Monday, December 09, 2013

WSJ hits ACA from the left

Good reporters at the Wall Street Journal continue to bust the ACA's chops.  The likes of Louise Radnofsky, Amy Schatz, Timothy Martin and now Leslie Scism, who's been covering insurance for at least 15 years (and is also a news editor), are not going to get their facts wrong. But it remains fair to wonder whether the Murdoch-era news editorial regime is shaping the stories' emphasis [UPDATE: I have spoken to someone at the Journal, whose word I trust, who assures me that editors area not imposing a political agenda on reporters. I regret speculating about motive without information.]

Today, Scism and Martin spotlight something that has in truth troubled me as I explore offerings on and ValuePenguin:  the prevalence of high deductibles, particularly in bronze plans:
As enrollment picks up on the website, many people with modest incomes are encountering a troubling element of the federal health law: deductibles so steep they may not be able to afford the portion of medical expenses that insurance doesn't cover.
The average individual deductible for what is called a bronze plan on the exchange—the lowest-priced coverage—is $5,081 a year, according to a new report on insurance offerings in 34 of the 36 states that rely on the federally run online marketplace.

That is 42% higher than the average deductible of $3,589 for an individually purchased plan in 2013 before much of the federal law took effect, according to HealthPocket Inc., a company that compares health-insurance plans for consumers. A deductible is the annual amount people must spend on health care before their insurer starts making payments.

The health law makes tax credits available to help cover insurance premiums for people with annual income up to four times the poverty level, or $45,960 for an individual. In addition, "cost-sharing" subsidies to help pay deductibles are available to people who earn up to 2.5 times the poverty level, or about $28,725 for an individual, in the exchange's silver policies.

But those limits will leave hundreds of thousands or more people with a difficult trade-off: They can pay significantly higher premiums for the exchange's silver, gold and platinum policies, which have lower deductibles, or gamble they won't need much health care and choose a cheaper bronze plan. Moreover, the cost-sharing subsidies for deductibles don't apply to the bronze policies.
That is all true, and worth reporting.  What's de-emphasized, though is a core ACA design feature: the premium subsidies are keyed to the silver plans, which are thus theoretically "affordable" for everyone (that is, available for a fixed percentage of income that rises at higher income levels, from 2% at incomes up to 133% of the Federal Poverty Level to 9.5% at 300-400% FPL). If you are premium subsidy-eligible, as more than half of those shopping on the ACA exchanges will be, and eligible for cost-sharing subsidies, as those under 250% FPL are, than the silver plans are almost certainly a better deal than the bronze.

Moreover, the political context is effaced in this article.  Republicans like high cost-sharing, as healthcare wonk Adrianna McIntyre and management/public policy scholar William Ocasio highlighted in responses to the article on Twitter (McIntytre should note, however, that WSJ reporting and WSJ op-ed are not the same animal).  Red-state Democrats funneled Republican preferences into the ACA -- particularly in the Senate, where the de facto 60-vote requirement meant that the law could be no more liberal than the most conservative members of the Democratic caucus. The House bill provided more generous subsidies. The sharpest criticism in the WSJ article is from the left, via Jamie Court of Consumer Watchdog.

All that said, the high deductibles are troubling -- especially to spoiled me, who's enjoyed zero deductible coverage with modest co-pays for 15 years through my wife's healthcare-industry employer. I would prefer to forgo certain mandated free benefits, such as birth control and yearly checkups (what's wrong with an affordable co-pay?) in exchange for lower deductibles.

Update: Conservative reporter and ACA critic Philip Klein notes that it's unfair to compare bronze plan deductibles to the average deductibles currently available on the individual market, instead of to those of the cheapest non-ACA plans.

Update 2: Robert Pear covers the same phenomenon -- high deductibles in bronze plans in particular -- in today's NYT.

Related: WSJ on ACA
On rate shock in Georgia
The WSJ spotlights an apparent anomaly in ACA subsidies
The WSJ on the ACA, cont.
The WSJ leans into "rate shock" narrative for the ACA


  1. What is the cost of mandated benefits? Seems like a red herring to me. High deductibles are due more to bronze plan design, lower relative premium than to mandated benefits.

  2. Studies show that high deductibles and co-pays discourage insureds from seeking health care, which mainly means preventive care. Most health care practitioners would prefer zero or very low deductibles and co-pays for that reason. Of course, those with higher incomes can set up a tax-favored IRA to cover the deductible and co-pays, something those with lower to middle income can't afford to do. Rather than a patchwork, why not have blended funding, with private insurance funding catastrophic coverage (which is what private insurers are good at) and public funding of preventive coverage (i.e., for the deductibles and co-pays).