Maybe we should call blue states bronze states

In several posts, I have tried to track how successful the ACA exchanges were in steering lower-income buyers of private plans toward silver plans, the only metal level at which subsidies that reduce deductibles and out-of-pocket costs are available. Low-income buyers of bronze plans, which offer low premiums but sky-high deductibles, forfeit access to these Cost Sharing Reduction (CSR) subsidies, which radically reduce costs for those with household incomes under 200% of the Federal Poverty Level and phase out at 250% FPL.

On the whole, the news is good, though information that correlates metal level selection with buyers' income is sketchy. In New York, the only state that breaks out metal level selection by income bracket, 89% of buyers under 200% FPL chose silver plans and so took advantage of CSR. In the federal exchange, only 15% of buyers who qualified for any kind of subsidy bought bronze plans.

Bronze plan selection varies quite a bit by state, however, for reasons that are hard to tease out.  For starters, more people on average bought bronze in the 14 states (plus D.C.) that built their own exchanges -- most of which are also among the wealthier states.

State per capita income seems to affect metal level selection. interacting with other factors such as premium prices, the quality of outreach to the uninsured, whether the state expanded Medicaid (which takes out potential buyers between 100 and 138% FPL), and the age composition of the buying pool.*

My thanks to a friendly stranger on Twitter who put together a scatterplot correlating state median income and bronze plan selection. That led me to the latest census data on median household income by state. Below, I've matched it up with HHS state-by-state data on ACA buyers' metal level selections.

For ACA buyers at all income levels, here are the bronze takeup rates for the thirteen highest- and thirteen lowest-earning states:

In Mississippi ACA rollout, one big disaster, one small success

Politico's Sarah Varney has a beautifully reported, infuriating account of how Tea Party government in Mississippi sabotaged the state's ACA rollout, leaving Mississippi "the only state in the union where the percentage of uninsured residents has gone up, not down."

The tale has three parts: 1) the state's Tea Party governor elected in 2012, Phil Bryant, undercut and induced the closure of the state's home-built insurance exchange, a project in which the state insurance commissioner (and Haley Barbour crony) Mike Chaney was deeply invested, and which was briefly operative before full ACA implementation. 2) The state refused to participate in outreach to the uninsured and, by closing its exchange, forfeited substantial federal aid for outreach. 3) The state rejected the ACA's Medicaid expansion, which would have extended Medicaid eligibility to an estimated 333,000 uninsured residents. Mississippi was also among the poorest performers in attracting competition to the exchange: most counties had only insurer, Humana, offering plans.

I would add a footnote. Of those three factors, the refusal to expand Medicaid in the nation's poorest state was by far the most consequential.  As part of Healthcare.gov, Mississippi's state exchange did not ultimately perform so badly.  The state exchange enrolled 61,494 people in private plans, 20.6% of the estimated 298,000 uninsured residents eligible to buy insurance on the exchange. That's not great, but it's a higher percentage than that achieved in several states that built their own troubled exchanges, and better than 17 states overall.

Had Mississippi achieved the national average percentage of eligible signups, 28%, another 22,000 residents would be insured. An estimated 138,000 Mississippians, by contrast, fell into the so-called Medicaid gap -- that is, they would have been eligible for the blocked expansion but earn too little to qualify for subsidized coverage on the exchange. Again, 333,000 state residents were estimated to be newly eligible for Medicaid under the expansion. And many states that expanded Medicaid actually exceeded their target enrollments.

What the ACA can't cure

I recently referred to Investor's Business Daily reporter Jed Graham's coverage of the ACA as "adversarial." He objected. I responded, "I don't ignore or minimize ACA flaws but would not object to a characterization of my writing on it as "sympathetic."

That set me thinking about everything that troubles me about the ACA -- or, more accurately, things that trouble me about the US healthcare system that the ACA is unlikely to fix -- though it may help catalyze reform on several of these fronts. Here's the list:

1. All private health insurance in the U.S. is inadequate -- thanks to the shameful out-of-network billing, balance billing, and creative billing by hospitals, physicians and other providers documented in sickening detail by Elisabeth Rosenthal in her Paying Till it Hurts series. We are in the grip of a depraved system in which hospitals often operate as free billing zones and payers' attempts to control costs just generate new loopholes.

