Monday, July 01, 2013

WSJ leans into the "rate shock" narrative for Obamacare

[Updated 7/13, per "Blows to Obama's Health-Care Law Pile Up"...]

The WSJ's Louise Radnofsky is an experienced healthcare reporter, and her front-page story today about pending "rate shock" for healthy singles when the ACA takes effect is factually accurate. Since the focus is on the risk that the healthy uninsured will stay out of the ACA's healthcare exchanges, it's arguably fair to focus on the subset -- a minority of those who don't get insurance from an employer or the government -- whose premiums may go up. But nonetheless I find the emphasis and framing misleading in some particulars (e.g., the online home page teaser, "Insurance Rates Could Soar Under New Law"). .

The lede goes for maximum shock effect, setting reader perceptions before multiple caveats qualify the picture:

Healthy consumers could see insurance rates double or even triple when they look for individual coverage under the federal health law later this year, while the premiums paid by sicker people are set to become more affordable, according to a Wall Street Journal analysis of coverage to be sold on the law's new exchanges
The article's core example does bring many of the law's tradeoffs into the picture. But not all. Here's the heart of it:
 For a 40-year-old single nonsmoker—in the middle of the age range eligible for exchanges—a "bronze" plan covering about 60% of medical costs will be available for about $200 a month in most places, the proposals show.

Though less generous than "silver" and "gold" plans on the exchanges, a bronze plan would still include fuller benefits than many policies available on the individual market today.

The challenge for the law is that healthy 40-year-olds can typically get coverage for less today, especially if they are willing to accept fewer benefits or take on more costs themselves. Supporters of the law say tighter regulation on insurance practices gives consumers more protection and is worth the extra cost, but they have to persuade people who don't have an immediate need for health care of that. If only sick people buy into the new insurance pools, prices could shoot up....

In Richmond, a 40-year-old male nonsmoker logging on to the eHealthInsurance comparison-shopping website today would see a plan that costs $63 a month from Anthem, a unit of WellPoint Inc.  That plan has a $5,000 deductible and covers half of medical costs.

By comparison, the least-expensive plan on the exchange for a 40-year-old nonsmoker in Richmond, also from Anthem, will likely cost $193 a month, according to filings submitted by carriers.

The law is likely to offer a benefit to those who have difficulty getting insurance now or are pushed out of the market because they have had illnesses. Under the current system, the rate on the $63-a-month plan could be revised higher if a consumer indicates prior health problems in a medical questionnaire that must be filled out before buying the plan. The application also could be rejected entirely based on specific answers given.
 Among points not discussed here:
  • Who's affected? According to a widely cited Barrie + Hibbert paper by actuaries Kurt Geisa and Chris Carlson, in 2011 there were about 8.2 million 40-to-49 year olds, the age group the WSJ spotlights. Of those, just 1.8 million had incomes exceeding 300% of the federal poverty level (FPL), roughly the cutoff above which buyers on the ACA exchanges may pay more in premiums than they would pay on the current individual market -- if they have no preexisting conditions.  As Ezra Klein pointed out in response to a similar spotlight on an quote by Avik Roy, about 25% of applicants are either turned away or have to pay more than the quoted price. Conversely, it's true that of the 4.9 million 40-49 year olds already in the non-group market in 2011, about 2.8 million exceed 300% of FPL and so could pay more premium, albeit for better coverage.
  • Regional difference:  I won't say that Radnofsky cherry-picked, but the Richmond plan she cited is a relatively good deal, compared to what's available in other regions around the country, on one critical metric that the ACA improves on: maximum annual out-of-pocket pocket costs that a policyholder may be forced to pay ((let's call this annual max OOP). In ACA exchanges, the OOP for the bronze plans is about $6.4k.  In the Richmond plan spotlighted by the Journal, the deductible is $5k, relatively moderate for a catastrophic plan, and the OOP  is $8.5k -- also not bad, relatively speaking. I punched in random zip codes on to check out comparable plans for a healthy 40 year-old male elsewhere. In Pike County, Kentucky, a plan priced at $69/month had a $7.5k deductible and a $12.5k total OOP maximum. Cross County, Arkansas showed a $68k/month plan with a $10k deductible and a $20k OOP.  McClain, Michigan: $84k/month, $12k OOP. 
  • Affordability: If the cost of an ACA bronze plan exceeds 9.5% of the healthy single 40 year-old Richmond gentleman's income, he is exempt from the individual mandate, in which case he can either buy a catastrophic plan via the ACA or not buy insurance at all (admittedly, self-exemption is a hindrance rather than a help with regard to the problem of getting enough healthy individuals to sign up with the exchanges).  Our single 40 year-old  will not face this eventuality unless he earns slightly more than 300% of FPL and lives in a state where ACA premiums come in very high, or lives in a state that has refused the ACA's Medicaid expansion. The latter is a truly serious flaw, created by the Supreme Court's ruling making Medicaid expansion optional and by Republicans' desire to sabotage the law.
  • Coverage: Radnofsky does acknowledge that those who pay more under the ACA than they might for non-group coverage in the current market will be buying better insurance.  But the coverage limitations in plans offered on the non-group market today can be horrific -- and they were far worse before the ACA banned lifetime and annual coverage limits and other practices that made insurance illusory in many cases. To take one example: today's New York Times spotlights one couple that bought plans on the non-group market that did not cover childbirth, which would have cost them an extra $350 per month. They just had a baby and are facing uninsured charges likely to be in the tens of thousands.  The ACA includes maternity and newborn care in its mandated package of minimum essential benefits. To some observers, those minimum benefits constitute a burden on "young invicibles" who don't want them. In fact, the cost-benefit breakdown for millions who over the course of decades move in and out of employer- or government-provided health insurance is likely to be extraordinarily complex. But the essence of insurance is paying to cover risks that may or may not be actualized.
At present, a bit shy of 20 million Americans buy health insurance on the non-group market.  About half of them earn over 300% FPL and so may pay more, for better coverage, under the ACA (the older they are the less their premiums are likely to rise). The ACA should swell their ranks by about 15 million, most of whom will receive coverage subsidies. There will be winners and losers. It's fair to call attention to the substantial subset who won't be able to buy bare-bones coverage at current rates.  But doing so requires presenting all the discernible relevant variables.

UPDATE 7/5/13: In this post I held off speculating whether the story framing is attributable to the rightward swing in news editing that's taken place at the WSJ since Murdoch's Dow Jones acquisition. But today's ACA story -- Blows to Health-Care Law Pile Up, Cutting ts Sweep looks awfully like a Foxification. Again, some decent reporting is presented with a very negative slant. It aggregates old news -- the Supreme Court check to Medicaid expansion, the Republican state government stonewall of the healthcare exchanges -- with the latest mosquito bite, the suspension of the employer mandate -- to suggest that the law is in deep trouble, without intimating that the major checks to full implementation are driven by GOP animus, or that the GOP will refuse to allow fixes to problems their sabotage has created, like the ineligibility of people below the 138% of the poverty line, denied the intended Medicaid coverage in GOP-run states, to participate in the healthcare exchanges. If denied Medicaid, they ought to be able to buy coverage for pretty close to free on the exchanges.  [UPDATE 3/18/14: I have spoken to someone at the Journal, whose word I trust, who assures me that editors area not imposing a political agenda on reporters. I regret speculating about motive without information.]

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