The tax filing season in 2015 is the first time that people are encountering the enforcement of the shared responsibility payment (tax or penalty) for not having a qualified insurance plan for at least 10 months in 2014. This payment is deducted from any income tax return. As a result, it is argued that many people are learning for the first time that they are liable for this payment for failing to obtain insurance in 2014. The problem is that this lesson comes too late to avoid the penalty again for this year (when penalties are much higher) because two months have already elapsed by the time they learned about this penalty.
The solution is to make a new open enrollment period for these previously uninformed tax-payers:
A special enrollment period will begin March 15 and end April 30 to help consumers avoid tax penalties for not obtaining health insurance coverage this year, Andrew Slavitt, principal deputy administrator at the CMS, said during a news briefing Friday.
There are two problems with this announcement.
The first is that it introduces a second open enrollment period in the same calender year. The idea of a short open enrollment period is to force people to decide on a plan in a small window or risk going without coverage for a year. In contrast to commercial practices of open-enrollments of just a couple weeks, the ACA exchange open enrollment for 2015 was already generous with 4 months (last two months of 2014 and first two months of 2015). At the end of open enrollment any person who did not sign up will be ineligible for new insurance until the next open enrollment period. This is needed to avoid the free-rider problem of people who wait until they need health care before signing up. I’m not certain, but I understand that the ACA legislation demands a single open enrollment period in order to justify the requirement for universal coverage with no preexisting condition exclusion.
The second problem is that even if someone were to sign up in March or April, their coverage may begin as late as June. Since it takes a couple weeks to initiate coverage, someone who completes the enrollment on April 30 probably will have coverage start in June instead of May. This means such persons will have only 7 months of coverage for 2015 instead of the required 10 months. The implication of the above announcement is that such qualified new enrollments will not be subject for the shared responsibility payment for 2015.
The two problems are that this second open-enrollment period is contrary to the original legislation. I doubt the original intention of the legislation allows the administration to make this kind of change. I realize that there is some discretion allowed to the secretary of HHS to define significant life events to qualify for enrollment outside of open-enrollment period, but if the current administration were run by Republican president, I suspect the Democrats (the authors of the original bill) would object that this action exceeds the authority permitted in the law. Instead, the Democrats appear to be demanding this response.
So far, I have not seen any objections from either party. Also, it is unlikely to result in a judicial review because of standing issues (no one is substantively harmed by this violation of the law). The current political environment does not include a voice for the Dedomenocratic Party. For this post, I’m want to explore an appropriate Dedomenocratic Party response to these issues by using the principles of dedomenocracy or punctuated libertarianism.
As in my earlier discussions of a Dedomenocratic Party position, such as here, the party places a priority over the data and the urgency instead of concepts like justice of fairness. The two problems mentioned above about following the law. Also the second problem presents a fairness issue where some people are allowed to pay for fewer months of coverage (fewer than 10) that the early law-abiding subscribers had to pay.
In a democracy, justice and fairness is a very critical issue for maintaining a super-majority consent. A Dedomenocratic Party operates within a democracy so this should be a consideration.
I may be assuming that if a Dedomenocratic Party had a voice in the government, it would be a minority voice. If the Dedomenocratic Party had a majority, then it could move forward on a pure dedomenocracy (rule by automation of data analytics) and not have to make a human decision at all. Dedomenocratic Party can not dismiss justice and fairness as irrelevant because this is still a democracy. However, I will stand by the point that the Dedomenocratic Party places lower importance on these concepts.
The Dedomenocratic Party does not object to the new enrollment period on grounds of such principles.
In contrast, the Dedomenocratic Party places a high priority on urgency and evidence. The evidence is that there are a large number of people who are just now learning how the law applies to them individually as they file for taxes for the 2014 year. They are observing deductions in income-tax returns due to the shared responsibility fee and they are learning that next year’s fee will be twice this year’s.
Despite 3 national election cycles with their abundant advertising promoting or attacking the program, and despite investments in advertisements and other promotions to educate the population about the law, there are many people who may not have realized the law affects them personally. Personally, I don’t find this very surprising. Only a fraction of the population follows the election cycles. Also, many people are either not consuming mass-media that carry advertisements, or they have been well-conditioned to ignore anything that looks like a promotion for some product.
On the other hand, our government enjoys a high participation rate in filing for taxes. The one mechanism we have to reach nearly the entire population is through the tax filing. In particular, the affordable care act mandate exclusively applies to people who file taxes. Tax filing is the one time everyone will get the message that the mandate applies to them personally. That message will be unavoidable this year because it affects the size of refund checks from taxes. This is the first year when that message will be delivered. While it is too late to avoid the penalty for 2014, they will learn that the penalty will double next time.
