Friday, June 12, 2015

Five under-reported facts about the ACA

It just popped into my head to consolidate a few facts about the ACA that I think I know and that seem to be pretty widely unrecognized. I just delved into the first one today, and I've flogged many or most of them several times, but here goes:

1. Silver plans are usually more than silver: 85% of silver plans sold on ACA exchanges are enhanced by Cost Sharing Reduction subsidies that raise the actuarial value from a baseline of 70% to 73%, 88%, or 94%, depending on the buyer's income. Two thirds of silver plan buyers have the stronger forms of CSR -- AV 87% or 94%.  On the other hand...

2. Half of those buying plans in the individual market are off-exchange, and many of those are doubtless buying silver plans with AV 70% (the metal levels are in use in ACA-compliant plans sold off exchange).

3. Most of those buying off-exchange are paying more than they would have pre-ACA, but perhaps 20-50% of them have a pre-existing condition or have a family member with one. Many of those buyers are paying less than they would have pre-ACA, and some would not have been able to buy or afford insurance at all.

4  ACA coverage rules are not the main reason that the law raised the price of unsubsidized individual market insurance.  Republicans have made the ACA's mandatory Essential Health Benefits their favorite whipping boy, but the real price driver is guaranteed issue -- the prohibition against basing the price of a plan (or eligibility) on the would-be buyer's medical history. And most Republicans profess (rather vaguely) to support that.

5. Short-term beneficiaries of the ACA exchanges "count."  U.S. health insurance markets have long been highly volatile, mainly because job status is highly volatile -- along with marriage status, place of residence and various other factors. Lots of people will plug into exchange coverage for four months, six months, twelve months -- and that's as it should be, not a sign of market dysfunction. In fact, I don't know how the real experts feel about this, but to me the retention rate in the ACA exchanges from 2014-2015 was kind of surprising.

6. There's too much underinsurance in the ACA marketplace -- but the pre-ACA market was worse. According to one study, the average actuarial value of plans in the pre-ACA market (as of 2010) was less than the 60% mandated for the ACA's lowest-tier bronze plans.  Some pre-ACA buyers may have been satisfied because they lacked coverage for services they didn't need or didn't think they'd need, like mental health or drug treatment. But let's also not forget annual and lifetime coverage caps,  hidden exclusions for all kinds of services, and arbitrary rescissions -- all ended (at a price) by the ACA.


  1. Thanks for a fine post. Numbers 4,5,6 are totally true, and could be brought out about 30 times a day across the internet to counter the claims of ACA opponents.

    My only caution would be point #3. I do not quite see how you can get any reliable data about those buying plans off-exchange. You would have to cull numbers from 25 insurance companies, and not obvious numbers either.

    1. Bob, some of the regular survey conductors, Kaiser and I think Commonwealth or Urban, and maybe RAND too, have come up with estimates of the off-exchange market. Kaiser has about half on-exchange.

  2. I wonder what is the source for item 1.
    Thank you

    1. See the article linked to in the intro paragraph. It's based on income data in the March HHS ASPE brief and totals for CSR takeup in the more recent May enrollment snapshot. Links to both in the story linked to in the intro.