Monday, October 20, 2014

NYT spotlights plight of ACA bronze plan buyers, leaves out vital context

[first posted 10/18]

The Times has a front-page story today, by Abby Goodnough and Robert Pear, that highlights the plight of ACA private plan buyers who bought plans with such high deductibles that they are foregoing needed treatment.  This is a real problem -- bronze plans in particular have terribly high deductibles, averaging $5,000 per individual -- but vital context is missing. Here's the framing:
About 7.3 million Americans are enrolled in private coverage through the Affordable Care Act marketplaces, and more than 80 percent qualified for federal subsidies to help with the cost of their monthly premiums. But many are still on the hook for deductibles that can top $5,000 for individuals and $10,000 for families — the trade-off, insurers say, for keeping premiums for the marketplace plans relatively low. The result is that some people — no firm data exists on how many — say they hesitate to use their new insurance because of the high out-of-pocket costs.
The first thing to note is that low-income ACA shoppers were generally not subject to these high deductibles. Low-income marketplace shoppers should generally not be buying bronze plans  -- not only because the deductibles are higher than those of silver-level plans, but because the silver plans alone come with Cost Sharing Reduction (CSR) subsidies. These reduce deductibles and maximum out-of-pocket costs for buyers with household income below 250% of the Federal Poverty Level (FPL). CSR subsidies are really large for buyers under 200% FPL, giving silver plans actuarial values comparable to those of the most generous employer-sponsored plans for those in that income range. The Goodnough-Pear story does explain CSR, but deep in the story, following four hard-case individual narratives.

Bronze plans had relatively low takeup in the ACA's first open season. According to HHS statistics, just 20% of users in all marketplaces (state-run as well as healthcare.gov) bought bronze plans. Since 33% of buyers who earned too much to qualify for subsidies bought bronze, less than 20% of the subsidy-eligible must have done so.

An even larger majority of those who qualify for CSR (reducing deductibles and OOP costs) bought silver plans allowing them access to those important secondary subsidies. That's especially true for those under 200% FPL, where the cost reductions are really steep.. New York,  one of the few states that provided information about the income levels of those buying health plans at each metal level, provides evidence of this.  According to my calculations, 89% of New York plan buyers with incomes under 200% FPL bought silver plans.* That spells low deductibles and OOP costs. For those under 150% FPL, deductibles are likely to be under $600 -- and zero in many cases. For those between 150% and 200% FPL, deductibles top out at about $1250.

It should also be noted that in some though by no means all markets, some high deductible plans provide important benefits before the deductible is reached. These may include $50 copays for primary care visits or $7 copays for generic drugs.

Finally, the handful of hardship cases presented by Pear and Goodnough should not be taken entirely at face value. The hardship is real  -- and the problem of high deductibles, mostly for somewhat higher-income buyers, is also real -- but in many cases the problem in these tales almost certainly lies in the person having bought the wrong plan.

One story in particular does not add up:
Carol Payne, a respiratory therapist in Gilbert, Ariz., signed up through HealthCare.gov for a Blue Cross Blue Shield plan with a $6,000 deductible. She pays $91 toward her monthly premium and gets a subsidy of $353 to cover the rest.

The plans she could have chosen with lower deductibles were from insurers that “were not as reputable,” Ms. Payne said. She has used the insurance for preventive care and an emergency room visit after a car accident.
Here's a syllogism: A plan with a $6,000 deductible is a bronze plan. If Blue Cross offers a bronze plan in Gilbert (Maricopa County), it also offers a silver plan.  And if Ms. Payne is only paying $91 a month, she qualifies for CSR.

I checked this reasoning out on healthcare.gov. It was borne out, though the results do point toward a tough choice for Ms. Payne, albeit one with viable options. Her subsidy -- $353 -- is an important clue to her age and income, if she's single. I couldn't get an exact match on healthcare.gov, but here's an approximation:

A single 59 year-old with an income of $16,200 would pay $99 per month for the cheapest BCBS bronze plan available in Gilbert, AZ,  after a subsidy of $352 per month. The deductible is indeed $6,000. A silver Blue Cross plan would raise her premium steeply, to $161 per month, but with a deductible of just $50 and an OOP max of $2250. (That premium spread would be lower for a younger buyer.**)  

A silver HMO plan from Health Net, however, would cost our 59 year-old just $43 per month, with a deductible of $25 and an OOP max of $1000. Ms Payne may be right to shun Health Net; as of April 2014 it had more consumer complaints than any Arizona insurer available on Healthcare.gov (as well as more plans available). But a Humana HMO would cost this buyer $91 per month, with a deductible of $500 and an OOP max of $750.   

That deductible is less than half that of the average employer-sponsored plan, according to a Kaiser Family Foundation survey that Goodnough and Pear cite. At an income under 150% FPL, an ACA plan must have an actuarial value of 94% -- better than most employer-sponsored insurance. Goodnough and Pear directly compared the average deductibles of ACA plans to those typical of employer-sponsored plans without mentioning CSR in this context.

Ms. Payne had viable choices. She almost certainly made the wrong one. Even if she had reason to stick with Blue Cross (e.g., doctor choice?), an extra $700-plus in premiums would reduce her deductible by $6000 (if our hypothetical double is more or less on target).

Bronze plans can be a real temptation -- and in some cases, an appropriate choice -- for buyers who qualify for relatively modest premium subsidies (and no CSR) -- or for no subsidy at all.  For some, the high deductibles will prove a genuine hardship and a deterrent to needed care. 

Worse, some low-income buyers may find the bump-up from a bronze to a silver premium enough of a hardship to go for bronze and forgo CSR. Others will not notice what they're missing. Selecting a health plan is a really complex choice, and perhaps most low-income people in particular need assistance to make a choice that best fits their needs. I've seen stats indicating that about half of ACA buyers accessed help from navigators, brokers or other helpers.

While some people have doubtless been ill-served by high deductible ACA plans, however, the aggregate numbers suggest that most chose plans appropriate to their needs and income levels. That's good news. And there's no inkling of it in this Times front-pager.
----

*  In the 200% to 250% FPL range, the percentage of New Yorkers choosing silver plans drops suddenly to 59%. That's rational, as CSR is quite modest in this range, and New York premiums are high.  Relatively high percentages of New York buyers chose gold and platinum plans, which are lower-deductible than silver. More on the New York numbers here.

** ACA premium subsidies are calculated to leave the subsidized buyer paying a fixed percentage of her income, varying according to income level, if she buys the second-cheapest silver plan.  The subsidized premium does not vary with age, but the base price does.  At higher ages, the base price spread between silver and bronze plans is larger than at lower ages. Thus the difference between a bronze and silver premium varies according to the buyer's age. If our single buyer in Gilbert were 32 and earning $16,200, the cheapest bronze BCBS plan would cost her $71 and the cheapest silver, $100.

Update/correction: I briefly posted this with a claim that Goodnough and Pear did not mention CSR at all -- then found that I'd missed the rather buried explanation (confirmation bias; I scanned for it three times earlier!).  I've corrected that error.

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