Wednesday, October 14, 2015

Hey, Jeb! Who's getting those "huge new subsidies" under the ACA?

Touting his new ACA replacement plan, which would wipe out ACA coverage rules for insurers and replace means-tested ACA private plan subsidies with tax credits for catastrophic coverage available at any income level, Bush asserted:
Obamacare created huge new subsidies for low-income Americans, but it left middle-income Americans facing higher premiums and higher out-of-pocket costs.
There are some grains of truth to that.  People who 1) get their insurance in the individual market,  2) earn too much to qualify for subsidies (that is, over 300-400% of the Federal Poverty Level (FPL)), and 3) don't have pre-existing conditions pay more  than they would have pre-ACA.* You could argue, too, that the ACA has driven up out-of-pocket medical costs, if not premiums, for people with employer-sponsored insurance (ESI) -- or at least that it will do so once the Cadillac Tax kicks in, if it ever does. The claim is highly contestable, though, as neither premiums nor out-of-pocket costs have risen faster in ESI than in pre-ACA years and myriad factors are at work. Really, it's simply too early to tell.

But Bush's statement, like most Republican claims to speak in defense of "the middle class," reveals a top-heavy view of what "middle class" means. His sneer at "huge subsidies" is also a sneer at huge swaths of the U.S. population -- where the uninsured are concentrated.

A recent Census report** indicates that in 2014 the ACA caused large drops in the uninsured rate among Americans with incomes under 100% FPL ( a 4.2 point drop, from 23.5% to 19.3%), 100-199% FPL (a 5.3 point drop) and 200-299% FPL (4.2 points.).

At higher income levels, where uninsured rates are much lower,  the drop was smaller: 1.9 points for those from 300-399% FPL, and 0.4 points for those over 400%  FPL.  That's pretty much the middle class that Bush is talking about, and he does, again, have a point: 50% of the population is above 300% FPL, according to the census. Even at these levels, though, the percentage drop in the number of uninsured was quite respectable: 18% at 300-399% FPL, and 14% at over 400% FPL (compared to a peak of 26% at lower income levels).

But in 2013, three quarters of the uninsured (74%) had incomes under 300% FPL, and 55% of the uninsured had incomes under 200% FPL (as did one third of the U.S. population). In 2014, a modestly disproportionate 80% of the drop in the uninsured rate was among those under 300% FPL, and 59% of the drop was for those under 200% FPL.  Here's how each income group fared, according to Census findings:

Reduction in Uninsured Population by Income Group, 2013-2014

Pop 2013
Pop 2014
Uninsured 2013
Uninsured 2014
Drop uninsured
< 100% FPL
 46.27 mil
 46.66 mil
10,87 mil
 9.00 mil
1.87 mil
 58.77 mil
 58.69 mil
11.99 mil
 8.86 mil
3.13 mil
 49.58 mil
 51.45 mil
 7.83 mil
 6.02 mil
1.81 mil
 40.82 mil
 40.82 mil
 4.20 mil
 3.43 mil
  .77 mil
Over 400%
117.67 m
118,19 m
 6.59 mil
 5.67 mil
  .92 mil
313.44 m
316.17 m
41.47 mil
32.98 mil 
8.50 mil

Under 200%
105.04 m
105.34 m
22.86 mil
17.86 mil
5.00 mil
Under 300%
154.61 m
156.29 m
30.68 mil
23.88 mil
6.81 mil

The ACA's "huge new subsidies" that Bush decries are strongest for people with incomes up to 200% FPL -- where, in 2013, 55% of the uninsured were concentrated. ACA beneficiaries below that level either get Medicaid, which covers all or close to all of a beneficiary's medical costs, or, in the ACA private plan market, Cost Sharing Reduction (CSR) subsidies that boost coverage to levels superior to the ESI average (for those who buy silver plans, as about 80% of marketplace customers under 200% FPL do).

A bit under two thirds of ACA marketplace customers have incomes under 200% FPL Subsidies thin out beyond that point. The Urban Institute  has recently argued that ACA subsidies are "underfunded" -- not "huge" enough to make coverage truly affordable for many. An Avalere Health analysis indicates that the marketplace's appeal drops rapidly at income levels over 150% FPL.

Oddly, though, the Census numbers show as sharp a drop in the uninsured at the 200-299% FPL level as at under 100% FPL (4.2% in both cases). This may be in part because the census surveys define household income differently than does the ACA marketplace -- counting all who live in one dwelling as opposed to those who file taxes as a household. Or it may be due to employment growth, and so ESI access growth, among those in the higher bracket. Also, the refusal of some 22 states as of the end of 2014 to expand Medicaid crimped progress among the poorest -- though new Medicaid enrollees still outpaced marketplace private plan enrollments in 2014. (I've previously noted another apparent oddity in census data: low growth in public insurance access at the lowest income level.)

In any case, Bush's tax credits to subsidize catastrophic plans for those who lack access to ESI would leave middle class people with incomes in the 200-400% FPL range on the hook for far more of their medical costs than the ACA does.  His boost to Health Savings Accounts, on the other hand, might be catnip to a swath of the 37% of the population in households with incomes over 400% FPL. Call it the Bush 37%.

* There are perhaps 9 million unsubsidized customers in the individual market, if Kaiser's estimate that about 40% of the market is off-exchange is on target (1.6 million on-exchange enrollees are unsubsidized). Of the perhaps 7-plus million off-exchange buyers, about 1.5 million may be in grandfathered or grandmothered pre-ACA plans. Of the remainder, no one really knows what percentage have pre-existing conditions that would have rendered them uninsurable or forced them to pay more pre-ACA.  One recent survey indicated that half of Americans have medical conditions that would have been classed as a preexisting condition pre-ACA (alas, can't recall whose study). The ACA's guarantee that those with preexisting conditions will not be charged more or refused coverage on the basis of their medical condition or history is the main way the ACA raised the price of unsubsidized plans in the individual market -- far more consequential than the coverage rules that Republicans love to lambaste.

** The Census' Health Insurance Coverage in the United States: 2014 is based on two large-scale annual surveys of households' income and insurance status, the Current Population Survey and the American Community Survey.

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