Tuesday, April 10, 2012

The ACA offers catastrophic coverage: the AP notices!

For almost two weeks, I have been beating a drum, waving a flag, screaming from the bleachers that justices Alito, Roberts and Scalia seemed unaware of a fundamental feature of the Affordable Care Act (and were not disabused during oral argument on 3/27): the ACA has a catastrophic coverage option.  All three seemed convinced that the mandate requires individuals to buy more coverage than many people will ever need, such as substance abuse treatment, and that the young were being exploited as "golden geese" to subsidize the cost of covering older citizens.

My focus was on provisions in the ACA, Section 1302 (e), allowing those under 30 and others who could show financial hardship to buy purely catastrophic coverage. Now, the AP's Ricardo Alonso-Zaldivar is out with a story* citing several experts who assert that the bronze plans to be offered in the insurance exchanges, available to all, are also essentially catastrophic coverage plans -- though that definition is contested. Those calling it catastrophic focus mainly on the percentage of costs covered:

On the surface, the minimum benefits requirement does seem to mandate comprehensive coverage. But another provision of the law works in the opposite direction, and the two have to be weighed together.

This second provision allows insurance companies to sell policies that have widely different levels of annual deductibles and copayments. A "platinum" plan would cover 90 percent of expected health care expenses, but on the bottom tier a bronze plan only covers 60 percent.

 "The minimum that people will be required to buy under the health reform law is clearly a catastrophic plan," said  [Richard] Levitt [head of the Kaiser Family Foundation's Initiative on Health Reform and Private Insurance]
Whether or not you consider the bronze plans 'catastrophic' coverage, it's plain that the drafters of the ACA went out of their way to minimize what those subject to the mandate would be required to purchase: unambiguously catastrophic coverage for those under 30 or showing financial hardship; high deductible coverage for those fully subject to the mandate. That minimalist approach should weigh heavily with the justices -- and possibly, as Marty Lederman (and I) have suggested, provide a path for them to uphold the mandate while further limiting it.

In the March 27 Supreme Court pleadings on the mandate, Michael Carvin, one of two attorneys arguing for the plaintiffs, asserted that ""Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance."  Asked by AP's Alonso-Zaldivar about claims that the bronze plans are catastrophic coverage, he dismissed them:
Carvin says he stands by his statement in court that the law prohibits anyone over 30 from buying any kind of catastrophic insurance.

"The bronze plan is not catastrophic coverage," said Carvin, who represents the National Federation of Independent Business.

"It's got all the minimum essential benefits in it," he added. "It's got to have wellness, preventive, contraceptives — all kinds of things a 30-year old would never need. It's not remotely catastrophic."
Fine -- there's no agreed definition for "catastrophic coverage." But imagine if, in response to assertions that the mandate required excessive insurance purchases, either Verrilli or one of the liberal justices had pointed out that the ACA offers those subject to the mandate essentially two layers of what can reasonably be called catastrophic coverage -- an absolute bare-bones plan for those under 30 and those truly unable to afford the bronze  -- even with subsidies, or with income high enough to disqualify them for subsidies -- and a high deductible option for everyone else.  In other words, the mandate is minimized for those who either want to bear more risk or really can't afford more complete coverage. Carvin's categorical assertions would have looked a lot shakier.

* On 4/1, I emailed two of Alonso-Zaldivar's colleagues covering the Supreme Court for the AP alerting them to the catastrophic coverage option in the ACA and the justices' apparent ignorance of it, with a link to my 3/31 post. Alonso-Zaldivar has acknowledged to me that the email was passed to him but says that his article was focused on "a different issue" (the 'catastrophic' nature of the bronze option as opposed to the more limited and unambiguously catastrophic option for those under 30 or showing hardship).  I disagree that these are different 'issues' -- both are crucial aspects of limits on the mandate. But I am glad in any case that the issue is out there.


  1. This story is a lie. All plans include the so-called "essential health benefits," see p. 5. By definition, that is not purely catastrophic coverage.


    The real purpose of the ACA is force people without insurance into the clutches of the insurance companies, at taxpayer expense and at the point of a gun. And then to ram a compulsory state religion of quackery, fraud and charlatanism, under the pretexts of "wellness and prevention," down everyone's throats. I.e., the bilge that has spewed from the White House ever since Obama took office.

    1. What, actually, in the Kaiser Family Foundation document you cite support your argument? As far as I can tell, that document identifies five levels of coverage: Bronze, Silver, Gold, Platinum, and Catastrophic. It offers not a hint that the Foundation, or anyone other than an NFIB attorney, defines "catastrophic coverage" in a way that would exclude the provision at issue. You wouldn't, by any chance, be pretending that the KFF supports your position?

  2. Wipe the spittle off, Anon. First, the AP story is not a "lie." It includes your point of view, expressed civilly by Michael Carvin. Second, "catastrophic coverage" has no precise definition, as the difference of opinion in the story makes clear. Third, the catastrophic option provided to those under 30 and others exempt from the mandate in the ACA is by any definition 'catastrophic coverage,' except for the preventive services it provides at no additional cost to the insured -- hardly a a dictat that they purchase Cadillac coverage. And while you may find it gratifying to describe the preventive coverage under the mandate as quackery and bilge, most health insurance experts consider provision of such services sound public health policy.
    What paranoid rhetoric deems "a compulsory state religion of quackery, fraud and charlatanism" is a bid to provide all citizens with minimally adequate health care coverage -- a threshold requirement for a civilized society, provided by every wealthy nation in the world but the US.

  3. Several actuarial firms have estimated the deductible under the Bronze option and came up with numbers between $2000 and $6500. Even the lowest of these would qualify as the type of policy required to support tax-favored HSA accounts. Such policies are commonly called "catastrophic coverage".

    As for the scope of essential health benefits, when catastrophy strikes practically any benefit may come into play.

    Finally, as to equating the young with "golden geese", it is also true that the ACA's community rating system does allow age-banding, the youngest paying a third as much as the sixty-four year-olds.

    Alongside the catastrophic coverage limitation, all three of these factors significantly reduce the validity of what was essentially an overbreadth argument by Scalia and friends. The mandate IS narrowly tailored to the problem Congress was addressing in enacting it.

    A pity that Verrilli had not been able to say, "Yes, Justice Scalia, and that it precisely what Congress did." I did not see this point in the government briefs; perhaps one or more amicus briefs pointed it out One can certainly hope it is picked up by one of the liberal justices or their law clerks. Do they keep reading newspapers and/or blogs relating to case in review? Do they read the sign I'm willing to hold up on the courthouse steps?

  4. A bit more.

    One of the conservative justices cited, with obvious scorn, the fact that some young man might not want drug abuse and mental health coverage. Yet, competent doctors watch their serious accident or sudden serious illness patients for depression and addiction to opiate pain-killers.

    I remembered that this morning when I read that Buster Posey, an All-Star catcher for the SF Giants was out of the line-up with a case of shingles. In his mid-twenties, he's a bit young for this disease, is wealthy, and well-insured. But what is remarkable about shingles is that the rash lasts a week, covers no more than a relatively small part of the body, yet can end up in huge pain, sometimes lasting years. Among the most-common treatments for post-shingles pain are opiates and anti-depressants.

    Now imagine a major burn victim.

    Okay. Now imagine a man Buster Posey's age, although without the seven-figure contract, who does not want mental health or drug abuse coverage.