Incenting Shit Plans

Ezra Klein has his overview of the Max Tax here. After boasting of the plan’s affordability (!), Ezra’s biggest complaint is the lack of an employer mandate:

The employer mandate is pretty much the free rider plan that the Center for Budget and Policy Priorities tore apart here. It’s bad policy. An addendum though is that individuals whose employers offer them insurance are not eligible for subsidies, unless the insurance their employer offers would cost more than 13 percent of their income. I’d feel better about that if it were lower for low-income workers, but the plan says that the Secretary of Health and Human Services must revisit this number within five years to see if it should be lowered.

I’ll go further and say the Max Tax actually incents employers to offer shit plans. Here’s the whole section on what Bad Max euphemistically calls "Employer Responsibility:"

Employer Responsibility. Employers would not be required to offer health insurance coverage. However, employers with more than 50 full-time employees (30 hours and above) that do not offer health coverage must pay a fee for each employee who receives the tax credit for health insurance through an exchange. The assessment is based on the amount of the tax credit received by the employee(s), but would be capped at an amount equal to $400 multiplied by the total number of employees at the firm (regardless of how many receive a credit in the exchange). Employees participating in a welfare-to-work program, children in foster care and workers with a disability are exempted from this calculation.

As a general matter, if an employee is offered employer-provided health insurance coverage, the individual is ineligible for the tax credit for health insurance purchased through an exchange. An employee who is offered unaffordable coverage by their employer, however, can be eligible for the tax credit. Unaffordable is defined as 13% of the employee’s income. The employee would seek an affordability waiver from the exchange and would have to demonstrate family income and the premium of the lowest cost employer option offered to them. Employees would then present the waiver to the employer. The employer assessment would apply for any employee(s) receiving an affordability waiver. Within five years of implementation, the Secretary must conduct a study to determine if the definition of affordable could be lowered without significantly increasing costs or decreasing employer coverage.

A Medicaid-eligible individual can always choose to leave the employer’s coverage and enroll in Medicaid. In this circumstance, the employer is not required to pay a fee.

Coverage offered by an employer of any size, including fully insured and self insured plans, is not required to comply with the list of benefits required of plans in the non-group and small group markets. Employers must provide first dollar coverage for prevention services (except where value-based insurance design is used), however, and cannot have a maximum out-of-pocket limit greater than that provided by the standards established for Health Savings Accounts (HSAs).

First off, if a 50-person firm decided not to offer health care, it would have to pay up to $20,000.  That’s a whole lot cheaper than the hundreds of thousands they would have to pay to insure these employees.

But let’s take a hypothetical employers–we’ll call them AlmartWay–that employs around 1.4 million people in the US.

AlmartWay pays such shitty wages that a huge proportion of their employees would actually be eligible for Medicaid, particularly with the eligibility for Medicaid boosted to 133% of poverty. So those employees could just enroll in Medicaid; AlmartWay wouldn’t pay a dime, and you and I would therefore be subsidizing the gutting of our local economy so that the descendants of Sam AlmartWay could continue to get disgustingly rich.

But say that only covers about 500,000 of AlmartWay’s employees. That would leave 900,000 employees. Enough that AlmartWay might want to offer health care to avoid the 350 million dollar fine it might get. So AlmartWay offers a plan that has a huge deductible and pays 60% of costs that employees have to buy into. According to Bad Max’s plan, after all, employer health care plans don’t have to meet any of the standards that single enrollee plans have to meet, save for making preventative care available. 

Coverage offered by an employer of any size, including fully insured and self insured plans, is not required to comply with the list of benefits required of plans in the non-group and small group markets. Employers must provide first dollar coverage for prevention services (except where value-based insurance design is used), however, and cannot have a maximum out-of-pocket limit greater than that provided by the standards established for Health Savings Accounts (HSAs).

Because of AlmartWay’s size, everyone would be automatically enrolled.

Employers with 200 or more employees must automatically enroll employees into health insurance plans offered by the employer. Employees may opt out of employer coverage, however, if they are able to demonstrate that they have coverage from another source. Additionally, states would have the option of establishing a process for auto-enrollment of individuals and families into policies offered in the non-group and small group markets

Which means AlmartWay’s employees can only get out of paying for such crap is if they can prove that they’re enrolled in something else. But unless AlmartWay’s insurance cost more than 13% of their employees’ salary, then that employee couldn’t get a subsidy they’d otherwise qualify for.

