationist view is that if the GOP succeeds in undoing the ACA, maybe the young people will learn to not be fucking idiots over the course of fighting to get it back?
No. They will use it to validate their nihilistic world views that require nothing of them.
This guy youngs.
Doomerism is the laziest worldview. It requires one not even know or inquire about what is true. It requires they do nothing.
This was my partner's family growing up. She was raised by a single mother who ran a modest, but successful, small business, and healthcare was eating up around half of their income (a lot of health problems). The ACA, in my partner's words, was "life changing." They cried when it passed. It made decent medical care actually affordable to them, and my partner will get very annoyed when their peers talk about what a disappointment Obamacare was.
It should be extraordinarily easy to find 2 families with profitable small businesses who couldn't get insurance at all back then, 2 salaried professionals whose insurances denied major claims for bullshit "pre-existing conditions," and 2 full-time hourly workers whose children were born with conditions requiring treatment that they couldn't access until the ACA.
But no one is going to write that article. If anything similar is written, I can almost guarantee the subject will be a profoundly unsympathetic, morbidly obese, checked-out single mother with five kids through five fathers, surviving on SSDI and child support from three of them, who has to be cajoled and nursemaided through getting her kids on Medicaid and then spends the whole article bitching about having to take them to appointments on time and doctors telling her what to do.
Because I've seen that article a dozen freaking times.
Yes, those kinds of people deserve healthcare too, because everyone does, especially the kids they're busily failing. But they're not how you sell policy on this front, so stop fucking talking about them.
This seems like a sound idea. To be honest I think it was non-obvious that pre-existing condition reform wouldn't break the insurance market by creating overwhelming adverse selection problems, but AFAICT in practice all it did was cut down on a massive implicit subsidy to the industry and more-or-less come out of rents.
ED: Oh hell, I think I just managed to convince myself of a meaningful argument in favor of employer-provided health insurance, which is that it significantly mitigates adverse selection for conditions that don't preclude employment by decoupling insurance provision from risk pools. Ugh.....
There was a huge amount of work put into risk pooling and behind-the-scenes tax and subsidy transfers between insurers to ensure no one got screwed by the adverse selection problems, which is why it came to nothing, as least as far as my limited understanding goes.
Definitely non-obvious to me. I assumed that the pre-existing condition reform would only work with the mandates, one reason I heavily supported the mandates (the least popular part of it).
I was pleasantly surprised when the end of the mandates did _not_ end it all.
100% agreed that it was very surprising that the individual mandate did not turn out to be a load-bearing structure. (At least at the time of its repeal?)
I suppose in a roundabout way this is another point in defense of epistemic humility by the media: healthcare is *weird.*
A responsible MSM outlet would accompany this straight then-vs-now coverage with some hard-hitting editorials (more than one, to drive home the point) about just how awful healthcare would become again and how many millions would lose coverage if Trump and the Repubs had their way.
Yes - bravo
Regarding that first article... Since it was published it's become clear that the hold the hard left has on a lot of comfortable young people is largely contingent on convincing them, or them convincing themselves, that they are actually historically badly off. The second they stop being broke or understand that they never were, they bail, which is basically why most of our cohort has tossed any semblance of economic populism overboard, with only some residual post-liberalism remaining as a sign of our post-'08 vague radicalism, and even that tide seems to be receding.
A lot of the kids a few years younger than us making $60-120k a year are genuinely convinced that the Danish model would make them better off instead of taxing the shit out of them to pay for services for families with two adults and 2-3 kids making $60-120k.
Yes - bravo
Two thoughts ... (1) Total agree. The 2020 shift to Medicare 4 All was a terrible choice. M4A offers upside to like 15% of the population and downside risk to the rest. (2) When Pod Save America thinks your article is a frothy, hyperbolic mess ... that's really saying something. I think Matt's media point is specifically going after (1) Kagan and (2) The Atlantic's upcoming dystopian series about Trump's potential return - both being a complete waste of digital ink.
