Tapped out in Kentucky: Back story to an ACA hardship case

It's not quite an iron rule, but it's a fair bet: When a newspaper reports an Obamacare hardship tale, involving someone who's bought a private plan that leaves coverage unaffordable, that person bought the wrong plan.

In two front-page stories separated by nine months, one running today, The New York Times' Abby Goodnough has reported the saga of a very sick 60 year-old gentleman, David Elson, who struggles to continue his work installing security systems while suffering from advanced diabetes. In February 2014 Mr. Elson, who says he earns $28,000 "in a good year," somehow ended up enrolling in a health plan with a monthly premium of $350 (after subsidy) and a deductible of $2,600.

There is nothing wrong with the reporting here (in fact it's excellent reporting, nuanced and empathetic). Mr. Elson made the choices described, for the reasons described below. Newspaper space is not infinite. Nonetheless, anyone familiar with the ACA subsidy scale could tell at a glance that he was paying more than he should -- and, as one of his caregivers noted back in March, more than he could afford.

On bronze-smithing the ACA

A couple of days ago I wrote about three conservative ways to change the ACA that would arguably increase viable options for individuals, insurers and (in one case) employers.  It occurs to me that a common thread runs through them all, and that thread may be twined round the heart of a system as invested as ours is in private enterprise, choice and competition.

Here are the three proposals:

1) Allow Cost Sharing Reduction (CSR) subsidies, currently available only with silver plans, to attach also to bronze plans, maintaining a proportionate difference in actuarial value between bronze and silver plans.

2) Allow smaller employers, or possibly even all employers, to fulfill the employer mandate by fully funding employee HSAs linked to HSA-qualified plans available on the ACA exchanges.

How conservatives might amend (rather than destroy) the ACA

The Affordable Care Act is by any rational assessment a conservative plan to expand access to healthcare -- relying in large part on private insurance and competition, devolving oversight and insurance industry supervision to the states, and imposing fiscal 'responsibility' on individuals with incomes as low as 138% of the Federal Poverty Level to contribute to the cost of their healthcare.

Yet conservatives complain bitterly that the private market is not free (i.e., to exclude benefits now deemed 'essential'); that the states are commanded to administer within a federal straitjacket; that the employer mandate will choke off job growth; and that the individual mandate is an unconstitutional impingement on personal liberty.

Looking back at a year of blogging about the ACA's increasingly successful implementation, it occurs to me that I've addressed three possible changes to the law that could reasonably be called conservative. Two increase viable consumer choice within the exchanges; one takes seriously the possibility of replacing the individual mandate, and one would loosen or perhaps partially replace the employer mandate.

Here they are:

New data: health exchange design matters

Why was there such huge variation among states in the proportion of ACA private plan buyers in the first open season who bought bronze plans -- the plans with the lowest premiums and highest deductibles and copays? In Hawaii, 41% of ACA shoppers bought bronze; in Mississippi, 8% did.

Part of the answer, as I've noted before, lies in a state's relative levels of wealth and health. Lower income buyers are eligible for generous Cost Sharing Reduction (CSR) subsidies that reduce deductibles, co-pays and yearly out-of-pocket (OOP) maximums -- but only if they buy silver plans.

Fortunately, most did. If you're sick and poor, a $6,000 deductible is likely to give you pause -- even if the plan is all but free and you don't come in knowing what a deductible is. On Healthcare.gov, only 15% of buyers eligible for any kind of subsidy bought bronze. The percentage is probably considerably lower among those eligible for strong CSR subsidies -- that is, buyers with incomes under 200% of the Federal Poverty Level (data from states that broke out metal level selection by income band, cited below, suggests as much).

Another factor plainly has a strong impact, though, and may account for some wealth/health anomalies in state performance. That's website design. In Connecticut, which had a 2013 median household income of $67,781, second highest in the nation, just 16% of all buyers in the first open season selected bronze. In Colorado, with a median income of $63.371, 40% bought bronze.

