Amanda Stanhaus

Tag: health insurance

Obamacare

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President John F. Kennedy said, “Ask not what your country can do for you—ask what you can do for your country.”

When fighting for his signature health insurance reform, President Barack Obama shouldhave said to America’s young people, “Ask not what Obamacare can do for you—ask what you can do for Obamacare.”

Have elders been pestering you to sign up for health insurance in your state’s Obamacare marketplace?

Of course, they are looking out the post-26 young’uns in their life. (Psst, pre-26? Ask the rents about joining their insurance plan!) But elders are also looking out for their own bottom line.

Picture perfect healthy young people, who don’t use many health care services, are exactly who will bring down health insurance premiums. Young’uns balance out the insurance “see-saw.”

Otherwise, if only sick people sign up for health insurance, premiums will only go up…up…and up!

Not convinced you should sign up? Let me introduce my friend Michelle Obama.

Convinced now? Mosey over to Healthcare.gov.

Many young people have signed up already, wowing policy wonks by surpassing the projections.

Keep it up!

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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

Social Insurance: Current North American Debate

Originally submitted for an independent research project comparing North America’s welfare states with Professor Antonia Maioni at McGill University.

North America’s policy makers and interest groups debating the future of their respective welfare states have lost sight of the important role of social insurance in a capitalist system. J. Donald Moon understands a democratic welfare state to be “an attempt to solve a serious moral dilemma that necessarily results from the central role of markets in modern society.”[1] Moon defines self-respect as, “one’s belief that one lives up to certain standards that define what it is to be a person of worth,” and its preservation is key to an ideal democratic welfare state.[2] Moon’s argument features T.H. Marshall’s explanation of civil, political, and social rights that facilitate equal citizenship; together these rights create equal social worth, genuine equality of respect, and consequentially, the ideal democratic welfare state.[3] To create an ideal democratic welfare state that preserves self-respect, Moon outlines the three “institutional principles” of a welfare state: achieving full employment, ensuring universal provision of social services, and establishing a comprehensive program of social insurance.[4] Moon recognizes his “institutional principles” have internal limits and various implementation options, but in general they allow for social rights to be exercised, while maintaining self-respect.[5] Moon’s argument and his “institutional principles” represent the North American consensus that created their unique liberal welfare states. Now lacking a consensus view of Moon’s “institutional principle” of social insurance to shape program reform, misinformed interest groups dominate the retrenchment debate that is resulting in reforms dismantling the social insurance programs of North America’s liberal welfare states.

Given the capitalist systems of North America’s liberal democracies, social insurance is a moderate fix. When discussing common risks, such as birth into a poor family, ill health, involuntary unemployment, etc., Theodore R. Marmor, Jerry L. Mashaw, and John Pakutka explain that “beginning with Otto von Bismarck…the social provision of income protection against these risks has been a fundamental precondition for the flourishing of industrial capitalism. Looked at historically, social insurance is a deeply conservative idea and the major viable alternative to state socialism.”[6] Marmor, Mashaw, and Pakutka describe social insurance’s original goal “to cushion workers and their families from the many threats to economic security that capitalism produces while, as the same time, permitting the market economy to produce its undeniable gains in national income.”[7] However, social insurance must adapt to reflect current realities of its beneficiaries, as Marmor, Mashaw, and Pakutka explain, “[programs] that fit well in one era can become outdated in another. A society’s underlying sense of ‘fairness’ or ‘appropriateness’ in guarding against risks to loss of income from work can change as well.”[8]A philosophical consensus and resulting reforms must reflect the times to be relevant. Lacking a consensus view of social insurance, program reform debate is commanded by interest groups that promote retrenchment.

