Sunday, November 15, 2015

It's fair, O Robert Pear, to spotlight high deductibles in ACA plans. But some context is missing.

An article by the New York Times' Robert Pear, spotlighting the plight of ACA marketplace customers who bought plans with sky-high deductibles, had my eyeballs shooting lasers in two directions.

On the one hand, kudos to Pear, not only for showing the absurdity of offering plans with deductibles north of $6,000 per person to people who are not affluent, but for spanking HHS for emphasizing low premiums uber alles:
Sylvia Mathews Burwell, the secretary of health and human services, issued a report analyzing premiums in the 38 states that use “Eight out of 10 returning consumers will be able to buy a plan with premiums less than $100 a month after tax credits,” she said.
I have complained about that misdirection repeatedly, most recently noting that only about 5 in 10 will be able to buy a silver plan for under $100 and thus access the Cost Sharing Reduction (CSR) subsidies that are available only with silver. So Burwell is effectively hawking bronze plans to those who, as Pear illustrates, won't be able to use them.

On the other hand, Pear exaggerates the prevalence of super-high deductibles among marketplace enrollees. His acknowledgment of CSR is buried deep and lacks context:
In addition, people with particularly low incomes can obtain discounts known as cost-sharing reductions, which lower their deductibles and other out-of-pocket costs if they choose midlevel silver plans. Consumer advocates say this assistance makes insurance a good bargain for people with annual incomes from 100 percent to 250 percent of the poverty level ($11,770 to $29,425 for an individual). 
You'd never know from that characterization that 56% of current marketplace enrollees (as of June 30) have plans enhanced by CSR, and that about 80% of CSR-enhanced plan holders have coverage superior to the average employer-sponsored plan.  It's not really accurate to call 250% FPL a "particularly low income." According to the Census Bureau's' September report on health insurance coverage in 2014, half the population lives in households with incomes under 300% FPL, and one third in households with incomes below 200% FPL. According to my calculations, about two thirds of those uninsured in 2013 had incomes under 250% FPL.

The availability and relatively high takeup of CSR on the ACA exchanges constitute an essential -- and missing -- context for this factoid cited by Pear:
In many states, more than half the plans offered for sale through, the federal online marketplace, have a deductible of $3,000 or more, a New York Times review has found. Those deductibles are causing concern among Democrats — and some Republican detractors of the health law, who once pushed high-deductible health plans in the belief that consumers would be more cost-conscious if they had more of a financial stake or skin in the game
Did that "review" factor in CSR? Some silver plans unenhanced by CSR have deductibles over $3,000; CSR-enhanced plans are really different plans, though they go by the same name. Some state exchanges label them "Silver 94, Silver 87" and "Silver 73," the numbers signifying the CSR-boosted Actuarial Value, or percentage of the average user's yearly costs covered by the plan. CSR eligibles would see fewer plans with deductibles above $3,000, since silver plans available to them would not have deductibles this high. More to the point, the availability of CSR for about three quarters of marketplace customers to date is more important than the quantity of high deductible (bronze) plans offered to those customers.

82% of silver plan holders in the ACA marketplace have plans enhanced by CSR. Yet it's quite common to write about silver plans as if CSR does not exist. The "New York Times review" cited here may (or may not) have fallen into the error (I've emailed Pear to ask).

Still, this bean-counting of plans available is relevant, in that bronze plans offer an inappropriate temptation to low income buyers for whom they'll do little good. Moreover, and most state exchanges show prospective buyers a menu of plans ranked by premium, lowest first -- so a plethora of high deductible bronze plans may raise the likelihood of bronze selection. But only 21% of current marketplace enrollees are in bronze plans. That's too many -- but the Times article leaves the impression that the proportion is higher (though some of the featured plan holders are in silver plans unenhanced by CSR).

I should acknowledge, too, that about 40% of those who buy plans in the individual market buy them off-exchange, and have no access to premium subsidies, let alone CSR. The problem of prohibitively high deductibles is real, and large. It's just not as large within the ACA marketplace as this article implies.

Hey, HHS, you're boasting about the wrong metric
Premium vs. deductible: New tools oversimplify
Affordable underinsurance? That's where's new Total Cost Estimator may steer you


  1. I don't think Robert Pear has any understands the subsidy structure of the ACA. If he did, he would not have been taken in by this story:

    "Mr. Fanning, the North Texan, said he and his wife had a policy with a monthly premium of about $500 and an annual deductible of about $10,000 after taking account of financial assistance. Their income is about $32,000 a year.

    The Fannings dropped the policy in July after he had a one-night hospital stay and she had tests for kidney problems, and the bills started to roll in."

    Needles to say, with annual income of 32K, the Fannings could have had a CSR boosted silver plan for about $170 a month.

    1. in a complex market, the person with the most information wins
      what is the chance that consumes will *ever* have a chance in picking out healthcare plans ?
      after all, in life insurance, where we know that level term is better for almost all people then whole or universal, many people still buy whole or universal

      the point is, relying on average people to parse healthplans makes as much sense as asking avg people to plan their own retirement finances