That's doubtless because the Connecticut site shows CSR-eligible applicants silver plans first; that is, the menu of plans available to a given user defaults to silver, both in the pre-application "shop-around" feature and in the actual application. The Colorado site, in contrast, does next to nothing to steer CSR-eligible buyers toward silver. The shop-around is cumbersome; the filter by metal level is hard to find (at the bottom of the screen, and you have to scroll back up to activate it). Perhaps more importantly, unlike on Healthcare.gov, applicants who qualify for CSR and make a move to buy a bronze plan receive no warning that they're leaving benefits on the table.

New data from Connecticut

The strongest evidence of the impact of site design comes from data about the choices of buyers with household incomes below 200% FPL (CSR is available but much weaker for those between 200-250% FPL). HHS did not provide this information for the 36 states that used Healthcare.gov in the first open season, and neither did most states. Colorado did, however, and so did New York (median 2013 household income $53,843).  And now, Access Health Connecticut has provided me with CT numbers for the current open season, which began on November 15.

Employers, HSAs and the ACA

Jay Hancock at Kaiser Health News reports that significant numbers of small businesses may stop offering health insurance to their employees, sending them instead to the ACA exchanges. This could be a good thing for employees who earn little enough to qualify for strong ACA subsidies -- win-win for employer and employee at the federal government's expense.

According to the Kaiser Family Foundation, small employers in 2014 paid an average of nearly $5,000 for solo coverage and a bit more $10,000 for a family premium. What if an employer wants to compensate employees for dropping a benefit that constitutes such a large share of their compensation?  There's a problem with straight salary increases: they reduce employees' ACA subsidies and so give a portion of the extra income back. At healthinsurance.org, I examine three scenarios in which a pay hike worth about 70% of a typical employer premium contribution triggers subsidy reductions ranging roughly from about 25-- 80%.

An employer who really wants to help employees can avoid this problem by getting creative about compensation.  One striking way to do so would be to fully fund Health Savings Accounts (HSAs) that employees can use with HSA-qualified plans on the exchanges. Here's how I described the possibility in the healthinsurance.org piece:

Health exchange design has a clear impact on metal level choices

[New data from Connecticut: please read updated version of this post here.]

Why was there such huge variation among states in the proportion of ACA private plan buyers who bought bronze plans -- the plans with the lowest premiums and highest deductibles and copays? In Hawaii, 41% of ACA shoppers bought bronze; in Mississippi, 8% did.

Part of the answer, as I've noted before, lies in a state's relative levels of wealth and health. Lower income buyers are eligible for generous Cost Sharing Reduction subsidies that reduce deductibles, co-pays and yearly out-of-pocket (OOP) maximums -- but only if they buy silver plans. Fortunately, most did. If you're sick and poor, a $6,000 deductible is likely to give you pause -- even if the plan is all but free and you don't come in knowing what a deductible is. On Healthcare.gov, only 15% of buyers eligible for any kind of subsidy bought bronze. The percentage is probably considerably lower among those eligible for strong CSR subsidies -- that is, buyers with incomes under 200% of the Federal Poverty Level.

Another factor plainly has a strong impact, though, and accounts for some wealth/health anomalies. That's website design. In Connecticut, which has a median household income of $67,8k, second highest in the nation, just 16% of all buyers selected bronze. In Colorado, with a median income of $63.4k, 40% bought bronze.

That's doubtless because the Connecticut site shows CSR-eligible applicants silver plans first; that is, the search results default to silver (at least they do in the pre-application shop-around feature; I've been trying to confirm that they do in the actual application process). [UPDATE: an Access Health CT spokesperson has confirmed that the actual application also defaults to silver for CSR-eligible users.] The Colorado site, in contrast, does next to nothing to steer CSR-eligible buyers toward silver. The shop-around is extremely cumbersome; the filter by metal level is hard to find (at the bottom of the screen, and you have to scroll back up to activate it); and unlike on healthcare.gov, applicants who qualify for CSR and make a move to buy a bronze plan receive no warning that they're leaving benefits on the table.