2. For the unsubsidized and lightly subsidized, private insurance on the ACA exchanges is too expensive. Or rather, medical care obtained under the insurance is too expensive.  One of the law's strengths is the Cost Sharing Reduction (CSR) that reduces deductibles and out-of-pocket costs for buyers with incomes below 200% of the Federal Poverty Level to levels comparable to those offered in top-grade employer-sponsored insurance (much more modest CSR is offered to those between 200% and 250% FPL).  Those cost control come into play if low income buyers choose silver plans (fortunately, most do) and if  they are not hit by the kind of out-of-network and balance billing that Rosenthal documents. Those above 200% FPL, however, have to choose between high monthly premiums and often sky-high deductibles, average over $5,000 for bronze plans (which may be tempting to many at the upper range of subsidy eligibility).

Ebola's Information Paradox, Part II: Do we hear?

Looking back to a devastating Cholera outbreak in a poor neighborhood of London in 1854, Steven Johnson notes that "it took two entire weeks before the press began treating the outbreak as a major news event for the city."  A hundred and sixty years later, we're safer (although more fearful) because news travels faster:

Compare this pattern of information flow to the way news spreads now. On Thursday, Craig Spencer, a New York doctor, was given a diagnosis of Ebola after presenting a high fever, and the entire world learned of the test result within hours of the patient himself learning it. News spread with similar velocity several weeks ago with the Dallas Ebola victim, Thomas Duncan. In a sense, it took news of the cholera outbreak a week to travel the 20 blocks from Soho to Fleet Street in 1854; today, the news travels at nearly the speed of light, as data traverses fiber-optic cables. Thanks to that technology, the news channels have been on permanent Ebola watch for weeks now, despite the fact that, as the joke went on Twitter, more Americans have been married to Kim Kardashian than have died in the United States from Ebola.

Well yes, wonderful. But how long did it take for news of a deadly, fast-developing epidemic in West Africa to bubble up into full public consciousness in the United States? The psychological quarantining of a poor region in the grip of a terrible affliction persists.

A surprise (to me) regarding Medicaid eligibility under the ACA

I learned an interesting fact about the ACA from Kaiser's Larry Levitt on Twitter today.

It's well-known to ACA watchers that a low-income worker whose employer offers insurance deemed "affordable" according to ACA formula cannot buy subsidized private coverage on the exchanges. What I suspect is less well-known, and what Larry spelled out, is that the availability of employer-sponsored insurance does not negate Medicaid eligibility for someone whose household income is low enough to qualify for Medicaid.

I agree

with this Dish reader:

I choose to believe that Obama will not adopt Bush administration interpretation of torture treaty obligations, will not adopt a West African travel ban, and will not go deep into Syrian quagmire.

Maybe “hope” is a better word.

Re Sully's closer: "I’m hoping too. And doing what little I can to help make it so": When I read the Times article claiming that Obama is "considering reaffirming the Bush administration’s position that the treaty [UN Convention Against Torture] imposes no legal obligation on the United States to bar cruelty outside its borders," I knew exactly what Sullivan's response would look like.  And that the White House would know too. And that Sullivan speaks for Obama's base on this front, or at least a large part of it. For whatever that's worth.

NYT spotlights plight of ACA bronze plan buyers, leaves out vital context

[first posted 10/18]

The Times has a front-page story today, by Abby Goodnough and Robert Pear, that highlights the plight of ACA private plan buyers who bought plans with such high deductibles that they are foregoing needed treatment.  This is a real problem -- bronze plans in particular have terribly high deductibles, averaging $5,000 per individual -- but vital context is missing. Here's the framing:

About 7.3 million Americans are enrolled in private coverage through the Affordable Care Act marketplaces, and more than 80 percent qualified for federal subsidies to help with the cost of their monthly premiums. But many are still on the hook for deductibles that can top $5,000 for individuals and $10,000 for families — the trade-off, insurers say, for keeping premiums for the marketplace plans relatively low. The result is that some people — no firm data exists on how many — say they hesitate to use their new insurance because of the high out-of-pocket costs.