"In the January/February issue of The Atlantic, 24 writers explain how Donald Trump could destroy America’s civic and democratic institutions, including its courts, national political culture, and military, if he succeeds in returning to the Oval Office."
>> The 2020 shift to Medicare 4 All was a terrible choice. M4A offers upside to like 15% of the population and downside risk to the rest.
I thought the idea for M4A involved adding a Medicare-like public plan to the exchanges that's priced at cost. The M4A plan would leverage Medicare's provider agreements, cost structure, and claims processing infrastructure. This shouldn't affect the finances of Medicare at all because any subsidies on the exchange M4A plans would be paid through ACA just as they are today.
What's the source of the downside risk to the rest?
I might be missing something in your response but Sander's M4A proposal eliminated private insurance. That level of disruption only creates risk.
https://www.nytimes.com/2019/03/23/health/private-health-insurance-medicare-for-all-bernie-sanders.html#:~:text=At%20the%20heart%20of%20the,idea%3A%20Abolish%20private%20health%20insurance.
Got it. I misunderstood.
I'd love to be able to buy into an ACA Medicare plan at full cost just to be able to use the Medicare provider network instead of the crappy networks available with today's ACA plans.
I guess this would be more accurately called the public option, but it seemed like a pretty straightforward way to clean up a big problem that the ACA exchange plans have created for some of us.
Exactly. That's what's so maddening. Sander's 2016 public option proposal that Clinton picked up was perfect. He was still campaigning on it in 2017. I'll never understand his leap further left into a mandatory single payer system in 2020. He lost my vote on this alone.
https://www.vox.com/2016/7/9/12135292/hillary-clinton-public-option-bernie-sanders
https://www.cnn.com/2017/07/30/politics/bernie-sanders-health-care/index.html
Indeed. My only theoretical concern about a public option was that the government might be forced (politically) into outcompeting private insurers and that this would have unintended consequences on the system, but at least the first-order consequences seemed entirely reasonable.
The NHS’ problems seem to stem from its sheer size in the budget, which encourages politicians to look at ways they can raid it for short term priorities. This has led to a cost efficiency drive that appears to have failed, really, except insofar as it was cutting service in the long run.
This is one reason I’ve come to like the hybrid system ACA created: there’s just less ability for the legislature to reduce the quality of healthcare as a means to pay for things which are major immediate priorities politically.
indeed, we see the issue you highlight with respect to Medicare. It’s a big beast, and a unified single program. Hence it’s a target for those looking for a piggy bank.
We can bang on the media, and they’d deserve it. But why don’t politicians who care about this issue (surely there are some) have any way to get their attention? The media love fights. Is there no way to pick one?
I really, really want to like D leadership more. But I keep getting the impression that they are tired, too cautious, or simply without conviction. Given the stakes it’s incredibly frustrating.
LIke Republican fiscal irresponsibility!
I really appreciate your critique of contemporary news media.
Democrats only get credit for what ever transgressions the GOP commit.
This is a technical question about why the provider networks on ACA exchange plans are so limited. I've searched high and low for a good explanation, but haven't found one. The SB commentariat has very diverse expertise. Maybe there's an expert here that can answer this?
Prior to ACA my family had an individual market plan with a very broad nation-wide Blue Cross provider network. The plan was expensive and we had to go through the arduous underwriting process to get it, but once we passed through that gauntlet we had great coverage and could see most any provider we wanted (with a high deductible of course).
When ACA was passed, I thought the provision limiting insurer profit to 20% of the total cost of care would incentivize insurers to offer at least some plans with great provider networks that come with higher premiums. After all, more costly plans that have higher plan premiums mean more profit (because of the limit that insurer profit can only be 20% of the cost of care).
Instead, what happened is that all the individual market plans on offer are HMO plans with very limited provider networks.
Why don't insurers want to offer at least some plans that cost more but have wide provider networks similar to what employer plans offer?