As a general matter, if an employee is offered employer-provided health insurance coverage, the individual is ineligible for the tax credit for health insurance purchased through an exchange. An employee who is offered unaffordable coverage by their employer, however, can be eligible for the tax credit. Unaffordable is defined as 13% of the employee’s income.

Hell, if I were a rapacious manager like AlmartWay’s completely hypothetical managers were, I’d turn employee health care into a profit center because (if I read this right) you could require employees to pay back 12.9% of their income for health care, and the only thing you’d really have to promise in return is preventative care. So I predict, if this bill passes in anywhere near this form, that AlmartWay will start making its own employee health care a big profit center because they will be stuck

By golly. This is even a health care plan Blanche Lincoln and Mark Pryor and their biggest constituent could love!! Though frankly, Bad Max’s plan is even worse than Wal-Mart itself–with a call for part time mandates and no disability discrimination–called for (though maybe Wal-Mart was thinking of the free subsidy for its Medicaid eligible employees all along). 

55 replies
  1. BayStateLibrul says:

    My first impression is that Max is bad… too complex… will become like the IRS Code…
    Go with ease… Public Plan forever

    • Blub says:

      hehe. No wondering they’re cracking down on Americans crossing into their country when they think we might want to stay and look for a job.

  2. wesgpc says:

    Too bad state voters cannot recall a Senator.

    These guy needs a good primary opponent every election the rest of his career.

  3. shootthatarrow says:

    Reform? No.

    Redistribution? Kinda looking more like it don’cha think?

    If only this was how it was being put out there last summer during the 2008 election run-up for the WH last November.

    Funny how Single Payer Plan gets ditched — public option gets dry gulched and run over the cliff — now it is all about mandates that support the current for profit insurers and mythical future triggers that fire public option guns or YIKES!! some kind of Single Payer Plan for Americans.

    David Gregory tonight on Chris Matthews Show (MSNBC) stating liberals better get in line and support this vital reform!! And then David rolls this classic out ” don’t let the perfect defeat the good ” …oh David…David…David.

    Perfect is not going to defeat the good here David.

    Greed,rotted money politics and a very entrenched,politically connected for profit insurer industry is.

    This seems to be all about flushing the toilet no matter what.

    No Single Payer. No public option. No cost control. More of same o same o.

    Only now it is mandated join/pay in to Big For Profit Health Insurers.

    Big penalties for not paying the for profits gatekeeper fees.

    Ruinous out of pocket costs and forced self rationing of healthcare.

    Barack Obama really ought to be ashamed of himself. Is there no shame?

    • sadlyyes says:

      fuk DAVID G and his rancid cocktail weenies,he can go choke on em,and Tweety too


      • pointus says:

        O’ Donnell has been spouting that shit for weeks now. He seems to have forgotten that the House has to pass bills too. O’ Donnell used to be chief of staff on Senate Finance, & that colors his thinking.
        What i fear will happen is that the public option will be paired with a “trigger” that will never be pulled, just like with Medicare Pt. D.

        I agree with SparklesTheIguana, #19: it’s time to move to a civilized country. It’s also time to convert our dollars into gold, or Euros, or cases of ramen noodles: “The United Nations has stepped into the debate on the future of the US Dollar – to urge that it be dropped as the world’s reserve currency.”…..09-09.html

    • Blub says:

      when the PO fails, we should NOT jump on the HR676 single payer bandwagon to another failure. This is NOT about insurance reform. It’s about healthcare reform. Public health insurance with totally private healthcare is a cost disaster. It hasn’t worked anywhere in the world and it won’t work here. We need to begin again, with a new debate and a new bill. And the starting point for that new debate should be a public system – either VA for all or a public/hybrid/subsidized system like what the Canadians and Singaporeans have.

      • shootthatarrow says:

        I would like to see 2010 elections all about whatever load of manure is about to be spread regarding this total non reform reform sellout to the for profit insurers by a Democrat run WH and Congress.

        The time leads being discussed suggest several years from here to somewhere anyway.