Scalia researched torture's efficacy by watching "24"

Antonin Scalia reacted* to the Senate torture report with a defense of torture, as reported by the AP*:

"Listen, I think it's very facile for people to say, 'Oh, torture is terrible.' You posit the situation where a person that you know for sure knows the location of a nuclear bomb that has been planted in Los Angeles and will kill millions of people. You think it's an easy question? You think it's clear that you cannot use extreme measures to get that information out of that person?" Scalia said.

That jogged a memory. What planted this scenario in Scalia's mind? Hark back to June 2007, via the Wall Street Journal Law Blog:

The Globe and Mail reported that Scalia came to the defense of Jack Bauer and his torture tactics during an Ottawa conference of international jurists and national security officials last week. During a panel discussion about terrorism, torture and the law, a Canadian judge remarked, “Thankfully, security agencies in all our countries do not subscribe to the mantra ‘What would Jack Bauer do?’ ”

Justice Scalia responded with a defense of Agent Bauer, arguing that law enforcement officials deserve latitude in times of great crisis. “Jack Bauer saved Los Angeles . . . . He saved hundreds of thousands of lives,” Judge Scalia reportedly said. “Are you going to convict Jack Bauer?” He then posed a series of questions to his fellow judges: “Say that criminal law is against him? ‘You have the right to a jury trial?’ Is any jury going to convict Jack Bauer?”

Obama: Drop that "Plans for under 100!" pitch

Hey, Mr. President: you may have the right audience here. But you have partly the wrong message:

Obama appeared Dec. 8 on Comedy Central’s “The Colbert Report,” where he took the place of host Stephen Colbert for a regular segment called “The Word” -- retitled “The Decree” for his appearance -- to pitch enrollment to young viewers.

“Most young people can get covered for less than $100,” Obama said, using lines purportedly meant for Colbert. “How is the president going to get that message out to the kids? 

The administration really needs to take down this "plans for under $100!" banner. Here's why: if an adult under age 35 has an income low enough to get a plan with a premium under $100, she almost certainly qualifies for Cost Sharing Reduction (CSR) subsidies that reduce deductibles and copays -- but only if she buys a silver-level plan. Keeping the premium under $100 for a single person in many cases means buying a bronze plan -- and the average deductible on a bronze plan is over $5,000.

Forecast: A lot more Pennsylvanians will buy bronze plans in the ACA marketplace in 2015 than in 2014

Here's a prediction: the percentage of ACA private plan buyers in Pennsylvania who select bronze plans -- the lowest metal level, with the lowest monthly premiums and the highest deductibles -- is going to shoot up in 2015.

In 2014, among states with the lowest percentages of bronze plan buyers in the ACA marketplace, Pennsylvania was something of an anomaly.

Is Medicaid expansion reducing SSI claims? If so, an uninsured diabetic in Tennessee called it

There is some evidence that the ACA's Medicaid expansion may be reducing claims for Supplemental Security Income (SSI). While such claims are dropping across the US as employment picks up, they're dropping somewhat faster in states that opted in to the ACA Medicaid expansion Modern Healthcare's Virgil Dickson reports:

The number of Americans applying for Supplemental Security Income benefits dropped in the first six months of this year compared to the same period last year, and experts are debating whether the decline is partly related to the healthcare reform law's Medicaid expansion to low-income adults.

A total of 1,189,567 SSI disability claims—mostly related to physical or mental disability— were filed in the first six months of 2014, compared with 1,330,169 during the same period last year, a drop of 10.6%, according to data obtained by Modern Healthcare from the Social Security Administration through a Freedom of Information Act request. The total decline in SSI claims in states that expanded Medicaid in the first six months of 2014 was 11.2%, compared with 10.0% in non-expansion states.

Back in June 2012, an uninsured diabetic waiting in line for treatment at a Remote Area Medical clinic in rural Tennessee forecast such a drop to New Republic reporter Alec MacGillis:

Instead of adding copper plans to the ACA marketplace, enhance bronze

One of the relative successes of the ACA's first open season is the high rate at which private plan buyers who were eligible for Cost Sharing Reduction (CSR) subsidies, which attach only to silver plans, did in fact choose silver.