The problem is that the open-enrollment period (and the 2-month grace period of no insurance) is closed for the current year before people will learn through their tax filing that the law applies to them. In the current law, they would have learned that their cost is tripled: this year’s fee plus next year’s doubled fee that at this point is inescapable.
As a data scientist, I think this result could have been anticipated. Although the first year’s fee was meant to be small, it should have been obvious that it would be imposed after the 2 month grace-period for 2015 has passed. The first penalty fee would be tripled than what is in the law: the fee for 2014 and the doubled fee for 2015 (to be paid next year). The problem is that the fee is collected at tax time that ends nearly 5 months after the start of the year. The law could have anticipated this with a special first year provision to have a secondary open enrollment period just for this year.
I suspect this consequence was anticipated but congress still decided against allowing this first year exceptional condition. Instead there was an extensive effort to get the word out through advertisements and various promotions so that no one would be surprised when they file for 2014 taxes. Unfortunately, it appears that effort failed to reach a good number of people.
I expect most of the people affected have low-incomes above the poverty level. These are the incomes less likely to have employer-sponsored plans and they are also busier with making a living so they have less access to media that carries promotions of the law. These same people are going to feel the pain of the penalties more acutely because even this year’s fee would have been a significant portion of the refund they had been counting on. The prospect of a now unavoidable doubled fee for next year would be even more disappointing to them.
My point is that the tax filing for 2014 will be the first time many people will finally get the message about the fact that the mandate applies to them. This is one piece of evidence for a dedomenocracy decision.
Another piece of evidence is that the affordable care act depends on the largest possible participation of people to have plans. The ACA is an insurance program and it benefits by having as large a pool of subscribers as possible. This newly informed population represents an opportunity to greatly increase that pool of subscribers for this year. Even though they will be paying for less than 10 months of premiums for 2015, they will still be paying something into to the system. Also, they will increase the covered population so that the ratio of those who actually need to consume health care will be smaller, thus making the program appear more sustainable.
It is unfortunate that we missed the opportunity to get a full year (at least 10 months) of premiums from these new potential subscribers. That opportunity has now forever been lost. There remains an opportunity to get premiums for the remainder of the year. This can help finance the insurance plans because it is highly likely that this population has low concern about needing health care services. Also, a present year enrollment will lock in these subscribers to become renewals for next year.
The above observation about this population being less likely to need health care also argues that this is unlikely to result in a free-rider problem of someone enrolling late and needing immediate (and expensive) care. The affected population is declining insurance probably because they have low concerns about their health.
The current time is a unique opportunity to increase the insured population who will remain in the program. The problem is that under current law, they will still have to pay the penalty for this year because they will be insured for less than 10 months of 2015. The existing law discourages them to participate this year. Their lack of participation this year will mean they will not be renewing for next year. To get them enrolled in time for next year, there will need to be a new advertising campaign to get them to sign up during the open enrollment period.
This presents a third piece of evidence. It is more cost effective to get these people to be renewals for coverage next year instead of attempting to reach them in time to be first time subscribers during the next open enrollment period.
Allow me to assume all of the above can be backed by good data. The Dedomenocratic Party would have the data to gain their support for the second open enrollment period, but it’s support also depends on evidence of urgency. The urgency is that this is a very unique opportunity over all subsequent years and this opportunity closes at the end of the current tax filing season.
This is the first tax filing season where the fee will be enforced. In addition, this is the year where the following year’s fee will most dramatically increase. From 2014 to 2015, the fee doubles. But from 2015 to 2016, the fee will only increase 25%.
The current tax season offers the strongest incentive to sign up for insurance. A doubling of the fee for the next year is more persuasive than a 25% increase.
The urgency is that the tax season will end soon and that the year is already in the third month. To take advantage of this opportunity, a rule must be made quickly.
The Dedomenocratic Party should be able to support the exceptional secondary open-enrollment period for 2015 to start after the official open-enrollment period closes. The data supports that this would be a good decision and that there is an urgency to act quickly.
If there were truly a Dedomenocratic Party voice in congress, it could advocate emergency legislation to make this possible under that the ideals of constitutional government. This is not going to happen in the current political environment. Instead, the rule is being imposed bureaucratically with dubious legality. This is an authoritarian decision that happens to be consistent with Dedomenocratic Party values. In other words, this is consistent with what would happen in automated government of a dedomenocracy.