qotd: Instruction sheets for completing ACA tax forms - a proxy for ACA complexity

Health Affairs Blog
August 29, 2014
Implementing Health Reform: Tax Form Instructions
By Timothy Jost

On August 28, 2014, the Internal Revenue Service re-released the draft
forms that will be used by employer, insurers, and exchanges for
reporting Affordable Care Act tax information to individuals and to the
IRS for 2014 and 2015, as well as the instructions for completing those
forms. The IRS also released in the Federal Register requests for
public comments on three of those forms – the 1094-B, the 1094-C, and
the 1095-C – under the Paperwork Reduction Act. This post reports on
these forms and instructions and on a guidance released by the Centers
for Medicare and Medicaid Services.

The tax forms had been published earlier and are described in an earlier
post. The instructions for the forms, however, had not been available
and had been eagerly awaited by employers, insurers, exchanges, and tax
professionals. Forms 1094-C and 1095-C will be used by large employers
with more than 50 full-time or full-time-equivalent employees to
determine whether the employer is responsible for penalties under the
employer shared responsibility requirements of the ACA. They will also
be used to determine whether employees have received an affordable and
adequate offer of coverage, rendering them ineligible for premium tax
credits. Employers are required to provide each full-time employee with
a form 1095-C and to file each of these together with a transmittal form
1095-B form with the IRS.

The instructions for the 1094-C and 1095-C are by far the most complex
of the instructions released on August 28, filling 13 pages with dense,
two column, print. Most of the complexity derives from the options for
complying with the employer mandate and the transition exceptions to
that mandate that the administration has created…

Implementing Health Reform: Tax Form Instructions, by Timothy Jost:
http://healthaffairs.org/blog/2014/08/29/implementing-health-reform-tax-form-instructions/

IRS - 2014 Instructions for Forms 1094-C and 1095-C (Draft):
http://www.irs.gov/pub/irs-dft/i109495c--dft.pdf

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Comment by Don McCanne

If you enjoy minutia, click on the links to the full blog post and the
draft instructions and read away.

Although today's message deals with only one minor provision of the
Affordable Care Act - the instructions for tax forms used to report ACA
tax information to individuals and to the IRS - the administrative
detail required is mind-boggling. Extrapolate that to all aspects of ACA
and it becomes obvious that, instead of gaining administrative
simplicity, ACA greatly increased administrative complexity - on top of
the most administratively complex health financing system in the world.
What a waste!

Timothy Jost's comment from yesterday's message can be repeated again
today: "We are doomed to continue to struggle with this complexity as
long as we stubbornly cling to a private health insurance-based health
care financing system."

Single payer.

qotd: Timothy Jost analyzes Avik Roy’s “Transcending Obamacare”

Manhattan Institute for Policy Research
August 2014
Transcending Obamacare
A Patient-Centered Plan for Near-Universal Coverage and Permanent Fiscal
Solvency
By Avik Roy

The proposal contained herein — dubbed the Universal Exchange Plan ("the
Plan") — seeks to substantially repair both sets of health-policy
problems: those caused by the ACA and those that predate it.

The Universal Exchange Plan would introduce major changes to the broad
set of federal health care entitlements: Obamacare, Medicare, and
Medicaid. The Plan uses a reformed version of the ACA's health insurance
exchanges as the basis for far-reaching entitlement reform.

The Plan would repeal many of the ACA's cost-increasing insurance
mandates, including the individual mandate. But it would preserve the
ACA's guarantee that every American can purchase coverage regardless of
preexisting conditions. And it would utilize the concept of using
federal premium support subsidies, on a means-tested basis, to defray
the cost of private health coverage.

It would gradually migrate most Medicaid recipients, along with future
retirees (N.B.: Medicare), onto these reformed exchanges.

The plan has its roots in real-world examples of market-oriented,
cost-effective health reform. Notably, two wealthy nations — Switzerland
and Singapore — spend a fraction of what the United States spends on
health care subsidies; yet they have achieved universal coverage with
high levels of access and quality.

http://www.manhattan-institute.org/pdf/mpr_17.pdf

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Following is a posted response by Don McCanne to an August 13 Forbes
article in which Avik Roy introduced his reform proposal:

Don McCanne:

