About Me

My photo
This site is the inspiration of a former reporter/photographer for one of New England's largest daily newspapers and for various magazines. The intent is to direct readers to interesting political articles, and we urge you to visit the source sites. Any comments may be noted on site or directed to KarisChaf at gmail.

Saturday, March 22, 2014

Another 'Glitch' -- But don't worry, ObamaCare is running smoothly -- By James Taranto, The Wall Street Journal

The story in today's Philadelphia Inquirer begins reassuringly: "Nearly six months after the disastrous launch of Healthcare.gov, with the website running smoothly and more than five million people signed up as open enrollment heads to a close . . ."

But it turns out that's just disclamatory throat-clearing. Here's the rest of the paragraph: ". . . a new glitch has come to light: Incorrect poverty-level guidelines are automatically telling what could be tens of thousands of eligible people they do not qualify for subsidized insurance."

Reporter Don Sapatkin writes that he and his colleagues discovered the error "while running scores of income scenarios through Healthcare.gov"--the sort of testing you'd think the developers would have conducted long before the launch last Oct. 1. The story observes that the finding "again raises questions about the site's accuracy." 

It seems to us the Inquirer doesn't give itself nearly enough credit. Its investigation doesn't raise questions, it answers them.

The error affects consumers in states that haven't opted into ObamaCare's Medicaid expansion, and the tests were conducted only on the federal exchange, so that it isn't clear whether state exchanges are affected or not. But most presumably are not. Only one state, Idaho, has its own individual-market exchange and has not expanded Medicaid.

The problem arises because ObamaCare uses two different definitions of the poverty line. Whereas eligibility for subsidies is determined by the 2013 line, eligibility for Medicaid is based on the 2014 line, which is 1.5% higher. The website mistakenly calculates eligibility for subsidies using the 2014 line. 

In Medicaid-expansion states, subsidies are available only to consumers above 138% of the poverty line; those whose earnings are below that level are expected to go on Medicaid. Since the 2014 line is higher than the 2013 line, anyone who is above 138% of the former is necessarily above 138% of the latter, so there shouldn't be any false negatives.

In non-Medicaid-expansion states, however, the cutoff is "100 percent of poverty" in the Inquirer's redundant description. That is, it's supposed to be the 2013 poverty line. Households whose income is between the 2013 and 2014 poverty lines--which number 5,000 in Pennsylvania, according to the Inquirer--are mistakenly told they aren't eligible.

The error only affects the "window-shopping tool": "If [consumers] ignored the message and clicked through to view the plans, another tool would correctly indicate they may qualify for a tax credit [subsidy] . . . to lower their premiums." The main effect therefore will be to dissuade some people from purchasing subsidized policies.

There's another potential problem:
Consumers whose incomes slightly exceed the high end of eligibility initially discover they are eligible for tax credits to lower their premiums. In theory, accepting a tax credit for which you're not eligible could make you liable for unpaid income tax when the IRS processes the return, said Jocelyn Guyer, a director at Manatt Health Solutions who helped states that set up their own marketplaces.
But "in practice" that shouldn't happen, since the next step correctly shows those consumers they are not eligible. That, however, may feel like a bait-and-switch--You're eligible for subsidies! Oops, no you aren't!--dissuading some of those potential customers from proceeding further.

All points to a more fundamental problem in the design of ObamaCare's subsidy scheme, the ramifications of which will become clear next year at tax time. The calculations of subsidy eligibility for 2014 policies are based on estimated 2014 income. "The marketplace is designed so small income changes trigger corresponding subsidy differences," the Inquirer notes. That means that when tax filers determine their actual 2014 income next year, some will have to pay back subsidies for which they turn out not to be eligible because the estimate proves to have been too low.
(Click link below to read more)
READ MORE Sphere: Related Content

No comments:

Post a Comment