Oak -

1) the piece of the Employer Mandate that was delayed was only for firms less than 50 employees but more than 15. It is because some of the rules were not hammered out to make the exchanges work. It affects very few firms. That special "class" of firm was created by lobbyists for special treatment, so paradigms needed to be created. It doesn't mean that the 99% of the rest of the mandate is useless or invalid.

2) Are you objecting to this particular Government mandate or any of the literally millions of other municipal, county/parish/state or federal mandates that are used to govern commerce? As it relates to the market for insurance, are you saying that creating and regulating an open access, high disclosure level exchange of financial products is a bad thing? Are you against the NYSE or NASDAQ or the CBOT? Are you suggesting that these exchanges are perfect or that they are not free markets?

3) I guess time will tell.

As for enrollment, one does not have to enroll until december 15. The exhanges only came online October 1. No one expected (based on observed human shopping behaviors) that the rate of enrollment would be constant over the period. Like anything in life, if we can wait, we will. Although I suspect that most will be signed up by the beginning of december to avoid the rush. Still got almost 50 days.

WHODATINCA -

I appreciate the "states rights" sentiment. Allowing local jurisdictions to self govern is a desirable goal. The tough part is that the political borders are mostly artificial. That makes the "equal protection" aspect of the universal law somewhat of a superseding concept. As for your notes on the 10th and second amendments, many laws have been passed and tested in the courts on both, and it is rare that one has been held unconstitutional. Gun laws abound in every state and on a federal level and are constitutional, and states have been hard pressed to define a "power" that is not delineated in the Constitution. Just like world business is now a "global" concept, many foundational US laws not delineated in the constitution are transcending states' borders. The courts have been involved increasingly so that jurisdictions don't codify discriminatory and preferential laws. It will be interesting to see where the Roberts Court goes with this, as they have teetered recently.

BTW, liberals are just as much in favor of gun possession as the wingnuts (I'm assuming that liberal is a slur much like wingnut). It seems like the approach to legislation is a bit different.

As for taxation and subsidies, this area is more complicated due to the policy need to distribute the burden of tax as fairly and equitably as possible. The challenge of any tax system is to not encourage adverse behaviors or discourage positive behaviors. The reason we tax virtually everything is so that one can't escape paying into society. No activity should get special treatment. Some activities are not taxed directly, like charities that promote a social good (like cancer research, or the ASPCA) but the salaries paid to the employees do get taxed.

Our government uses the tax system to alter behaviors. One major criticism of this is that the tax may not achieve its objective (see tobacco tax) or cause inadvertent transfers of wealth (see carried interest rule). Until a tax is implemented and behaviors adjust, one cannot accurately predict whether tax policy will be successful. However, if a type of tax consistently produces similar effects, one can predict the outcome probabilties. New taxes are the hardest to characterize. Debate rages on a transaction tax for trading shares on NYSE and NASDAQ. Arguments for are that traders can manipulate share prices with small fast trades, and that a tax makes this unfair strategy come with a penalty. Arguments against include that most trades are simply portfolio adjustments, not manipulations, and that those trades bear too much burden.

The taxes raised under the plan are mostly on the product sellers, like drug companies and device manufacturers, and some system suppliers. The theory is that these companies benefit most from reimbursement in these plans, so they should subsidize the least able to pay. The estimates are that the revenues from these sources plus the receipts from those insured should provide adequate coverage from the costs of adding the newly covered. Now, you can argue that these costs are already being borne by the system because those poor are getting healthcare for free. But if you agree that individuals who have been purchasing healthcare plans are already bearing too much of the burden of subsidizing the poor, this leaves only corporate profits as a source to make up lowering premiums for those who have been forced to subsidize for so long.