The first thing to note is that low-income ACA shoppers were generally not subject to these high deductibles. Low-income marketplace shoppers should generally not be buying bronze plans  -- not only because the deductibles are higher than those of silver-level plans, but because the silver plans alone come with Cost Sharing Reduction (CSR) subsidies. These reduce deductibles and maximum out-of-pocket costs for buyers with household income below 250% of the Federal Poverty Level (FPL). CSR subsidies are really large for buyers under 200% FPL, giving silver plans actuarial values comparable to those of the most generous employer-sponsored plans for those in that income range. The Goodnough-Pear story does explain CSR, but deep in the story, following four hard-case individual narratives.

Bronze plans had relatively low takeup in the ACA's first open season. According to HHS statistics, just 20% of users in all marketplaces (state-run as well as healthcare.gov) bought bronze plans. Since 33% of buyers who earned too much to qualify for subsidies bought bronze, less than 20% of the subsidy-eligible must have done so.

The ACA marketplace and the toilet paper aisle

My last post was in protest to a New York Times front-page article that highlighted the very real plight of ACA private plan buyers who were forgoing needed medical care because they'd bought high-deductible, mostly bronze-level plans. My beef was that the article omitted important context, e.g., that only 20% of ACA shoppers selected bronze and that the vast majority of low-income buyers who were eligible for Cost Sharing Reduction (CSR) bought silver plans that allowed them to access those important secondary subsidies.

I also suggested that the four individual narratives in the piece should not be taken at face value -- in particular, the plight of one woman who had selected a bronze plan with a $6,000 deductible but was plainly eligible for CSR that would have brought the deductible down to $500 at worst and as low as $25, depending on what plan she chose. This woman plainly made the wrong plan choice -- in itself a significant problem, but not one that the Times article addressed.

I want to focus here on a second brief narrative in the Times story, in which the woman in question was somewhat higher-income and so faced a tougher choice, with less obviously attractive options. Here's the tale:

CMS warns current ACA enrollees to shop anew.

I am glad to note that CMS, in its outreach to current enrollees in ACA plans, is shifting its emphasis away from auto-enroll and toward encouragement to shop for the best deal.

When current enrollees log onto healthcare.gov  after the 2015 marketplace opens on November 15, their new applications  will be pre-filled with their latest information from 2014. That's good. CMS also provides a good deal of information in fairly simple terms in this 5-step instruction sheet. Also good. It begins with a useful warning:

REVIEW - PLANS CHANGE, PEOPLE CHANGE. Every year, insurance companies can make changes to premiums, cost-sharing, or the benefits and services they provide. Review your plan’s 2015 coverage to make sure it still meets your needs and you’re getting the best plan for you. 

What the outreach does not do is explain that a person's current plan may lose "benchmark" status if new (or revamped) entries undersell it -- and if so, the subsidized enrollee will be on the hook for the whole difference between the cost of the benchmark plan and her current plan. That's because subsidy levels are tied to the  price of the benchmark -- the second cheapest silver plan in a given area. If you buy that plan, your share of the premium will be a fixed percentage of your income. If your plan costs more than the benchmark, you pay the difference. That difference may be especially large for older buyers, for whom the unsubsidized premium can be up to three times as large as the premium for a younger buyer.

I can see why CMS might calculate that a "benchmark gap" is too complex a concept to explain in written materials. Encourage people to compare, and they should see the difference between the cost of their current plan and cheaper options.  I'll leave it to online "product scientists" or market psychologists or others with data and experience to judge whether that's the right call. 

Grazing in the gaffeteria

Kevin Drum meditates on "the usual preoccupation that political reporters have with process over substance":

For example, Steve Benen notes today that Kentucky Democrat Alison Lundergan Grimes recently dodged "a straightforward question about whom she voted for in the 2012 presidential election" and got hammered for it. But in Iowa, when Ernst refused to say if she wants to shut down the Environmental Protection Agency or what she'd do for those who’d lose health care coverage if Obamacare is repealed, the reaction was mostly crickets.

