Friday, December 12, 2014

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.
To be exact: any single person earning over $21,500 will have to pay over $100 for a silver plan. But any single person earning less than $23,340 will qualify for really powerful CSR if they buy silver (weaker CSR is available to those earning $23,340--$29,175).  Here's how that plays out.

In Newark, NJ, a 27 year-old earning $21,500 (let's call her Prudence) can get the cheapest silver plan for exactly $100. Enhanced by CSR, the plan has a deductible of $100. Primary care physician visits have a $10 copay; specialists, $50; ER visits, $400; and generic drugs are free. The yearly out--of-pocket maximum -- the most Prudence can be on the hook for in one year -- is $2250. That is good coverage.

Prudence can get the cheapest bronze plan in her region for $63 per month. It has a $6,000 deductible and no benefits that kick in before the deductible is reached, excepting the ACA's mandatory free preventive services, including a yearly checkup, birth control, and various screenings, such as for cholesterol or depression. For any actual illness or injury likely to require treatments, she's on her own until she spends $6,000. Not so prudent.

An awful lot of young people earn less than $21,500 and so can get silver plans for under $100. But still, the emphasis on the sticker price is wrong.  Bronze plans are almost always inappropriate for low-income people, which includes these days includes most young adults. The administration should be blazoning forth CSR -- and defaulting search results on to silver for those who qualify for CSR (as the Connecticut and Maryland exchanges do). Or better yet, attaching CSR to bronze.

P.S. Prompted by Adrianna McIntyre, I want to acknowledge that bronze plans can work for some people, including some young adults, especially if they a)  are healthy and anticipate needing little to no medical care, b) have financial resources or a family backstop such that $5000-6000 in unanticipated medical costs (e.g., a few days in a hospital) won't break them, c) live in an area or are of an age where the premium spread between bronze or silver is especially large (bronze plans are free for many subsidized older adults) and/or d) have access to a bronze plan that has significant benefits that kick in before the deductible is reached, as some do, and finally, alas, e) just can't bloody afford a silver premium. More on "for whom the bronze bell tolls" here.  My point is not that everyone who's CSR-eligible should choose silver, but that administration messaging shouldn't reduce the decision to a single price point.

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