Monday, September 23, 2013

On rate shock in Georgia

I have questioned (here and here and, to a lesser extent, here) whether Wall Street Journal coverage of the Affordable Care Act has a negative bias.  I don't want to overstate the case, as the Journal's health care reporters are well informed and thorough.  Perhaps the bias is mine. But today, in an article about how the experiences of potential beneficiaries of the ACA are likely to vary state by state, reporter Louise Radnofsky, sharing a byline with Amy Schatz, again made me bristle a bit, here:
The price of insurance policies available on the exchanges varies by area—and just as importantly, the perception of the prices is likely to be different. Some states have long had tight restrictions on the kind of policies that can be sold to individuals and small businesses, resulting in relatively higher prices. People in those states aren't likely to see big premium jumps. In states that left insurers with a freer hand, some people face greater price increases.

In Atlanta, before Georgia's new federally run health exchange kicks off, the cheapest plan available now has a monthly base rate of $43 for a healthy 30-year-old male nonsmoker, reflecting the state's light regulation. The median plan starts at $108 a month, according to a federal database of plans. Next year, that same customer will likely have to pay at least $188 a month, although some lower-income people could get subsidies toward premium costs.
To be fair, the first paragraph provides important perspective on why the rate jump is likely to be high for some people in Georgia.  But how high, and for whom? That last throwaway line -- "some lower-income people could get subsidies" -- glosses over essentials.  According to a Families USA report, Georgia has 1.9 million uninsured.  At least 800,000 are eligible for ACA subsidies, and another 650,000 would have been eligible for Medicaid under the ACA expansion if the state hadn't refused to participate.  Of those 650,000 left out in the cold by pure partisan spite, a portion -- those with incomes between 100% and 138% of the Federal Poverty Level -- will also be eligible for subsidies on the exchanges. If Georgia eventually yields on the Medicaid expansion, three quarters of the currently uninsured will be eligible either for subsidies or Medicaid; as of now, about half are eligible for subsidies. And by definition, all low-income Georgians who don't get healthcare through their employers will be eligible for subsidies -- i.e., those earning up to 300% or 400% FPL, depending on age.

Moreover, Radnofsky and Schatz don't consider what kind of insurance is available in the current individual market in Georgia, and to whom.  A Humana plan listed on ehealthinsurance.com in that $40something/month price range, available to a healthy young adult male, has a $10,000 deductible, with an additional $1,000 deductible for prescription drugs. Critical illness coverage, up to $50,000, is another $26.10/month, and accident insurance is available for $19 or $22.90/month (two levels).  All ACA plans cap yearly out-of-pocket expenses at $6,400. Nor do the authors consider how many uninsured Georgians may have preexisting conditions, from Diabetes to a trick knee, that would render buying insurance in the current individual market either impossible or multiples more expensive.

Finally, some states -- probably all states that are not setting up their own exchanges -- will allow insurance companies to sell policies to individuals outside the exchanges. States make the rules under which such policies can be sold, and they can allow less comprehensive policies than those that meet exchange "essential benefits" requirements. Back in the innocent days of 2011, the National Association of Insurance Commissioners warned that poorly designed rules for the non-exchange market could cause adverse selection inside the exchanges, by drawing the young and healthy to cheaper, skimpier plans.  The report in which that warning is issued can be used as a manual for sabotage by state officials trying to crash the ACA.  Since Georgia's commissioner is openly devoted to making the law fail, those cheap skimpy plans may still be available once the exchanges open.

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