News from New York: Most low-income ACA private plan buyers chose wisely

Recent readers know that I've been trying to get a bead on how many lower-income buyers of private health insurance plans on ACA exchanges bought bronze plans and so forfeited Cost Sharing Reduction (CSR) subsidies that reduce deductibles and out-of-pocket costs. CSR, on offer to those with household incomes below 250% of the Federal Poverty Level (FPL), is available only with silver plans.

In the federal exchange, covering 36 states, 76% of ACA private plan enrollees who qualified for premium subsidies bought silver plans. Not all of them also qualified for CSR, and so it seems likely that a higher percentage of those who did so qualify bought silver. In the federal exchange, which accounted for about two thirds of all plans sold, just 15% of subsidy-eligible buyers chose bronze plans, which carry the highest deductibles and out-of-pocket (OOP) costs.

Three states that I know of, Washington, Colorado and New York, have published data breaking out buyers' metal-level selections according to specific income levels. New York and Colorado are the only states I know of that report specifically, albeit indirectly, on the choices of buyers with household incomes under 200% of the Federal Poverty Level (FPL), the cutoff for really substantial CSR. Colorado is an outlier with a very high bronze takeup, to be dealt with in a future post. The news out of New York, in contrast, is quite good on this front, though a bit tricky to tease out.*

Tax code progressivity isn't everything. But the top line matters

"Don't soak the rich," Edward D. Kleinbard admonishes U.S. policymakers in today's Times. Countries with less progressive tax systems than the U.S., which tax everyone more and spend more on social services and other public goods, do a better job of reducing inequality (and fostering citizens' welfare) than the U.S. does. Lower income citizens get disproportionately more value from government spending, and an adequate tax base must be broad-based.

I take the point -- made with equal force two days ago by Vox's Cathie Jo Martin and Alexander Hertel-Fernandez [update: Mike Konczal and Matt Bruenig both demonstrate the alleged US progressivity is an illusion -- see below]. But there's a counterpoint. The U.S. may have a more progressive tax system and skimpier social welfare than the wealthy countries of Europe -- that's a longstanding reality. But all these countries have moved in the same direction over the past thirty years, and all have suffered widening income inequality. Here's Thomas Piketty's explanation:

Footnote to a Kliff note

Walmart announced earlier this week that it would stop offering health insurance to 30,000 employees who work less than 30 hours per week. Sarah Kliff points out that many of them will be better off on ACA plans:

Think of the 36-year-old Walmart employee here in Washington, D.C. who works 29 hours per week at the company's average wage of $12.73 per hour. She earns just about $19,000 annually if she works every week of the year.

If Walmart doesn't offer her insurance, the Kaiser Family Foundation's subsidy calculator shows that she qualifies for a $1,751 subsidy from the federal government to help buy coverage on the exchange. With that financial help, she can buy insurance for as little as an $7 per month. As a low-wage worker, she gets some of the most generous financial help.

But if Walmart does offer her coverage, it becomes her only option. She doesn't qualify for federal help and the $7 plan disappears. Walmart's plan, meanwhile, is way more expensive. The average premium there works out to $111 per month.

For many Walmart part-timers, the ACA offers an even better deal than this snapshot shows.  In addition to a premium subsidy that covers three quarters of the monthly premium, this person (if single) is eligible for generous Cost Sharing Reduction (CSR) that dramatically reduces her deductible and maximum out-of-pocket (OOP) costs. DC is not on healthcare.gov, so I checked what would be on offer if she lived in Fairfax, Virginia. There, she could choose a silver plan that costs $64 a month, with a $600 deductible and a $2250 OOP max -- or a plan that costs $74 per month but has no deductible and a $2250 OOP max.