In so doing, they resisted the temptation to pay far less per month for bronze plans, which carry sky-high deductibles and out-of-pocket maximums, unsoftened by CSR. As I've noted before, in the federal marketplace only 15% of buyers eligible for any kind of subsidy (including those who earn too much for CSR) bought bronze plans.

That's kind of surprising, since the premiums for silver plans are quite high for those in the middle income range of CSR eligibility. For a 44 year-old earning $23,000 per year, the benchmark second-cheapest silver plan in 2015 will cost $118, and the cheapest silver is usually only a few dollars cheaper.  The cheapest bronze plan price for this 44 year-old varies widely by state and county, falling most commonly in the $50--$75 range. That price spread between bronze and silver widens with age; a buyer in her 60s at this income level will often pay nothing or next to nothing for a bronze plan, versus the same $118 for silver (the subsidized benchmark price is a percentage of income and doesn't change with age).

I am troubled by the high premiums that low-income people have to pay for silver. $118 per month on an income of under $2,000 per month is quite a swallow. Though paying the extra premium for silver could save the buyer thousands in out-of-pocket medical costs, I'm impressed that so many many had the discipline to do it.  Prompted by a comment by xpostfactoid reader Bob Hertz, I find myself wondering: why do CSR subsidies attach only to silver plans?

What I wanted to ask Kevin Counihan

At a press briefing held yesterday, ACA marketplace CEO Kevin Counihan urged current ACA private plan holders to shop for a new plan, as "more than seven in ten of our customers can find lower prices by shopping."  Good -- the marketplace has gone all-in recently to try to convince existing customers not to renew their current plans without price-checking.

The next part of his message, however, betrays a skewed focus in my view. It's this: “Roughly eight in ten of our customers can get coverage for less than $100 a month after tax credits." That puts the focus unduly on premium, which is tantamount to dangling high-deductible bronze plans in front of low-income buyers.

The fact is, if you have access to a plan with a subsidized premium under $100, you are likely to be eligible for Cost Sharing Reduction (CSR) subsidies that will reduce deductibles and copays. CSR will cut out-of-pocket costs dramatically if your income is under $23,340 for a single person (200% of the Federal Poverty Level), and more modestly if your income is above that but below $29,175 (250% FPL).* But those secondary subsidies are available only with silver level plans, which have higher premiums than bronze.

Using Healthcare.gov's shop-around feature, I spot-checked the highest income that would enable a 44 year-old solo buyer to get the cheapest bronze plan in her zip code for under $100, give or take a dollar or two. In Chicago, it's $25,500. In Miami, it's $26,000. In Dallas, $27,500. In Biloxi, MS, $28,800; in Missoula, Montana, $25,500; in Newark, NJ, $27,700.  All of them are under the CSR threshold.

Older buyers with somewhat higher incomes can get bronze plans for under $100, since  the price spread between bronze silver increases with age.** In the six towns mentioned above, a 64 year-old could slip under the mark with an income ranging from $29,000 (barely CSR-eligible) to $33,500. Still, it's fair to say that the vast majority of buyers who can get a plan for under $100 are CSR-eligible.

It's the wages, stupid

"I'm no economist," to paraphrase Republican presidential hopefuls. But even a casual reader knows that for 35-odd years the lion's share of economic growth has gone to the wealthiest, and that the trend has accelerated in the last decade.

We're told, e.g. by David Leonhardt, that arresting the trend and creating wage growth is a gigantic mystery, and that Democrats, ostensibly the party of the less-than-wealthy, can only nibble around the edges, as with middle class tax cuts. That is, get GDP growth out of near-neutral and wage pressure will rise.

Now cometh billionaire Nick Hanauer, this generation's class traitor extraordinaire, to call bullshit and place the spotlight squarely on labor law and deliberate policy choices that have eroded workers' leverage vs. owners.  His focus is on wages -- specifically, in the piece below, on overtime pay. You can extrapolate and imagine a party that focuses relentlessly on the rules governing pay and workplace rules. I'm quoting an extended chunk here because I want to add my drops to the ocean, i.e. get a few more people to read this:

That high deductible ain't ineluctible

Dulce et decorum est to highlight the plight of low-income ACA shoppers who choose sky-high-deductible Bronze plans on the ACA exchanges. In some states, there are far too many of them.