As it relates to other forms of subsidies in healthcare, Medicare is a classic example. One of the largest, most successful and most popular government run programs in history, Medicare relies on taxing all wage earners while none of them can draw benefits until (and if) they reach the age of eligibility. Young healthy wage earners pay for the care of the elderly. This single payer system is similar to programs in Europe and Asia. There are some differences in its administration and coverage, but when politics are removed from its management, it is a highly efficient (2% administrative costs vs. 15-20% for private plans) program. CMS sets prices and some outcome benchmarks, making it a very "regulated" program. It is ironic to see those demanding government get out of their healthcare but to leave their Medicare alone.

A difficult transition that is being forced through the tax/subsidy/reimbursement program is the one from an "emergency care" model to a "preventive care - outcomes" model. This is the trickiest because a transition of this nature is best achieved through a single payer paradigm. However, in an attempt to keep the historical insurer based model, taxing profits and altering some reimbursement schemes are the only ways to change behaviors (I'd include regulations, but standard of care tends to change faster than legislation is capable of keeping up with that change, so policy makers are reluctant to codify medical practice into law).

Emergency care is the best model for suppliers of care because the demand curve is inelastic, which means that people will pay whatever is being charged because they have no negotiating leverage. Moving the model to a preventive care paradigm means that providers essentially get paid for patients NOT touching the system. This gives the patient more flexibility and causes the system to allocate resources more efficiently. Rather than dedicate resources to the worst cases and denying primary care that would obviate the emergency, the policy intent is to encourage a more proactive care system, lowering the risks of adverse medical emergencies and improving quality of life.

This will be complicated. It certainly can't be achieved without an iterative process of test-adjust-test. To say that the initial implementation isn't optimal so it should be abandoned is like advocating firing Drew Brees before week 1 because he already didn't win that season's Super Bowl.

I cannot say whether this program will work or not. However, the way it is structured is the only way to preserve a free market, insurance based system in which almost half the population participates in the market as a free/public good.

The baffling fact is that those who object to this plan haven't offered any comprehensive alternative that preserves a free market insurance based system. There is a lot not to like. There's a lot to like. Same as any other massive overhaul of a broken system.

The reason why Republicans want to delay implementation for a year is because insurance programs only work if the pool is big enough to cover the costs. Delay would stop the pool from getting bigger, leaving only sick and those with insurance having to raise their premiums to cover those sick. Because many of the programs in the ACA are wildly popular so much so that they will survive any repeal, delay would crush traditional insurers, disrupting the system and creating massive chaos. I'm not sure that this has been factored into the strategies for holding Government hostage to repeal.

As I said in the beginning of this post, this will be a wild ride because disinformation and rhetoric will ultimately be stripped away and we will have to deal with the reality of the situation.

Is it truly worth obliterating the US economy and harming US families for this?

Oak, I just don't know where to begin. I'll try, but just realize I'm not defending, just explaining.

The "mandate" portion of the ACA requires everyone to participate in the current insurance based model who is eligible. (Those not are covered by Medicare and Medicaid). One does not have to purchase insurance, but opting out will trigger a penalty of 95% of a "bronze" level plan, making purchasing a plan almost a no-brainer. A plan can be purchased similar to the way one shops for airfares on Orbitz. For the first time ever, Insurance companies must delineate each plan's specifics and characterize the premium costs to the insured. In this way, consumers have better information about the coverage that they are buying and the company through whom they will purchase plans. The Federal government put a set of minimum coverage requirements on all plans, but beyond those minimums, consumers can add features and pay extra for them.

From an "economics of insurance" analysis, this is the optimal arrangement. The more participants in the pool, the lower the participant's cost for participating in the pool as risk is spread out over a larger population. Even the "old" model insurance works exactly the same way but insurers had to advertise to attract healthy participants for a larger pool. The mandate simply substitutes out some of the need to advertise for those same healthy individuals.