Paul Krugman agrees with me

Back when  Paul "the stimulus was too small!" Krugman was in full Cassandra mode, just after the November 2010 shellacking, I took issue with one of his numerous whacks at Obama:

...take this sideswipe at the stimulus in Krugman's latest crie de coeur about the Fed's refusal to raise its inflation target:

...fearing opposition in Congress, the Obama administration offered an inadequate plan, only to see the plan weakened further in the Senate. In the end, the small rise in federal spending was effectively offset by cuts at the state and local level, so that there was no real stimulus to the economy.

Wasn't one of the core purposes of the stimulus to offset spending cuts by state and local governments? That's what stimulus does -- offset drops in demand. Of course, Krugman believes that there was too little state aid, along with too little of everything, in the Recovery Act, and naturally a stimulus should do more than offset other government spending cuts. But still, offsetting those cuts is a "real stimulus to the economy." The Recovery Act unquestionably preserved hundreds of thousands of state and local government jobs, and GDP would have been lower if this hadn't been done.

This may seem a semantic quibble. But it's a symptom, I think, of an oversimplified narrative. Krugman has implied elsewhere that the right-sized stimulus would have set the economy roaring back to life (as has Martin Wolf). To what degree is that credible? If Obama had asked for $1.2 trillion and got $950 billion, what's the math on the counterfactual? Unemployment at 8.3%?  And the effect of such a drop on the electorate? I confess it could be substantial. But there's an awful lot of what-ifs there, beginning with the premise that a substantially larger stimulus could have got through the Senate. And the narrative leaves out some externalities, such as the Euro sovereign debt crisis, which seemed to stop a decent-looking recovery in its tracks. Not to mention the credible possibility, forecast now by a growing number of economists and business leaders (e.g., here and here), that a substantial recovery may be on the horizon now. 

Some time in 2012, Krugman had a change of heart about Obama, and now he is out with a defense of Obama's record just as a host of ex-cabinet members and in-office Democrats is piling on (he himself notes the irony in this). Now behold his retrospective view of the (still too-small) stimulus:

ACA signups: Why is bronze more popular in blue states?

It's good news that more than three quarters of those who bought private health insurance plans on the ACA exchanges selected silver-level plans.  Most of those who qualified for help with premiums also qualified for subsidies reducing deductibles and other out-of-pocket costs.Those subsidies, dubbed Cost Sharing Reduction (CSR) were only available with silver plans.

According to a May 1 HHS issue brief, in the federal marketplace (healthcare.gov), only 15% of buyers eligible for any kind of subsidy bought bronze plans, which have lower monthly premiums but higher deductibles and cost-sharing and render a buyer ineligible for CSR.  Presumably an even lower percentage of those eligible for CSR bought bronze -- again, good news.

The percentage of bronze buyers varies considerably by state, however. Just 5% of subsidy-eligible Pennsylvania buyers selected bronze, while in Washington state, 36% did (Washington breaks out buyers' choices by income level).*  Overall, 25% of buyers in the state marketplaces selected bronze, versus 20% in the federal marketplace.  The outliers in the high-bronze column are all states that ran their own marketplaces.**

Those states are blue-to-purple;they're the ones where state government tried to make the ACA work. How did they end up with higher concentrations of bronze buyers?

ACA Signups: "Over 9.5 million served"?*

Charles Gaba has been tracking ACA enrollments during the off-season, as he did during open season. He estimates that approximately 9,000 people per day are signing up for private plans via "special enrollment" periods, with net attrition of about 2% per month as people drop plans for a variety of reasons.

Tonight Gaba estimates that there have been about 9.5 total private plan (QHP, for Qualified Health Plan) signups to date That's a number that most people will mentally offset, as HHS recently announced that about 7.3 million are currently enrolled in QHPs. Perhaps a bit less than half of that 2.2 million difference is comprised of people who never paid, the rest dropping plans at various points.

It's natural and to a degree fitting to focus on the number of current enrollees. That number is important in that a) the ACA has a long way to go to full takeup -- CBO forecasts 25 million exchange users by in 2018 --  and b) the states' risk pools need to maintain critical mass to establish a viable market. Still, the total number served since the outset -- discounting, perhaps, most of those who never paid -- is also significant.