But if you're going to do this, for God's sake bring into the narrative the Cost Sharing Reduction subsidies that attach to silver plans for low-income buyers, reducing deductibles and copays. For some buyers, the higher (though subsidized) silver premiums are a hard swallow.  But the story is incomplete if you don't lay out the choice. 

"Ware that swinging benchmark!" ACA Auto-renewal peril in Philadelphia

How could an ACA silver plan that cost a low-income family of three in Philadelphia $0 per month in 2014, with a $0 deductible, soar to $196 per month in the coming year?

A shifting "benchmark" silver plan and the disappearance of a large price spread between the benchmark second-cheapest silver and the very cheapest silver -- that's how,

Emily Van Yuga, an ACA outreach and enrollment coordinator for The Health Federation of Philadelphia, explained to me that last year, practically every one of the organization's clients bought that cheapest silver plan. This year, they all have to switch. Fortunately, the state is expanding Medicaid for 2015 (via a "private option" that the incoming Democratic governor, Tom Wolf, has vowed to scrap for traditional Medicaid), and most of the Federation's poor clients will will be eligible.

But the wildly swinging benchmark is a cautionary tale for 2014 ACA plan buyers who want to stay insured via the exchanges in 2015. I've laid it out in some detail on healthinsurance.org.

This is how you let people know what the ACA has to offer

According to a recent Kaiser Family Foundation survey, 53% of the uninsured don't know that the ACA provides financial help to low and moderate-income Americans to help them get insured. Last year, visiting Healthcare.gov or state exchanges didn't always alleviate the ignorance. An April 2014 McKinsey & Co. survey found that two thirds of subsidy-eligible respondents who visited the federal exchange,  remained uninsured and cited unaffordability as the reason did not know that they were eligible for subsidies.

I've asked before how so many visitors to Healthcare.gov could come away not knowing that their coverage would be subsidized. One answer: most did not find their way to the shop-around feature, which enables a user to enter a handful of data points (home location, household members with ages, and household income) and get plan price quotes with the subsidy included (or a notice that the user is likely eligible for Medicaid).  The shop-around was not functional until December 2013 -- and from that point on,while it wasn't exactly buried, it was hiding in plain site among several other potential starting points on the hc.gov home page.

This year it's different. The shop-around itself is streamlined a bit -- but more important, the home page steers users to it. "See plans and prices" is one of just two prominent options on the home page -- the one on the left, where reading starts.  If you pick the other -- "get started" -- you're prompted for your home state, after which you're again presented with a binary choice: see plans and prices, or apply now. "See plans and prices" is a bigger button.

In the same vein, email encouraging shop-around is pushed out to those who have created logins but have not enrolled in a health plan, either last open season or for 2015. I created a login last year, though I get my insurance elsewhere. This afternoon I received an email that looks like this:

View in browser | This newsletter created and distributed by Centers for Medicare & Medicaid Services Cyber Monday: Shop for health plans today This Cyber Monday, don’t forget to shop for health plans on HealthCare.gov. Getting covered may be cheaper than you think and you could be eligible for lower premiums and out-of-pocket costs. Take charge of your health care this holiday season. You’re on your way to the best gift of all – peace of mind for you and your loved ones. Get started today! Just enter your zip code to preview 2015 plans and estimated prices. Remember: Act by December 15 and your new coverage can start as soon as January 1 The HealthCare.gov Team

That big fat button leads straight to the shoparound, which begins with a zip code prompt. If you enter the requested info, you can get subsidy-inclusive price quotes within 30 seconds. That should give some uninsured people at least an understanding that "the government will help pay for coverage for low and moderate income Americans."

Now, if only the hc.gov shop-around would default results to silver for those eligible for Cost Sharing Reduction.  Calling Kevin Counihan....