Friday, June 12, 2015

On ACA exchanges, silver is usually not silver

I have a post up on that calls out yet another story about high out-of-pocket costs in ACA exchange plans that neglects to mention that 85% of silver plan buyers get Cost Sharing Reduction that lowers deductibles, co-pays, and yearly out-of-pocket maximums.

The story in question is under the auspices of Kaiser Health News, which generally gets its facts right, and there's no literally wrong fact in it. It makes sense, too,  to highlight that silver plans as well as bronze ones can offer pretty skimpy coverage. The lead below is referring to silver plans:
A key goal of the Affordable Care Act is to help people get health insurance who may have not been able to pay for it before. But the most popular plans – those with low monthly premiums – also have high deductibles and copays. And that can leave medical care still out of reach for some.
Indeed it can. But two thirds of silver plan holders (the "most popular plans", as the story subsequently clarifies)  have plans with actuarial values of 87% or 94%.  That doesn't mean that too many ACA customers aren't faced with too-high out-of-pocket costs. But casting silver plans unenhanced by CSR as the silver norm is like citing full retail prices at Macy's (where sales are so pervasive that the folks at the register often won't let you pay full price).

A few thoughts that didn't make it into the post:

1) It is really bloody counterintuitive for silver plans to be better than gold and (for those under 150% FPL) platinum ones. The exchanges do a poor job getting this point across, partly because it's inherently hard to get across. In other words, something's wrong with the design.

2) Silver plans are not only progressively better as you move down the income chain, they're also much cheaper. The rising percentage of income required to pay a subsidized premium as income rises is supposed to be proportionate, but the much-higher takeup rates for ACA plans among those under 138% FPL suggests that the less-than-2%-of-income premiums for silver at that income level are more affordable in absolute terms than the 6.3% of income required at 200% FPL. Overall the ACA offering gets much less attractive at 201% FPL.

3) For anyone who's not affluent, a health plan with an AV less than, say 80% is really not adequate. That's the ACA's Achilles Heel. About 45% of buyers on-exchange and probably most off-exchange have plans with AVs lower than that.  Unfortunately, the astronomic cost of health care in the US in combination with out political sclerosis (which produced those high medical costs) means it's impossible to phase out underinsurance unless we really bend the cost curve for an extended period of time.

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