Tuesday, September 09, 2014

The Republicans' ACA shell game

The most credible rap against the Affordable Care Act is that it raises the cost of insurance bought in the individual market for people who have no preexisting conditions and earn too much to qualify for subsidies.

That is true. Hence all the "rate shock" stories bruited by the GOP last fall.  Most of those stories did not survive scrutiny, because the GOP went for dramatic hardship cases, and most true hardship cases qualify for subsidized coverage.  Those truly dinged by the law were more like a couple with two children profiled by the New York Times earning about $100,000 per year and a single 50-something man earning just under $50,000 profiled in the same article -- folks on the wrong side of the subsidy cliff.*

Somewhere between one and five million people suffered at least short-term financial harm of this sort. Their numbers are now dwarfed by the 6-7 million people getting subsidized private plan coverage, the 7 million-odd added to the Medicaid rolls, and the 2-3 million under age 26 who gained coverage on their parents' plans.

The law as a whole remains unpopular -- because Republicans have been relentlessly smearing it for five years, because the individual mandate has always been an unpopular concept, because healthcare.gov dysfunction imprinted "train wreck" perceptions before the problems were patched and signups surged, and because astounding numbers of the still-uninsured still don't know that they qualify for subsidized coverage.

Nevertheless, reality has seeped in enough to sap the strength of the Republican attack.  And as the intensity of that attack has diminished, its policy core has shrunk to a simple line that masks a core evasion. Here's one iteration, as expressed to Talking Points Memo's Sahil Kapur:
"Ensuring that people with preexisting conditions have access to coverage has long been a popular policy, and one where there is bipartisan agreement. It's the the entirety of ObamaCare that remains EXTREMELY unpopular," Brad Dayspring, a spokesman for the Senate GOP's campaign arm, told TPM in an email.

Scratch this a bit -- and Republican candidates will wriggle away before you can scratch it very deeply -- and it boils down to "cover everybody, but make coverage cheaper."  But therein lies the shell game. "Ensuring that people with preexisting conditions have access to coverage" generally means implementing "guaranteed issue" -- that is, mandating that a buyer's medical history will not affect the price of the insurance offered to her. Most Republicans, when pinned down (and most won't be pinned down), say they support this. But guaranteed issue.

But guaranteed issue is the main factor that drove up the base (unsubsidized) cost of privately purchased insurance under the ACA. As I've noted before, benefits consultant Milliman estimated in March 2013 that guaranteed issue would drive the cost of insurance in California up 26.5%.  The ACA's benefit requirements, in contrast, would raise premiums only by an estimated 4.8%. More recently, with the data for the ACA's first open season available, a NBER study by a team of health economists led by the Wharton School's Mark Pauly identified guaranteed issue as the primary cause of cost increases averaging 14 to 28% in 24 states.

Some Republicans, rather than expressing support for guaranteed issue, will tout the value of state-level high risk pools, which provide somewhat subsidized insurance for those priced out of the private individual market by preexisting conditions. These pools have existed in many states for years, and they were mandated as a temporary measure by the ACA until the exchanges opened in 2014. They have never been adequately funded, however, and have never been able to meet the need of the vast number of people priced out of the individual market. No Republican has proposed an adequately funded high risk pool component to a developed alternative to the ACA.

Republican attacks on the ACA have devolved to attacking the whole --that is, the name, or rather the politically charged nickname "Obamacare" -- while avoiding discussion of the parts. That strategy tracks the public opinion they've shaped so skillfully, which approves the parts while disapproving the whole. But its policy bankruptcy is manifest.

*  The numbers of such victims are relatively small. About half of the 10-12 million Americans who bought insurance in the individual market in 2013 qualified for subsidies or Medicaid under the ACA. Some of those who didn't -- probably 25-50% -- were households including a member with a preexisting condition. Most people who enter the individual market in a given year stay there less than a year in any case. And some who suffered a price spike in the short term may eventually benefit -- if they develop a preexisting condition, or suffer a drop in income, or have use of the fuller coverage mandated by the ACA -- e.g., the banning of lifetime and annual coverage caps, or coverage for pregnancy, mental health, drug abuse, etc.

1 comment:

  1. Well done. Two more points:

    Those who suffer from the new law had preferred rate health insurance before, and now must navigate in a guaranteed issue world.
    It is true that this group is smaller than the ACA's beneficiaries.
    However this group does vote more. They may play a role in elections down the road.


    Almost no one talks about ACA rules on small group insurance -- but in numbers, far more persons could be hurt as these rules are installed. If the Republicans were smart, and this is no sure thing, this is a way for them to attack the ACA,