The mandate also eliminates the "free rider" issue that plagues all public goods. Being purposely simple for the purposes of this discussion, hospitals and doctors and clinics are essentially open to the public. In some instances hospitals are required by law to provide care even if the patient cannot pay. Patients know this and are therefore have no incentive to purchase insurance knowing that they can successfully access the system. This is fundamentally unfair to those who pay for insurance because the costs of these "free riders" are passed on to those who pay. Prior to Oct. 1, the number of free riders was increasing far faster than new purchasers of insurance. This reality of cost shifting had to be addressed because the rich were/are forced to pay for care for the poor. By disconnecting the mandate, one would effectively destroy the insurance model, because only rich+poor health people would buy "insurance." Proponents of "personal accountability" and "anti-government takeover of healthcare" recognize that this is the only way to make the system fair and equitable.

The core difference between the "old" model and the "Obamacare" model is the transparency. Insurers are required to spell out specifics of coverage under Obamacare in a way that the average consumer can understand while stating a price that can be compared to other companies' plans. Kinda like looking at labels and prices when shopping at the supermarket. Aside from the requirements of the minimums, there are few new requriements that impact the insurer, other than they are limited to spending no less than 85% of policy revenues on delivery of care, no discriminating for pre-existing conditions, and that children up to 26 can buy into parents' existing plans.

The "exchange" feature of the ACA is about as free market as one can get in a healthcare system based on insurance, as the government does not set the price nor does it deliver the care. You have to remember that the insurance model is an extreme rarity in the world healthcare markets, as most nations with any meaningful healthcare infrastructure are single payer. The Massachusetts exchange paradigm was shared with all the states that chose to make their own exchange, and the Federal Government modified that model to account for those states who chose not to create an exchange. Having been implemented for over 10 years, the Mass model was fairly debugged.

I'll get to other points later. Problem is that criticisms are usually short but explanations are usually long, especially with healthcare. I guess up next is taxes and subsidies. Which is unfortunately more involved.

All new ventures go through startup issues. Nothing works perfectly out of the box, especially something as complicated as healthcare. The shakedown that Mass did will help other states implement their programs (California premiums are already lower than some of the more optimistic projections and account creation is faring well. Because people have until Dec 15 to sign up and their plans don't activate until Jan 1, it will be tough to say how well this will work until people start showing up in the providing chain.)

However, because the bulk of the implementation of the law covers disclosure by health insurers on these "Orbitz.com" comparison shopping sites, scale is not a factor that will determine its success. That's because large scale interactive shopping sites have been implemented in good working order for over 15 years.

What will be complicated is getting providers to reorient their business model from a "payment for throughput" scheme to a "pay for performance" scheme. It means that hospitals and doctors and clinics will have to stay completely up to date on the best practices and be very aggressive in managing their patients. Otherwise they will be disadvantaged economically. If your model is simply "see 40 patients a day - earn $250K per year" then you will hate Obamacare because you will no longer be paid simply for laying eyes on a patient. You will get penalized if that patient isn't managed to the best practices.

What I find interesting is that when this program ramps up, demand for nurses, technicians, and other healthcare professionals will skyrocket because all those people who now have insurance will flood into the system. That will be horrible for the economy because wages will be paid out to millions instead of dividends to thousands. And wages carry a much higher tax rate than do dividends (15-34% progressive + 10% FICA/Medicare vs 15% flat) Its a dastardly wealth transfer scheme that hits the bullseye of class warfare. I don't know why this doesn't get more attention from people that hate Obama.

Regardless of one's political stripes, when presented with information that is in direct contradiction to one's expectations, one will discount thay information and hold on tighter to the initial position. It's called the backfire effect and it can even cause people who are normally proficient in a task not to be able to perform the task if they believe the task will result in proving themselves out of step with reality.

Explains a lot on both sides of the aisle.

Even the Heratige Foundation, the biological mother of the Affordable Health Care Act, can't make the preposterous claim that the law will bankrupt insurance companies. RomneyCare in Massachusetts sees near universal coverage and more than adequate profits for payers. Insurance company profits are increasing in states in which the ACA law has been in place before the Oct. 1 start date. The biggest fear of opponents is not that the law will cause problems but that people will be happy with it, and they hate this President so much that it would be galling to them for it to succeed. You don't have to like this President, but you do not get to make sh up and promote fiction and bad policy without being called on it. At least not in this blog.