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You are here: Home / Anderson On Health Insurance / Got that one wrong

Got that one wrong

by David Anderson|  March 18, 20157:52 am| 16 Comments

This post is in: Anderson On Health Insurance

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One of the things I was quietly tracking was any indication that people in non-Medicaid expansion states who were near but slightly under 100% of Federal Poverty Level would be very optimistic in their estimates of 2015 income to get to 100% FPL.  At 100% FPL, they become eligible for subsidies and Silver plans that pay 94% of expected expenses.  A priori, I would have expected to see non-Expansion states to have a very low percentage of people buying coverage on the Exchange who make under 100% FPL (mostly immigrants who) compared to Expansion states as immigrants are not Medicaid eligible for the first five years in the country.

I was wrong.  Charles Gaba has the graph to show it:

Low income HIX Enrollment

Healthcare.gov non-expansion states had more people who made under 100% FPL buying plans than expansion states did.

If my theory was right that there was aggressive estimating of incomes for people in the 90% to 99.99% FPL band to get to 100% FPL, the opposite result would be the first visible indicator.  Has it happened?  Yes.  Has it happened on a widespread basis?  No.

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Reader Interactions

16Comments

  1. 1.

    JoeShabadoo

    March 18, 2015 at 8:15 am

    Speaking of states implementing important programs for the poor on their own, Jeb Bush wants to get rid of the Federal minimum wage. I find it hard to believe that anyone but the crazy libertarians can support this.

  2. 2.

    GHayduke (formerly lojasmo)

    March 18, 2015 at 8:36 am

    Richard, can you parse the difference between the DHS estimate of 16 million new enrollments, and the Gallup life quality survey estimate of 9 million enrollments?

  3. 3.

    JGabriel

    March 18, 2015 at 8:40 am

    Richard Mayhew @ Top:

    I was wrong.

    “What No One Will Ever Hear Anyone Say On Fox News?” for $500, Alex.

    (Seriously, one of the most refreshing (and educational) things on our side of the aisle is our ability to admit error, then discuss what we got wrong and why – so we can learn something from it.)

  4. 4.

    Matt McIrvin

    March 18, 2015 at 8:40 am

    I think the people in the Medicaid hole, by and large, never had any expectation that they could get any kind of health insurance and still don’t. The idea that they could juice numbers to get up into the zone covered by the ACA exchanges isn’t even on the radar for them.

    That’s part of the reason there isn’t more outrage at Republican governors’ refusal to expand Medicaid: they weren’t taking anything away, they were just refusing to provide something that people had never gotten in the first place and were too beaten-down to expect getting.

  5. 5.

    Crusty Dem

    March 18, 2015 at 8:47 am

    What are the penalties for underestimating your income? From my cursory look, it appeared that almost everyone would benefit from creatively lowering their expected income…

  6. 6.

    Richard Mayhew

    March 18, 2015 at 8:51 am

    @Crusty Dem: If you underestimate and get tax credits based on a good faith underestimate, you’re paying most if not all of the incremental tax credit back during the next income tax filing seaosn.

    If you grossly underestimate your income (say from $500,000/year for past 5 years to $63,424) in order to qualify for a tax credit, that is past prima facie good faith mistake, and probably a polite letter from the IRS to justify the change.

  7. 7.

    Richard Mayhew

    March 18, 2015 at 8:52 am

    @GHayduke (formerly lojasmo): time period

  8. 8.

    RSA

    March 18, 2015 at 9:24 am

    I think the people in the Medicaid hole, by and large, never had any expectation that they could get any kind of health insurance and still don’t. The idea that they could juice numbers to get up into the zone covered by the ACA exchanges isn’t even on the radar for them.

    I wondered about this, too. Not that it affects what happened, but I think it’s a reasonable explanation why.

  9. 9.

