To a point, New York Times healthcare writers (see byline below) did a good job explaining the complexities of the renewal decision facing many buyers of health plans on the ACA exchanges for 2014. But I have three beefs with the front-page presentation.
The first is in the headline (not the reporters' responsibility). The lead that follows clarifies the problem -- but for many, of course, the headline shapes perception:
Cost of Coverage Under Affordable Care Act to Increase in 2015Unless they switch plans is the key. For the 85% of buyers who qualify for federal subsidies, their costs will not go up at all if they buy the benchmark second-cheapest Silver-level plan, or a cheaper plan -- except insofar as their income rises. Their share of the premium is a fixed percentage of their income. In fact, if their income is flat they may qualify for higher Cost Sharing Reduction (CSR) benefits, since the formula for determining those benefits is adjusted yearly for inflation.
By ROBERT PEAR, REED ABELSON and AGUSTIN ARMENDARIZ NOV. 14, 2014
WASHINGTON — The Obama administration on Friday unveiled data showing that many Americans with health insurance bought under the Affordable Care Act could face substantial price increases next year — in some cases as much as 20 percent — unless they switch plans.
Second, the article's flagship example of a shopper facing a difficult premium-vs.-deductible choice is confusing on a couple of fronts. Here it is:
A 40-year-old in Nashville, with the cheapest midlevel, or silver plan, will pay $220 a month next year, compared to $181 a month this year, for the same plan.For starters, the prices quotes show that this buyer is paying full freight, earning too much to qualify for premium subsidies. Again, over 85% of buyers were eligible for subsidies that reduce premiums, in most cases drastically. More to the point, a majority of buyers* are eligible for CSR, which flattens out the differences in deductibles and maximum out-of-pocket (OOP) costs between silver plans. In fact, the CSR formula mandates that every silver plan for buyers in a given income bracket have the same actuarial value -- that is, pay the same percentage of the average user's yearly costs. (Come to think of it, that's true for non-CSR-eligible buyers too -- every plan in ACA exchanges has to have the same actuarial value as every other plan at the same metal level.**)
The least expensive plan is offered by another insurer, Community Health Alliance, one of the so-called co-op plans created under the federal law. It offers coverage for a monthly premium of $194.
But the lower premium means that consumers will have to pay a much larger annual deductible, $4,000, rather than $2,000. A policyholder who becomes seriously ill or has a costly chronic condition could pay hundreds of dollars in out-of-pocket expenses.
That's not to say that if our 40 year-old Nashvillean has a low income, she won't be faced with tricky tradeoffs. If she earns $19,000 a year, that cheapest silver plan, premium $64, will have a deductible of $250 and an OOP max of $2,000, vs. $0-deductible/ $1450 OOP for the Blue Cross plan (premium $90). But... copays up to the deductible and OOP max are lower under the cheaper plan: $5 for a primary care visit, 20% copay for a specialist, 20% for an ER visit and $8 per generic drug prescription, vs. a 50% copay for each of these in the more expensive plan.***
The point is not that the choice is not complicated -- just that that core premium-vs.deductible tradeoff is less stark for CSR-eligible buyers.
Finally, that Times-framed choice is further smoothed by the choice of no fewer than six other silver plans -- all offered by Community Health Alliance (that's not to say that the Times comparison is not germane -- it rightly contrasts last year's cheapest silver plan with this year's). There is a Community Health plan for $77 per month with a $0 deductible -- but it has the same per-service coinsurance formula as the Blue Cross plan, 50% copay across the board.
Arguably there's too much choice here, as in the toilet paper aisle. But the choices are not that bad. And the stakes for the CSR-eligible are not that high, at least as far as these financial formulas go -- the quality of the provider network may be more important.
The really high-stakes choice for the CSR-eligible (at least for those under 200% of the Federal Poverty Level; CSR is weak for those between 200% and 250%) is simply to choose a silver plan, since CSR is not available at any other metal level. Fortunately, most did.
* Just two states that I know of break out buyers' metal-level choice by their income bracket (HHS does not do it for the 36 states on healthcare.gov). In New York, 57% of buyers were CSR-eligible; in Washington, 56% were eligible. The percentages are likely to be higher in poorer states, as the higher takeup of silver plans in poorer states indicates.
** Since plans at the same metal level have the same mandated actuarial value, a given user's expenses under each plan will vary according to medical usage. Someone with a lot of drug prescriptions but few doctor visits will benefit primarily from a low drug co-pay; someone who needs a lot of specialist visits may focus on the specialist copay, and whether it kicks in before or after the deductible. What might really help are decision support tools that take a shopper's usage information and rank plans according to that particular buyer's likely yearly costs. The Idaho and California exchanges have rudimentary tools of this sort; Medicare.gov has better ones; and the private market is developing still more.
*** I am partly wondering whether those 50% copay quotes are accurate for a high-CSR-eligible buyer, or whether Healthcare.gov has failed to adjust them. As of a few days ago, the listed copays for the four individual services listed in the summary price quotes were not CSR-adjusted; now, they seem to be in the spot-checks I've conducted. But 50% for each service looks awfully high at the income level tested here.