"A 2011 OECD & WHO report of the Swiss health system revealed that it is
highly inefficient with profound administrative waste. It is inequitably
funded using regressive financing. It has excessive out-of-pocket costs
that can create financial hardships. And it has an increasing prevalence
of managed care intrusions through a private insurance industry that has
learned how to game risk selection. The problems are severe enough that
current polls indicate that a majority of the Swiss support their
upcoming ballot measure (September 28) that would convert Swiss health
care financing to a single payer system. Obviously the current failed
Swiss system should not serve as a model for U.S. reform."

http://www.forbes.com/sites/theapothecary/2014/08/13/transcending-obamacare-an-introduction-to-patient-centered-consumer-driven-health-reform/

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Health Affairs Blog
September 2, 2014
Transcending Obamacare? Analyzing Avik Roy's ACA Replacement Plan
By Timothy Jost

Avik Roy's proposal, "Transcending Obamacare," is the latest and most
thoroughly developed conservative alternative for reforming the American
health care system in the wake of the Affordable Care Act.

Roy's proposal is a curious combination of conservative nostrums
(limiting recoveries for victims of malpractice), progressive goals
(eliminating health status underwriting, providing subsidies for
low-income Americans), and common sense proposals (enacting a uniform
annual deductible for Medicare).

Most importantly, however, Roy proposes that conservatives move on from
a single-minded focus on repealing the ACA toward building upon the ACA
to accomplish their policy goals. He supports repealing certain features
of the ACA—including the individual and employer mandate—but would
retain others, such as community rating and exchanges. As polling
repeatedly shows that many Americans are not happy with the ACA, but
that a strong majority would rather amend than repeal it, and as it is
very possible that we will have a Congress next year less supportive of
the ACA than the current one, Roy's proposal is important.

Much of Roy's proposal is taken up with traditional conservative talking
points on health care reform. It is tempting to respond to these point
by point. For example, Roy trots out the health systems of Switzerland
and Singapore as models for the United States because they depend
heavily on consumer-funded health financing. The bottom line, however,
is that we are not Switzerland and we are certainly not Singapore, and
we cannot have their health care systems.

Roy also has his own hobby horses. He claims that people are better off
being uninsured than on Medicaid and trots out a long list of studies
that he claims show negative effects from Medicaid coverage.

Roy's Universal Exchange Plan

Rather than respond to Roy point by point, however, this review will
focus on the heart of Roy's proposal; his universal exchange plan. (To
access Jost's critique of Roy's universal exchange plan, use the link
below.)

Projecting The Benefits And Costs Of Roy's Proposal

In sum, higher cost-sharing should result in lower premiums for health
plans — a 40 percent actuarial value plan should cost less than a 60
percent plan. Skinnier benefits could also reduce premiums. Reduced
premiums should in turn draw more uninsured into the market and reduce
federal subsidy costs. But higher cost-sharing would reduce access to
care, decrease treatment adherence, and increase provider bad debt. The
savings Roy touts come at a high cost.

The Stubborn Problem Of Complexity

Another important point about the Roy plan must be noted: It does not
reduce the complexity of the ACA. Indeed, it might increase it.

The ACA has been woven inextricably into the fabric of our health care
system, and even ignoring, if that were possible, the millions of
Americans who are now covered under the ACA, it is simply not possible
to return to status quo ante through repeal. Roy reasonably recognizes
this and proposes instead to build on the ACA to move toward a system
that he finds more sympathetic.

But "transcending Obamacare" will not be easy. One of the greatest
defects of the ACA is its complexity. That complexity has required the
Obama administration to exercise considerable creativity in implementing
the law. But the law's complexity simply follows from the fact that the
drafters of the ACA attempted to build on, rather than to radically
change, our current, impossibly complex, health care system.

Much of Roy's proposal is still a broad conceptual framework. Even that
framework is complicated, but were the proposal reduced to actual
legislation, much less regulation, it would become far more convoluted
and politically contested. We are doomed to continue to struggle with
this complexity as long as we stubbornly cling to a private health
insurance-based health care financing system.

http://healthaffairs.org/blog/2014/09/02/transcending-obamacare-analyzing-avik-roys-aca-replacement-plan/

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Comment by Don McCanne

Avik Roy presents his model of health care reform as a plan that does
not require the repeal of the Affordable Care Act, but rather represents
a reform of the ACA insurance exchanges along with the eventual
elimination of Medicaid and Medicare. His proposed system is not yet
fleshed out, but to achieve his stated ends, tremendous administrative
complexity would have to be introduced.

There is much to criticize about Roy's conservative, consumer-directed
approach to health care financing - the worst flaw being the great
financial burden that would be placed on those requiring health care.
Should his proposal ever be seriously considered by Congress, a detailed
response should be effective in countering it.

