Friday, April 27, 2012

Kaiser weighs in: the ACA offers catastrophic coverage to all comers

As I have noted several times this month, the plaintiffs seeking to get the Affordable Care Act struck down have based their case in large part on assertions that the individual mandate will force masses of healthy young people to buy coverage far in excess of their needs, exploiting them as "golden geese" to fund insurance for older and sicker citizens. I have pointed out that the ACA in fact includes a catastrophic insurance option not only for all adults under 30 but for others who can show financial hardship or are otherwise exempt from the mandate. The AP's Ricardo Alonso-Zaldivar chimed in with an article citing several experts asserting that the cheapest class of plans to be offered in the insurance exchanges, the "bronze" plans, also offer extremely limited coverage -- just 60% of an average policyholder's expenses -- and can also be reasonably deemed "catastrophic." Steve Benen and Jonathan Cohn have also taken up the point.

Now cometh the Kaiser Family Foundation -- perhaps prompted by Cohn, who has written for them -- with a detailed breakdown of the coverage levels and likely deductibles to be faced by policyholders selecting the various levels of coverage made available by the ACA.  Seconding the experts cited by Alonso-Zaldivar, Kaiser deems the "bronze" plans tantamount to catastrophic coverage:

With much of the controversy over the ACA focusing on the individual mandate, it is
noteworthy that the minimum coverage requirement is for insurance that is
significantly less generous (and with a lower premium) than what most people have
today. It is a level of coverage that most would consider catastrophic, providing
protection in the event of an expensive illness while subjecting routine expenses
(except for preventive care) to a relatively high deductible. While much of the
opposition to the individual mandate is likely due to views about the appropriate
role of government, a better understanding of how it works and what it requires
could moderate some of the resistance to it.
There is something perverse in arguing that the mandate is constitutional because it offers the option of marginally adequate coverage.  But that's freedom, American style. I think that Kaiser underestimates the legal significance of the catastrophic options.  As I argued in response to Cohn's assertion that the constitutional argument wouldn't change if all the coverage options were robust:
That might be true in a depoliticized legal vacuum.  But the plaintiffs' arguments [that the mandated coverage was excessive] plainly made a deep impression on Alito, Robert, Scalia -- and, somewhat more equivocally, on Kennedy, all of whom voiced various aspects of those arguments. And Michael Carvin's brief on the individual mandate hammered home relentlessly the claim that the mandate was "forcing healthy individuals to immediately start paying inflated premiums that exceed their actuarial risk" (p. 38); that the mandate would "compel the uninsured into engaging in economic activity that is harmful for them but beneficial to third parties" (p. 1), etc. etc. -- and the conservative justices seem to have bought this argument.

Moreover, Carvin's assertion that "the uninsured neither interfere with commerce or its regulation, nor engage in economic activity by failing to purchase insurance" (p. 29) hinges in part on his insistence that the uninsured are being forced to buy more insurance than they personally need, and to buy it when they don't need it, e.g., when they're young and healthy. But since everyone is at risk of serious illness and so needs some insurance if they are not to pass their healthcare costs to the general public, this argument is weakened if it can be shown that the insurance citizens are mandated to buy does not exceed the real or perceived needs of anyone.

It is therefore germane that Congress erected several hoops to limit the mandate to the minimum necessary, e.g., expanded Medicaid eligibility, the catastrophic option for those under 30 and those who can show hardship, and the quasi-catastrophic bronze plans, which cover only an estimated 60% of the average person's medical costs. The judges asked Verrilli for a "limiting principle" putting boundaries on Congress's power to compel activity from citizens. As I have argued before, the ACA is self-limiting insofar as the drafters minimized the mandate.
On the one-month anniversary (lunaversary?) of the oral arguments on the ACA, it seems worthwhile to bring together relevant articles (besides my posts) exploring the catastrophic coverage options and other self-imposed limits of the individual mandate of the ACA.  Here they are:

Was Verrilli just the wrong man for the job? Part I (Ragbatz Tumblr, courtesy of Anon below, 3/28)
The bounded, minimalist way to uphold the ACA (Marty Lederman at Balkinization, 4/2) 
Supreme Court misunderstanding on health overhaul? (AP's Ricardo Alonso-Salvidar, 4/10) 
Policy ignorance at the Supreme Court (Steve Benen, Maddow blog, 4/16)
Will the justices make a catastrophic error? (Jonathan Cohn, 4/19)
And on the mandate more broadly:
The individual mandate is a piece of Cake
Verrilli's 'limiting principles' for the individual mandate
Another 'limiting principle' to individual mandate: states can opt out
If only Verrilli had said (A, B, C)
Verrilli, slapped silly, recovers willy-nilly (3/28)

Update: per the Anon comment below, see a dead-on Tumblr entry by "Ragbatz" on the catastrophic character of the bronze plans and the impact that info could have had on the oral arguments -- posted 3/28, according to the comment (the Tumblr is undated).


  1. Replies
    1. Whoa, Anon, that's a beautiful piece - states the relevance of the "catastrophic" nature of the bronze plans beautifully. There are no dates on the tumblr - you say it was 3/28?

    2. I am the keeper of I posted the item linked by Anon on 3/28, just before the C-Span Radio broadcast of the final day of oral argument. Thanks for the compliment.