    OzarkHillbilly

    March 18, 2015 at 9:26 am

    @Richard Mayhew: Thanx Richard. My little Bro and his 2 time cancer surviving wife are among those who lied about their income to get it above 100% FPL. Now I can tell him what to expect when that chicken comes home to roost. Here’s hoping their restaurant is over the top by next year.

  10. 10.

    Richard Mayhew

    March 18, 2015 at 9:39 am

    @OzarkHillbilly: If they overestimate their income (ie estimating $18,000 instead of $16,500) and they make less than 100% FPL, the IRS will not be going after their subsidy. If anything, they can expect a larger tax refund as they are limited to paying 2% of actual income for their health insurance and if actual is less than expected, they would have overpaid on their monthly payments.

  11. 11.

    Charles Gaba

    March 18, 2015 at 10:09 am

    Thanks for the citation…as well as pointing out something which I missed myself in a post which concurred with your original point!

    Yeah, after laying out the “workaround” in such detail, several folks have chipped away at the theory to the point that I now suspect that while some folks have/are doing so, it’s probably not nearly as many as both of us originally thought.

    Anyway, at the very least it serves as another reminder of how important the Medicaid expansion provision is.

  12. 12.

    Tenar Darell

    March 18, 2015 at 11:37 am

    Richard Mayhew at Top I suspect that a large part of this had to do with the active discouragement of navigators to assist people in applying for insurance in the first place. Seriously, if you’ve never had health insurance before, how could you comprehend applying for it, or shopping for it? It is hard enough for someone like me to understand how any of the plans work without involving the subsidies. I’m sure I’d need extensive help to figure it out if I had never before had health insurance. Hopefully friends and family of people at 90-100% of FPL are abundant enough, and reading enough that they can explain it to those on the borderline who had no expectations of succor.

  13. 13.

    Matt McIrvin

    March 18, 2015 at 11:48 am

    @Tenar Darell: The people who worry about moral hazard a lot have this idea that low-income Americans are income-maximizing rational actors who are constantly working every available angle to squeeze as many handouts from the system as they can. But you really need some kind of professional assistance to even do that effectively. The rich have people for it; if you’re already working as hard as you can just to keep your head above water, it’s going to be a daunting proposition.

  14. 14.

    gian

    March 18, 2015 at 2:22 pm

    California pulls blue shield tax exempt status.
    I’m interested in what you think the implications will be

  15. 15.

    Richard Mayhew

    March 18, 2015 at 2:56 pm

    @gian: I don’t know yet. I’ll have something a bit more coherent tomorrow morning when I have time to think and read more. Could be a big deal, could just be a way of getting some duck-like private activity back on the tax roll but otherwise a nothingburger…. not sure.

  16. 16.

    DavidTC

    March 20, 2015 at 3:17 pm

    I wasn’t expecting people to do more than be ‘very optimistic in their estimates’. I was expecting them to actually increase their income, legally.

    It’s pretty easy to do: ‘Hey, I’ll pay you $1000 to mow my lawn, if you’ll pay me $1000 to mow your lawn.’.

    Hey, look, both parties now have $1000 more to report on their income taxes.

    Hell, technically *bartering* counts as income. You have a $500 TV? Does your neighbor? Swap them back and forth every week, both parties can report the exchange as income at the fair market value of the TV.

    And, of course, you can just *lie*. Claim you got $2000 in illegal income or something. They can’t make you tell them where you got it from. Just put ‘$2000 in illegal activities’.

    This is all because no part of the law has ever been designed to work in circumstances where *inflating* income would be something people wanted to do. Ever. At all. There is no protection against it. And thus there are dozens of legal ways (in addition to completely undetectable illegal ways.) to end up with *more* taxable income if you need it because Republicans are morons.

    For some reason, however, this sort of thing hasn’t caught on.

    In fact, there are a lot of people out there worriedly asking the IRS things like ‘What happens if I reported an income over the FPL, and got subsidies, but I ended up lower?’, and the IRS starts talking about ‘good faith’ and stuff…and I just stare in bafflement…you can’t figure out how to report two or three thousand dollars more income? Really?

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