        Time to take the Democratic Party to the woodshed will be coming after this mandated bendover ploy gets the nod from a shameless Democratic Party.

        The GOPers? Who cares about those nutballs. Let them run amok. I hope they nominate Huckabee / Gingrich or Palin / Cantor for the WH in 2012.

        The Democrats are a poor third party makeover choice to be sure but until a new national party is erected taking over the Democratic Party and making it progressive,anti-corporatist and actually “liberal” is next best thing.

    • airmaster2 says:

      I have a 15 year old son (straight A’s) looking at choosing a career. His mother has 33 years experience as an RN. A medical Doctor was a logical choice, I have discouraged him from this field due to an extra 8 years of schooling with 400K in dept all for government controlled wages. Additionally the tort risk are unbearable. under PO we will need to outsource massive numbers of doctors from Pakistan, India, Nigeria just as the socialized European countries do now. remove government from all health care control, Insurance companies are heroes not villains. Personal medical savings accounts would control the incentive to waste and could be administered by insurance companies. Save 100’s of millions of our grandchildren from suffering and early death. Keep capitalism, private for profit insurance, not communism! Hasn’t worked anywhere on the planet and caused massive suffering. Many Democrats sincerely believe that our DNA is better then all of the other countries that have Communist health Care. Some how, Communist-Progressives hope our government will be successful when no government program in any country has ever been successful.
      Just call me a name we could go down that road, tell us real solutions that aren’t based on CHANGE blindness. Some solutions that cost no Tax $s:

      • We need to deal with the 100 of millions in Medicare /Medicaid fraud that only the government can afford to continue. Insurance Companies could not afford such fraud and would stop most if they could control Medicare. Get the complacent Government employees out of health control
      • We desperately need tort reform to reduce doctor’s unimaginable insurance premiums and stop the expensive defensive medicine most need to practice.
      • Allow smaller business to band together to bargain for better premiums as the large companies do.
      • Allow 100% individual tax deductions for health care expenses and medical savings accounts for those that don’t get sick.
      • Allow insurance companies to compete across state lines. Any form of Government health care is monopolistic and deadly.

      Obama will be history’s biggest mass (unintentional) killer if public option passes. So sad that they will be our American children and grandchildren. We have the best medical system because of capitalism. Saves lives, support it at all cost. Small Aviation business owner, not in the insurance business.
      (Copy and Paste)
      I find it interesting that one of our greatest founding fathers, Thomas Paine, called it correctly in his time when he said “But to expend millions for the sake of getting a few vile acts repealed, and routing the present ministry only, is unworthy the charge, and is using posterity (that’s our children’s and grandchildren’s future) with the utmost cruelty; because it is leaving them the great work to do, and a debt upon their backs, from which they derive no advantage. Such a thought is unworthy of a man of honor, and is the true characteristic of a narrow heart and peddling politician.”

        • airmaster2 says:

          Can’t make cense of me being the doomed one when you hand me a perfect example of a liberal that got educated and committed his life to defeat socialism. Reagan was committed to capitalism, the amazing progress it brought to the health care industry along with saving countless lives.

      • randiego says:

        all ideology, all the time. typical.

        Tell me something: How does a tax-deduction help you if you don’t report enough income?

        How do you square spending people’s premiums on CEO salaries in the $20M range, and overhead costs of over 30%?

        Tell you what – come on back here after Waxman issues his report on all the data he’s been gathering. I’d love to hear you defend some of what will come out.

      • cinnamonape says:

        While the Baucus plan would require insurers to “take” all applicants, regardless of age or health these people would have to pay until it bleeds. Smokers, the overweight and others with lifestyle risks, or pre-existing conditions, would be charged much higher premiums. 60-year-olds with similar health factors other than age could be charged five times as much for a policy as 20-year-olds. This suggests that some plans would simply structure policies to be so costly for some categories that these people would try to go “naked” until caught.

        Baucus would require that all Americans get health insurance (i.e. giving the Insurance companies a massive windfall) . The model would be mandatory car insurance, where driving without results in a fine…but unlike driving there is no liability risk to others. In addition many of those who can’t afford auto insurance can use other options…public transportation, taxis, bicycles, walking. This is a tax on “living”. It’s truly compulsory. How they’d hunt you down will be interesting…will it be when you show up At the hospital? Will they check a Central DATA BASE? How will they know you’ve failed to obtain a policy? How will they make you pay? This suggests that there be integration of private insurance company info with the Federal Gov’t…and linked into the IRS since they need to determine that tax base info.