But for now, Timothy Jost summarizes the fatal flaw of his approach in
two sentences:

"But the law's complexity simply follows from the fact that the drafters
of the ACA attempted to build on, rather than to radically change, our
current, impossibly complex, health care system."

and

"We are doomed to continue to struggle with this complexity as long as
we stubbornly cling to a private health insurance-based health care
financing system."

Avik Roy has contributed to the cause by showing us a proposal that
makes it ever more clear why we must change to a single payer national
health program. And we can thank Timothy Jost for clarifying that for us.

qotd: Pulling the safety net from under 4 million Californians

The Greenlining Institute
August 2014
Voices from the Front Lines: California's Remaining Uninsured and the
Safety Net

The Affordable Care Act (ACA) has made purchasing private health
insurance easier and more affordable for millions of Americans, but in
California, an estimated four million will remain uninsured in 2019. The
remaining uninsured population is very diverse, though often incorrectly
made synonymous with undocumented immigrants. In reality, these four
million Californians include citizens, undocumented immigrants and
documented immigrants who will continue to rely on the health care
safety net for their medical care.

Even with full ACA implementation, millions of people will remain
uninsured for a variety of reasons: a lack of an affordable offer of
health insurance, an exemption from the individual mandate due to
immigration status, unforeseen life events that may lead to temporary
periods of being without coverage, a knowing choice not to purchase
health insurance, or the reality that Medi-Cal participation rates will
not be 100 percent. A majority of these Californians will continue to
access their health care through safety net providers, whose critical
funding is rapidly diminishing in the broader context of ACA implementation.

In the 2013-14 state budget, Governor Jerry Brown moved forward with
Medi-Cal expansion in California — opening up access to health insurance
for millions of low-income Californians who were previously ineligible,
a majority of whom are people of color. As of the end of March, 1.9
million additional Californians have been determined eligible for Medi-Cal.

This initial success in Medi-Cal enrollment, made possible by the ACA,
does not come without a cost. Based on the assumption that expanded
coverage through Medi-Cal and Covered California would mean fewer
Californians relying on the safety net, the 2013-14 budget included the
requirement that counties had to relinquish significant funding
previously used to provide care for the remaining uninsured. As noted by
others, this carving out of local safety net dollars will leave millions
of remaining uninsured and underinsured Californians falling through the
cracks.

People of color disproportionately lack access to health care; prior to
the ACA, they made up 74 percent of California's uninsured and likely
will continue to be a majority of the uninsured moving forward.

http://greenlining.org/wp-content/uploads/2014/08/Voices-from-the-Front-Lines-Californias-Remaining-Uninsured-and-the-Safety-Net-spreads.pdf

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Comment by Don McCanne

After all of the health care reform measures have been fully
implemented, over four million Californians will still be uninsured. Yet
funding of the health care safety net has been sharply reduced.

Four million people! The entire population of each of the following
states is less than four million: Oregon, Oklahoma, Connecticut, Iowa,
Mississippi, Arkansas, Utah, Kansas, Nevada, New Mexico, Nebraska, West
Virginia, Idaho, Hawaii, Maine, New Hampshire, Rhode Island, Montana,
Delaware, South Dakota, Alaska, North Dakota, Vermont, and Wyoming.
Suppose nobody in any of those states had any insurance, and the funding
of their health care safety nets were significantly reduced. Although
the states are not comparable, it does give a perspective of the
magnitude of the problem that California faces, not to mention the
difficulties for the other states with large numbers of uninsured and an
inadequate safety net infrastructure.

So do we stop now that the Affordable Care Act has been enacted and
largely implemented? No? How do we expand on the ACA model? More
Medicaid? California is already fully expanding their Medi-Cal program.
Greater buy-in of the exchange plans? Where does the money come from?
Most of the uninsured certainly do not have it, and there are
insurmountable political barriers to further expanding government
contributions to these plans. Do we spend more on the safety net? ACA
was supposed to eliminate the need for a safety net by covering
everyone. More funds for federally qualified health centers could help,
but that would still fall far short of the needs.

No. Patching the ACA model is the most expensive approach to reform yet
it can never meet our needs. Each nail in each patch springs more leaks.
We do not need to perpetuate the inequities and inadequacies of our
highly flawed health care financing system. What can we do? (Trumpets
please.) Enact a single payer national health program - an improved
Medicare that covers everyone.