Lacking a consensus view in favor of social insurance, interest groups calling for privatization of social insurance programs in North America are shaping the program reform debate. The circumstances of both the U.S. and Canada are similar, Keith Banting and John Myles note, “Organizations that speak on behalf of the poor are weaker, and power has moved to institutional niches less responsive to redistributive interests.”[9] Traditionally, Banting and Myles describe liberal welfare states as: “reluctant to replace market relations with social rights; instead, they seek to provide a safety net for the ‘poor’ and to encourage the bulk of the population to rely as much as possible on private sources of economic security, including occupational benefits and personal savings.”[10] Critics of the welfare state and its social insurance programs are using this liberal welfare state tradition to their advantage. Banting and Myles explain, “the redistributive role of the state has always been less developed…In liberal welfare states, mere drift in social policy can represent a victory for conservative interests.”[11] The structure and tradition of North America’s liberal welfare states is facilitating program reform debate that lacks a common vision and is dominated by misinformed interest groups.

Liberal welfare states are being highly scrutinized due to an ideological shift that now supports reform to increase privatization and individual responsibility. Yet, critics misconstrue the role of social insurance in a capitalistic market. Marmor, Mashaw, and Pakutka explain critics’ understanding of social insurance, “Rather than being seen as supporting a capitalist system by cushioning its inevitable risks, social insurance arrangements are portrayed as undermining private markets and personal responsibility, or as threatening the overall fiscal health of the nation.”[12] Inherently, the payment and services of a social insurance system are inefficient. But, when these risks are insured publicly it is comparatively more efficient than when these risks are insured privately. Social insurance programs are essential to the maintenance of market capitalism as Marmor, Mashaw, and Pakutka explain, the risks insured by social insurance are not sufficiently dealt with in private insurance markets.[13] If a welfare state’s social insurance programs are privatized, insurance premiums will quickly become unaffordable, because of the problems of adverse selection–only the highest-risk people will sign up for insurance–and moral hazard–those insured will take on extra risks because they face no downside.[14] For example, if it is a personal choice to sign up for health insurance, only those who would utilize the insurance (i.e. those already sick) will register, and then premiums would exponentially increase, as the risk is concentrated among a small sick population. Public social insurance programs that provide coverage for large and various groups are the best way to spread risk and control costs. Marmor, Mashaw, and Pakutka explain that social insurance already provides what critics want to improve, “indeed, supporting a society based on a viable vision of [personal choice, individual responsibility, and market competition] is the fundamental function of social insurance. But social insurance programs designed to maximize personal choice and promote market competition will simply not deliver adequate social insurance protections.”[15] Privatizing social insurance programs is an oxymoron, as Marmor, Mashaw, and Pakutka note, “Making social insurance programs more ‘market-like’ is seldom a reform that supports family economic security or, in the long run, the market itself.”[16] Without a consensus view of social insurance, misinformed ideologues are mistakenly implementing “fixes” to improve personal choice, individual responsibility, and market competition that will only increase inefficiency in insuring against the inherent risks of a capitalist system.

A lack of a consensus view of social insurance plagued the passage and the ongoing implementation of the U.S.’s Affordable Care Act (ACA), which Marmor describes in his article, “Health Reform 2010: The Missing Philosophical Premises in the Long-Running Health Care Debate.” The U.S. was unlike other countries that simultaneously debated universal health insurance reform policies and the philosophical implications of a proposed reform.[17] Marmor notes Obama’s campaign for health reform repeated traumatic health insurance stories and sparked many partisan commentaries, but lacked a discussion defining fairness and solidarity in this instance.[18] Because the U.S.’s health reform debate lacked a philosophical agreement and the resulting law tinkered with a variety of existing programs, Marmor poses the question, “Is the absence of philosophical consensus an important element in explaining the very mixed reform result that emerged in March of 2010?”[19] The universal mandate central to the ACA continues the U.S.’s adherence to the Bismarck system and its definition of beneficiary: a worker, who contributes, receives program benefits.[20] Marmor, Mashaw, and Pakutka note that historically, Americans defined a “universal” social insurance program as one for “workers” or “contributors.”[21] Furthermore, the ACA continues the U.S.’s tradition of defining medical care as a market good.[22] In contrast, Marmor notes a common pattern of “equal access” in the universal health care programs of Canada, France, Japan, Holland, and Germany, as each country simultaneously debated program options and philosophical implications, and each country based its conclusion on the fact that medical care is a merit good.[23] Writing in Spring 2011, Marmor foreshadowed that the lack of philosophical consensus and reform coherence would weaken the durability of the ACA.[24] If such a debate had taken place, as it had in other democracies, Marmor notes that “while mass publics may not initially grasp the moral implications of reform, over time, experiential knowledge can often shift mass opinion in favor of the moral justifications originally offered by political leaders.”[25] Instead, Obama’s political opponents and their supporters attempted to dismantle the ACA, as there is no philosophical consensus to rally all citizens.