This actually seems to dig into the issue pretty well even if it's a few years old.
https://www.healthcaredive.com/news/could-narrow-networks-be-the-next-big-cost-cutter/512298/
Thanks for this. It was an interesting read.
It did a good job covering why narrow networks are so popular with insurers trying to compete for price sensitive shoppers on the exchanges, but it doesn't dig into why insurers ONLY offer limited network plans. That's my real question here.
It makes sense for insurers to offer some narrow network plans to snag price sensitive shoppers. But I'm still mystified why insurers don't offer at least one broad network plan that's more expensive (and more profitable) to snag shoppers who aren't price sensitive but want a quality network.
Maybe there just aren't enough consumers willing to pay more for a broad network, but according to the article you quoted, the cost savings from narrow networks is only 10 to 20 percent. That doesn't seem like enough difference to deter less price sensitive shoppers. It definitely wouldn't deter me. and so for me, the mystery remains.
I suspect that the ACA marketplaces are overwhelmingly dominated by very cost-conscious buyers. It's just the case that dominantly in America if you are relatively well-off, you probably have employer-provided insurance. (There are of course counterexamples such as Matt, but I think they're like 0.1% of the ACA markets.)
I would have guessed one of the larger cohorts buying ACA policies would be self-employed folks and afaik they have significantly higher median incomes than non self-employed people.
Maybe that gets offset by lower income folks with crappy jobs with no insurance on the bottom end, but anyone earning less than 138% of the federal poverty level usually gets shuttled off to a Medicaid plan. So I'd think that'd push median income for ACA subscribers up a bit compared to the general population.
But I really don't know. I did some googling looking for some demographic info but I didn't find any. Your theory would help explain the lack of more expensive offerings, although you'd think insurers would still try to skim some cream off the top. As of 2019, something like a third of ACA plan subscribers didn't qualify for subsidies. That means they earned at least 400 percent of the federal poverty level or $120k for family of 4. Not rich, but that's just the minimum income for that upper income 1/3.
I'm not sure if any of the ACA plans I've seen have "wide" provider networks or not. We buy my MIL a BCBS plan on the PA exchange (expensive but works way better than shit short-term plans), and I've never noticed a particular shortage of providers.
So I think at least part of the answer to this question is that for a newly insured person this doesn't matter a lot, they just find providers who are in network. Only if you came to the table with doctors already in mind does it strike me as a salient feature.
You're probably right about most people not valuing this.
For me it's less about specific providers or the ability to find a good enough provider.
It's more about quality than quantity. As an example, there's a prestigious cancer center within an hour of where I live that used to be in network with my old grandfathered plan, but isn't anymore. I don't have any reason to use it, but it was nice to know it was an option. Now if bad luck happens, I don't have that option.
Just for the sake of accuracy, I'll point out that the Democratic Governor of Kentucky who expanded Medicaid was Steve Beshear (2007-2015), Governor Andy Beshear's father. Medicaid expansion is so popular that the one term GOP Governor between the Beshears, Matt Bevin, never tried to outright repeal it even with a GOP majority in the state legislature, but instead tried to make it shittier by eliminating the state based individual marketplace, Kynect (which worked from day one, unlike the federal marketplace) and ran for reelection on implementing a work requirement to qualify for expanded Medicaid, which was dropped when he lost to Andy.
MattY, have you thought of forming a Cabal of Substackers to purchase health insurance as a group?
"Why do so many Republicans want to collaborate with Trump? Not just for fun. Because they have policy ideas that they know cannot withstand public scrutiny."
This is the crux of everything with the GOP - whether Trump, or Pro-Life activism, or the Anti-Woke movement, Gay/Trans-mania, or whatever else they are doing - everything, literally everything they do and say is and always has been a distraction from the fact that the GOP would lose every election until the end of time if it actually talked about its actual policy agenda.
No wonder some of them are starting to openly state they think Democracy is a failed idea, and that dictatorship could be really swell. They are as tired of their own lies as we are.