        And the fine is not actually buying “into” a public option.It’s like A fine issued for driving without insurance…you’re still going to have to get insurance, on top of the fine. Penalties for failing to have health insurance would start at $750 a year for individuals and $1,500 for families. Households making more than three times the federal poverty level – about $66,000 for a family of four – would face the maximum fines. For families, even the wealthy, fines would max at $3,800, and for individuals, $950. But they would be compelled to obtain insurance. The fine would NOT be a premium.

        • airmaster2 says:

          No American is required to posses an identification card. You don’t have to have a drivers license, social security card, pilots license, etc. only if you choose to participate. Now a huge step in government control is upon us. National health care card will be required or the sheriff will be knocking on your door with a side arm. Tell him no and big guys in black with machine guns will knock the door down. Way to go progressive communist. Other provisions of our Constitution that I consider sacred are being totally disregarded and under full scale assault by the Congress and the Obama administration. They are arrogant, and absolutely terrifying. If they succeed in this, then no provisions of the Constitution are safe from attack.

        • SomeGuy says:

          Look, they don’t need an ID card anymore because they can just look you up based on the info you give them. Your photo ID will just pop up on the screen. Don’t assume you can remain silent when they ask who you are.

        • airmaster2 says:

          Your right it’s beyond scary, something our founders were terrified of, a giant central power. There is a cesspool of thousands of attorneys in one city called Washington, all with their hands out for your money. They know control is power and wealth, time to stop sending them our money.

        • airmaster2 says:

          Facts and truth can be disrupting for many on this site, a few agree, maybe there someone listening. Paid? Nope, I am attempting to protect my children and country from a group of totally insane voters that don’t have a clue about an irreversible tragedy that lingers. Call me a fool, troll fine, you are an enemy within. I know I am right, your rants are indefensible.

        • pointus says:

          Even if the $950 max fine for individuals didn’t pay any premiums, a lot of us would be much better off just paying it, rather than buying crap private insurance with insanely high co-pays & deductibles.
          Plus, with so many low-income folks subsidized, it might be easier for us “fine-payers” to get indigent care!

  4. Blub says:

    I think Max has been paying too much attention to Olympia. Junk insurance as the answer to increasin levels of
    coverage… with ultra high deductibles etc are right out of Mitt’s position paper -considered by many to be unofficial rethug policy. Thanks Max. Just save us the trouble and just change parties will ya?

  5. Frank33 says:

    If it has not been noticed, Bad Max has shown the Liz Fowler Wellpoint ripoff plan to K-street corporate lobbyists. It has not even been shown to the White House folks. The President keeps giving up everything to these pigs and they keep disrespecting him. Curious.

    GIBBS: I don’t — I don’t believe — I don’t believe anybody here has — I’m — we’ve seen what we’ve read in the paper, but I do not believe that we’ve seen paper on the plan.
    QUESTION: I understand it’s bouncing around K Street.
    GIBBS: Not surprisingly, but I have not seen it here.
    QUESTION: And has there been any direct consultations between anyone at the White House and Senator Baucus or anyone in the group of six, since this outline began being floated on Sunday
    GIBBS: I don’t — I don’t know how far back that would go. We’re — we continue to talk to all the players involved. Obviously, you know Speaker Pelosi and Leader Reid will be here momentarily. So he’s going to continue to talk to all of those involved.
    QUESTION: I’m sorry. What did you just mean by it’s bouncing around K Street ?
    GIBBS: I was told that — that K Street had a copy of the Baucus plan, meaning, not surprisingly, the special interests have gotten a copy of the plan that I understand was given to committee members today.

  6. sadlyyes says:

    this all goes back to wall street

  7. nick1936 says:

    Where is Kerry and Rockefeller aren’t they on this committee also why are they hiding and allowing this clown to lead???