While Canada initially reached an “equal access” consensus regarding public health insurance, outpatient prescription drugs were not initially included in the single-payer model and interest groups have influenced the recent reform. The Canada Health Act is just one example of a Canadian tradition of defining a beneficiary as a resident; this definition stems from the Beveridge system, which is financed by general tax revenues, therefore all taxpayers receive program benefits.[26] Since 1984’s Canada Health Act, recent reforms reflect changes in philosophical consensus, technological capabilities, and fiscal abilities. Carolyn Hughes Tuohy describes these reforms as part of a hybridization phase, where “opportunities for reallocation and reinvestment are seized upon by certain actors within the healthcare system who see the potential to benefit from them….These actors determine the shape of reforms…joining forces with policy makers to influence the design of policy.”[27] As technological change has rapidly improved the capabilities and effectiveness of prescription drugs, pharmaceutical spending has increased; this increased spending is shouldered by individual Canadians, as many previous inpatient drugs have become outpatient prescription drugs.[28] Provinces have individually altered their out-patient prescription drug insurance policy to address this new issue. While there is great cross-provincial variation with regard to cost-sharing, there is a philosophical consensus prioritizing social assistance recipients as beneficiaries of provincial outpatient prescription drug insurance.[29] The province of Quebec has implemented the most substantial change with regard to outpatient prescription drug insurance, Tuohy explains, “Since 1998, all residents are required to have comprehensive insurance for prescription drugs, integrating employer-based coverage into an overall regime of public and private financing and offering a public program with an income-based premium for those without access to employer-based coverage.”[30] While preserving universality, in contrast to the Canada Health Act’s Beveridgean tradition of equal access to all taxpayers, Quebec’s outpatient prescription drug insurance reform incorporated a main tenant of the Bismarck system, as benefits are based on income and program contributions.[31] Tuohy believes private insurers will continue to be allies in reform, as they were in Quebec.[32] In general, the “politics of hybridization” that characterize health insurance reform call for a public/private partnership, as policy makers must identify allies within the private healthcare system and create opportunities for them within the public system.[33] Tuohy accepts the possibility of successful private/public partnerships, to address prescription drug insurance reform, as it is true to the Canadian consensus of social insurance, while utilizing the classic liberal reform style of debate shaped by interest groups.

The risks that led to the creation of North America’s post-war liberal welfare states are not the same risks of the modern economy; as North America’s social insurance programs are reformed, the debate must include a philosophical debate and the input of interest groups. The compromises of the post-war welfare state were based on single-wage earner families; the welfare state has failed to evolve with changes in the distribution of risk to the modern-day economy.[34] Banting and Myles note, across the OECD region, the economy, family structures, and compensation schemes have driven up inequality and “frozen” welfare states are barely able to stabilize income distribution.[35] To make necessary updates to modernize the welfare state’s social insurance programs, debate in North America would benefit from a philosophical consensus and a more comprehensive, informed understanding of how social insurance can complement the capitalist system and preserve private markets.

[1] J. Donald Moon,“The Moral Basis of the Democratic Welfare State,” in Democracy and the Welfare State, ed. Amy Gutmann (Princeton : Princeton University Press, 1988), 28.

[2] Ibid, 32.

