Saturday, March 08, 2014

Stat shots of the unsubsidized uninsured

Barring any slip between cup and lip, I should have an article coming out soon that recounts the experiences of several people who do not qualify for ACA subsidies but who have bought insurance plans for 2014 in the new ACA-enacted universe.  A preview is here. In the process, I've tried to get a grip on just how many such people there may be and how they're likely to fare under the ACA.

A Health Affairs post by Urban Institute researchers Lisa Clemans-Cope and Nathaniel Anderson has helped me bring the statistical picture into focus. I should say into relative focus, because there's a good deal of uncertainty in every stat shot. With that caveat, here goes:
  • Estimates based on 2009 surveys conducted by different federal agencies as to how many Americans were buying insurance in the individual market vary widely, from 9.1 million in the Medical Expenditure Panels Survey to 25.3 million in the American Community Survey. A mid-range estimate from the National Health Interview Survey (NHIS) conducted by the CDC is 14.0 million.

  • In December 2013, the Health Reform Monitoring Survey found that 18.6% of those insured in the individual market received cancellation notices attributing cancellation to the ACA, and  another 6% had their policies cancelled for other stated reasons.  Using that data, and the NHIS estimate of 14 million in in the individual market, Clemans-Cope and Anderson  estimate that 2.6 million people received policy cancellations that their insurers blamed on the ACA (and one might infer another 840,000 cancelled for other stated reasons).

  • According to a March 2013 Urban Institute study, 48.6% of those currently in the individual market are ineligible for subsidies. If that ratio is right, and the estimate of 2.6 million cancellations attributed to the ACA is on target, about 1.2 million people who received cancellation notices blamed on the ACA would be ineligible for subsidies.  Of those, some probably had pre-existing conditions and will do better under the ACA.

  • The Urban Institute study estimates the current individual market at 12.8 million, 6.2 million of whom would be subsidy-ineligible.

  • The Congressional Budget Office projects that from 2017 to 2024, between 24 and 25 million people will buy insurance on ACA exchanges every year. Of those, 4 to 5 million will be unsubsidized, a percentage in line with current HHS reports that 82% of those who bought on the exchanges to date have been subsidized.

  • As my handful of interviews indicate, most people who do not qualify for subsidies see no reason to go through the exchange to buy insurance, though many if not most will buy plans available on the exchanges. [Update/replacement 4/14/14: The updated CBO estimates released today forecast about 5 million people per year buying insurance off-exchange in the nongroup market from 2014-2024 -- about 4-5 million less per year than would have been in that market absent the ACA.

  • A large percentage of American households, and therefore of households in the individual market, include at least one person with a pre-existing condition. The percentage of Americans with preexisting conditions is between 19 to 50 percent, according to an HHS report overviewing various studies. Whatever the actual number, it needs to be multiplied by the average household size among people buying ACA-compliant plans. In Washington State, which collects detailed data on ACA enrollment, more than half the people enrolled in private plans through the state exchange are in households with more than one person.

  • The average household size among people buying health plans on the Washington exchange, according to my calculation, is 1.4. That's a lot smaller than the average U.S. household according to U.S. census data. The difference may stem in part from the fact that in most households that qualify for ACA subsidies, the children will be pushed into CHIP rather than added to their parents' policies and subsidized there.  In Washington State, the cutoff for CHIP eligibility is a family income below 300% of the Federal Poverty Level (FPL). That means that the only families with children  in which the children end up on their parents' policies would be a) those whose income is between 300 and 400% FPL, who would be eligible for subsidized family plans, and b) those ineligible for subsidies, who constitute less than 20% of those buying on the exchange. 
  • [added 3/13]: The converse of the point above may be that the average household size is larger among those in the individual market who are not subsidy-eligible than among those who are -- which would in turn increase the likelihood that someone in the household would have a pre-existing condition. On the other hand, the relatively wealthier are also likely to be relatively healthier.
To reiterate, in case anyone didn't notice: if the Urban Institute estimates are roughly on target, only about 2.6 million Americans underwent insurance policy cancellations attributed by their insurers to the ACA -- and of those, probably half qualify for subsidies and so will probably do better under the new healthcare regime. Of the remainder, a good percentage probably also had pre-existing conditions and so will likely also do better under the ACA, which forbids insurers to price policies based on a person's medical condition or history. These estimates suggest that the number of people genuinely subject to "rate shock" by the ACA is quite small [though see update 4 below].

UPDATE: some caveats, germinated on a post-blogging run:

1.  Re the estimates of the individual market, 2009 was a long time ago.  It was a year of economic freefall when the unemployment rate scraped 10%, which may have thrown some who could afford it into the individual market (and more into COBRA, and more into ranks of uninsured). Now unemployment stands at 6.7%. Since 2009, too, some 3 million adults under age 26 have accessed their parents' health insurance, most of it probably provided through an employer.  At the same time, the percentage of jobs providing health insurance has shrunk and the population has grown.

2. There is some ambiguity in designating who among the unsubsidized has bought insurance "off-exchange" or "on-exchange."  My coming article and preview provide anecdotal support for the intuitive likelihood that most people who are ineligible for subsidies won't buy their insurance through the website or the state websites. Many, however, will buy QHPs available on the exchange directly from an insurer or broker.  Do the CBO's figures for insurance bought on "exchanges" count all QHPs purchased, or only QHPs purchased through online websites? Also worth noting: buyers of off-exchange plans are in the same risk pool as those in QHPs if the insurer is offering any plans on the exchange in that state. If the insurer is selling off-exchange only, as some states allow, their customers will not be in the QHP risk pool.

3. Per Paul's comment below, I wonder whether more people in the individual market were hit with large rate hikes this year than with cancellations.

UPDATE 2: Kevin Drum also comments on the Clemans-Cope/Anderson post on cancellations but keeps it pithy.


  1. Our Blue Cross policy, which covers everything my wife and I need, went from $450 to nearly $650 in January. Blue Cross told us the big jump was due to the new ACA provisions in the policy. We (just barely) don't qualify for a subsidy. I was looking forward to this law taking effect, believing costs would be less for everyone, but that simply is not the case, unfortunately. For some they are going up, at least for now... Feeling kind of left out of the party at this point

  2. Paul, if you'd like to tell me more -- what your old plan did and did'nt cover, your ages, etc. -- please email me via the "about me" on the right margin. I'm trying to get a sense of how the ACA plays out for various people.

  3. My wife's and my Blue Cross policy more than doubled. However, we had a huge deductlible ($11k individual, $22k family) and no maternity coverage, from $511/m to $1300/m. We were able to get a cheaper plan from Blue Cross through the exchange, $1100/m. We are well above the level for subsidies. Am I unhappy to be paying so much more? Yes. Do I still support ACA? Absolutely.

    1. Thanks for this, Sam. At $11k/month, I'd guess you're either in your 50s or buying a platinum plan. As I said to Paul, if you're willing to provide more detail, please email me via the "about me" tab on the right margin.