  8. Frank33 says:

    Even more curious. Bad Max has not shown his plan written by health care corporations to the White House but has showcased it for K-street lobbyists. But Bad demands that the “Gang of Six” approve it by 10:00 am tomorrow. That would be Eastern time I presume. What a corrupt piece of work, both the plan and that phony coward.

    Sen. Max Baucus (D-Mont.) emerged from discussions with his Finance Committee Gang of Six Tuesday evening and declared that it was time to fish or cut bait.

    He gave the three Republicans and two other Democrats until 10 a.m. Wednesday morning to tell him what they thought of the framework proposal that he presented to them at the end of last week.

    • Hmmm says:

      Oy. What a craptastic move on BadMax’ part.

      Of course the whole gesture is kind of empty since we’re currently on hold waiting to see what PBO’s bill looks like.

  9. weekendclimber says:

    I wonder how long it will take for someone to find a loophole so that you can opt out, like all those people such as Wesley Snipes not paying there Federal Income Tax (not that I believe that the IRS loophole is real).

    • tbsa says:

      Maybe it is time to start blogging Defeat the Max Tax.

      This bastard needs to go. We should primary all these insurance lap dogs and send their asses packing.

  10. LKN2 says:

    Aside from the basic bad ideas (a mandate to pay whatever a for-profit health insurer asks, along with a taxpayer subsidy of those companies), we now have something MUCH more complex, which will require mucho $$$ for enforcement – money that could have actually gone for health care!

  11. cinnamonape says:

    Yes, Marcy…you’ve hit it right out of the Park on this. We’ll start seeing the “Company Farm” strategy for health insurance where these giant corpses will mandate their employees carry THEIR insurance, just like they tell their employees to buy their food from them or their uniforms or other gear. They’ll be selling McSurance, Target-Health, Well-Mart, etc. They’ll integrate the manipulation for workers comp…”sorry we have evidence that this was a pre-existing condition”, fire/”retire” workers who no longer fall within the umbrella of coverage, and make sure the deductibles are high and the co-pays massive.

  12. SomeGuy says:

    Emptywheel, you make this stuff understandable. Thanks.

    If we can’t get the public option, let’s at least not remove the options people have now.

    “Saint Peter, don’t you call me, ’cause I can’t go;
    I owe my soul to the company store…”

  13. JohnDoe says:

    Punative mandates?? Democrats must HATE being the majority party, because if they push this through, they will lose both houses in a landslide! How is punishing people who can’t afford health insurance going to reduce the cost or improve the care? This is the CHANGE we were promised? This is total BULLSHIT!

  14. airmaster2 says:

    If all made 30% then everyone would be in the health insurance business. But wait, that’s right, the big government will not allow cross state insurance competition. Just nationalism them all and then we can have competition in all states.

    • chrispadem says:

      Sure, just nationalize all the insurance companies. That way we’ll be sure to get great competition, like that provided by the electric companies [how are your rates, recently?], oil companies [isn’t gasoline a bargain at $2.50 a gallon?], the phone companies [remember when cell service was actually affordable?], the cable companies [now, THERE’s a bargain for you!]…I could go on.

      Yeah, corporate Amerika just LOVES us.

      • airmaster2 says:

        Not sure what you are saying, phone companies, gas companies, electric companies all provide amazing service at prices that are competitive and despite having to pass their tax bill on the consumer. Ever seen a communist Chinese telephone and power grid? Go where there are no big corporations and see how good we have it.

  15. SomeGuy says:

    Interstate and international competition could help, but it will not happen. They have divided the markets and passed out the pieces to each other, like you would with a birthday cake.

    • airmaster2 says:

      Companies that fight for a profit will see a market need and fill it. The consumer decides where his money goes not some CEO, competition makes it tough to divide out like a cake. Throw in some attorneys and politicians and they cut it to best suite them.

  16. Mauimom says:

    I can’t believe Rahm and Obama think that an “Any Bill” such as this one would be a great “win” for the Dems.

    Cripes, as soon as anyone with a brain figures out what’s going on, the mantra’s gonna be “Democrats screwed us. You can’t trust ‘em.”

  17. KingSlayer says:

    The HELP Bill is what the Senate bill needs to look like. Then it gets cloture, goes through reconciliation if necessary (and probably will be), and gets reconciled with the house bill before each side does an up-or-down vote on the final bill.

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