[3] Ibid, 42-3.

[4] Ibid, 44.

[5] Ibid, 44 & 52.

[6] Theodore R. Marmor, Jerry L. Mashaw, and John Pakutka, Social Insurance: America’s Neglected Heritage and Contested Future (Los Angeles: CQ Press, 2013), 67 & 217-218.

[7] Ibid, 67.

[8] Ibid, 220.

[9]Keith Banting and John Myles, “Canadian Social Futures: Concluding Reflections,” in Inequality and the Fading of Redistributive Politics, eds. Keith Banting and John Myles (Vancouver: University of British Columbia Press, 2013), 416.

[10] Keith Banting and John Myles,“Introduction: Inequality and the Fading of Redistributive Politics,” in Inequality and the Fading of Redistributive Politics, eds. Keith Banting and John Myles (Vancouver: University of British Columbia Press, 2013), 4.

[11] Banting and Myles,“Canadian Social Futures,”417.

[12] Marmor, Mashaw, and Pakutka, Social Insurance, 67.

[13] Ibid, 218.

[14] Ibid.

[15] Ibid, 217.

[16] Ibid, 241.

[17] Theodore R. Marmor, “Health Reform 2010: The Missing Philosophical Premises in the Long-Running Health Care Debate,” Journal of Health Politics, Policy and Law 36, no. 3 (2011): 567.

[18] Ibid, 567 & 569.

[19] Ibid, 567 & Theodore Marmor and Jonathan Oberlander, “The Patchwork: Health Reform, American Style,” Social Science & Medicine 72, no. 2 (2011): 125.

[20] Katherine Fierlbeck, Health Care in Canada: A Citizen’s Guide to Policy and Politics (Toronto: University of Toronto Press, 2012), 219.

[21] Marmor, Mashaw, and Pakutka, Social Insurance, 241.

[22] Theodore R. Marmor, “Health Reform 2010,” 569.

[23] Ibid.

[24] Ibid, 570.

[25] Ibid.

[26] Fierlbeck, Health Care in Canada, 219.

[27] Carolyn Hughes Tuohy, “Health Care Policy after Universality: Canada in Comparative Perspective,” in Inequality and the Fading of Redistributive Politics, eds. Keith Banting and John Myles (Vancouver: University of British Columbia Press, 2013), 291.

[28] Ibid, 293.

[29] Ibid, 301-2.

[30] Ibid, 302.

[31] Fierlbeck, Health Care in Canada, 219.

[32] Tuohy, 305.

[33] Ibid.

[34] Banting and Myles, “Introduction,”25.

[35] Ibid, 19 & 32.

Disability Insurance

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Even before I started researching insurance for my fabulous & frugal journey, I loved the Aflac insurance commercials. My all time favorite is the one with the duck in speech therapy—it gets me giggling every time.

Advertising geniuses somehow have me laughing about disability insurance. And even better, when I stopped giggling, I realized how much I needed disability insurance. But, their advertising wasn’t sure-fire…I shopped around for my disability insurance.

There is only so much emergency savings I can put aside. God-forbid, I might need a chunk of cash to take care of me while I recover.

Monthly, I pay tiny amounts towards my disability insurance, so if needed I can receive cash to replace a portion of the income I am missing out on while I recover.

As always, insurance gives me assurance than my finances won’t shrink when life happens.

Stay safe!

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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

Health Reform: Implications of Optional Medicaid Expansion

Originally submitted for an independent research project comparing North America’s welfare states with Professor Antonia Maioni at McGill University.

The American political structure limits the ability of comprehensive health reform. Marmor and Oberlander note, “If the U.S. instead had a Westminster-style parliamentary system, it is likely that America would have adopted national health insurance over 60 years ago when President Harry Truman proposed it.”[1] America’s system of checks & balances with inherent veto points maintains the status quo with The Patient Protection and Affordable Care Act (ACA). Marmor and Oberlander describe the ACA as, “patching-up the existing patchwork of public and private insurance.”[2] The ACA creates coverage for the uninsured by tinkering with the established components of American medical financings, namely employer-sponsored insurance, Medicare and Medicaid.[3] In June 2012, the Supreme Court ruled that the federal government’s forceful “tinkering” with Medicaid, a state program, was an abuse of its power.[4] A premier patch of The Patient Protection and Affordable Care Act–Medicaid expansion–is now optional; if not implemented, despite overwhelming financial incentives, yet another coverage gap will be unintentionally created by America’s most recent attempt at comprehensive health reform.

In order to best provide coverage for the uninsured, an individual purchases insurance in a subsidized exchange or becomes a Medicaid beneficiary, depending on whether their income is above or below 133% of the federal poverty level (FPL).[5] To incentivize expanding state Medicaid programs, the federal government would foot the expansion bill; Marmor et al. explain, “The federal government is willing to pay the entire cost of new beneficiaries in the period 2014-2017. The federal government’s contributions will then decrease slightly until they reach a steady state of 90% federal/10% state funding for 2020 and thereafter.”[6] Medicaid is already a great expense on a state’s balance sheet, so the federal government fully-funding its expansion should be welcomed.[7] The ACA’s Medicaid expansion provision relied on state cooperation; despite overwhelming financial incentives, states and business were resistant to reform and their case was taken by the Supreme Court.

In June 2012, the Supreme Court did not alter the provisions of The Patient Protection and Affordable Care Act, but Medicaid expansion became optional.[8] Breaking with a tradition of recognizing Congress’s ability to make federal grants to states conditional, the court found that the ACA’s conditions were “unconstitutionally coercive.”[9] “Genuine choice” was key to the Roberts plurality, as the Kaiser Family Foundation describes, “The Roberts plurality found that Congress had unconstitutionally threatened non-compliant states with the loss of all of their existing Medicaid funds, which amounted to a ‘gun to the head.’”[10] The Ginsburg Concurrence argued Medicaid expansion was constitutional; Congress reserved the right to amend the program from conception in 1965 and had frequently expanded the population and services covered.[11] While the Supreme Court decision left the ACA intact, the Kaiser Family Foundation explains, “the practical effect of the Court’s decision makes the ACA’s Medicaid expansion optional for states because, if states do not implement the expansion, states can lose only ACA Medicaid expansion funds.”[12] Breaking with tradition and ruling in favor of the states, the Court’s ruling creates a coverage gap due to the nuances of the ACA.

With the patch of Medicaid expansion now optional, a gap that was supposed to be covered will not be. The Kaiser Family Foundation describes how this coverage gap came to be, “The ACA envisioned people below 138% of poverty receiving Medicaid and thus does not provide premium tax credits for the lowest income. As a result, individuals below poverty are not eligible for Marketplace tax credits, even if Medicaid coverage is not available to them.”[13] The Kaiser Family Foundation calculates, “Nationally, nearly five million poor uninsured adults will fall into the ‘coverage gap’ that results from state decisions not to expand Medicaid, meaning their income is above current Medicaid eligibility but below the lower limit for Marketplace premium tax credits. These individuals would have been newly-eligible for Medicaid had their state chosen to expand coverage.”[14] Now that a key component of the ACA is optional, the goal of affordable health coverage for all is unattainable in the states not participating in the Medicaid expansion.

States that do not expand Medicaid will notice a drastic difference in their balance sheet compared to their neighbors who do expand Medicaid.[15] Maioni notes that the non-uniform expansion of Medicaid will “exacerbate regional and state differences.”[16] Yet, without a deadline, states can expand their Medicaid programs at any time.[17] States contemplating Medicaid expansion will be encouraged by the results of Tsai et al.. Their study reviewed the insurance implications for the chronically homeless, comparing those with Medicaid coverage to those who rely on state assistance and concluded:

chronically homeless adults who received state and local assistance were largely similar to Medicaid enrollees in reported health status and health care use patterns suggesting that states and localities could potentially experience savings from the decreased use of state and locally funded services if these people transitioned to Medicaid. Savings will be particularly substantial for adults who are made newly eligible by the expansion, since coverage for newly eligible individuals will be 100 percent federally funded until 2016, after which federal funding decreases to 90 percent over time.[18]

By transitioning citizens currently reliant on state assistance to Medicaid, the federal government would pay for these previously state expenses. Writing as an expert in public health and state senator in a state opposed to Medicaid expansion, Wisconsin’s Kathleen Vinehout points to America’s past, “Back in 1965 only half of the states participated but over the next few years almost all joined up. If saved lives didn’t trump ideology then, money did. I sure hope Wisconsin is smart enough to do the same now.”[19] States must act, perhaps against their ideology, if only to shuffle expenses off their balance sheets and on to the federal government’s, not to mention providing health insurance coverage for their citizens.

[1] Theodore Marmor and Jonathan Oberlander, “The Patchwork: Health Reform, American Style,” Social Science & Medicine 72, no. 2 (2011): 126.

[2] Marmor and Oberlander, 127.

[3] Theodore R.Marmor, Jerry L. Mashaw and John Pakutka, Social Insurance: America’s Neglected Heritage and Contested Future (Thousand Oaks: CQ Press, 2014), 124.

[4] Kaiser Family Foundation. “A Guide to the Supreme Court’s Decision on the ACA’s Medicaid Expansion,” August 2012, http://ow.ly/qwQXN, 1.

[5] Depending on how the federal poverty level is calculated, the cut-off can be 133% or 138% of the FPL.Please see the American Public Health Administration’s explanation here, http://ow.ly/qzkAX.

[6] Marmor, Mashaw and Pakutka,124.

[7] Ibid.

[8] Kaiser Family Foundation, “A Guide to the Supreme Court’s Decision on the ACA’s Medicaid Expansion,” 10.

[9] Ibid, 4.

[10] Ibid, 5.

[11] Ibid, 6.

[12] Ibid, 10.

[13] Kaiser Family Foundation, “The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid,” October 23, 2013, http://ow.ly/qwPEE. Also, please see note #5 about FPL.

[14]Kaiser Family Foundation, “The Coverage Gap.”

[15] Please see Kaiser Family Foundation’s Status of State Action on the Medicaid Expansion Decision for details http://ow.ly/qyZ7A.

[16] Antonia Maioni, “Obamacare vs. Canada: Five key differences,” The Globe and Mail (Montreal, QC), Oct. 2, 2013.

[17] Kaiser Family Foundation, “The Coverage Gap.”

[18] Tsai, et al.,”Medicaid Expansion: Chronically Homeless Adults Will Need Targeted Enrollment and Access to a Broad Range of Services,” Health Affairs 32, no. 9 (2013): 1557-58.

[19]Kathleen Vinehout, “Biography,”  http://ow.ly/qz0Mk & Kathleen Vinehout, “Medicaid Expansion: The High Cost of Ideology,” Feb. 8, 2013,  http://ow.ly/qz0NX.

Save Before You Strut

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Slippery lobby floor + leather soled pump= broken toe

I love health insurance. (Hi Barack, tweet me!) I didn’t break the bank!

But now to the most ridiculous (and most expensive) part…transportation.

I haven’t stopped strutting, but a toddler goes faster than me hobbling with my boot on one foot and pump on the other.

I’ve always dreamed of taking taxis and NOT the bus everywhere. Dreams do come true…my emergency savings is shrinking per mile.

money market deposit account is where I stored my emergency savings. Compared to a simple savings account, this kind of account earned me a bit more interest while I was in non-emergency mode.

(click on the bold-faced vocab words:))

I made an emergency savings account my reality by using forced savings/automatic deposit, just like my 10% fund. I didn’t miss it, because I never realized I didn’t have it.

And luckily I had the money I needed for my toe and I to take taxis around town.

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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)