Saturday, December 05, 2015

Attention, Secretary Burwell: If you really want ACA shoppers to consider more than price....

This is all very well, Secretary Burwell...
Burwell acknowledged that people have had some trouble picking the right policies, with some deciding based mainly on how expensive policies were, rather than on what’s covered.
But why then did I get a voicemail on Thursday from telling me that "most people" can get plans for under $75? Here's the email version of that mantra (also sent Thursday):

The message here is that monthly premium price is all that matters. Based on current enrollment, a large subset of those who can find a plan for $75 per month can find only a bronze plan below that ceiling.  Most bronze plans have deductibles north of $6,000. Meanwhile, anyone who can get a bronze plan for under $75 is eligible for Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans, which have higher premiums.

In Philadelphia, for example, a 40 year-old with an income of $23,000 can buy the cheapest bronze plan available for $70 per month. The deductible is $6,000, and the buyer's yearly out-of-pocket (OOP) maximum costs are $6,850, the maximum allowable under the ACA.  For the same buyer, the cheapest silver plan is $119 per month -- with a $500 deductible and a $1,500 OOP max.

To get the benchmark (second cheapest) silver plan in any ACA market in the U.S. for under $75, a solo buyer would have to show an income below $19,200, which is 163% of the Federal Poverty Level (FPL). Somewhere between 40% and 50% of current enrollees are below that income level.* This year, the enrollment pool may be somewhat wealthier, as takeup rates among the uninsured so far have been much higher in the lowest income brackets than in higher ones.

According to HHS, fully 77% of those who selected plans in 2015 could have bought a plan for $50 per month or less, and just half of them -- 38% -- did so. That good. It reflects the fact that three quarters of buyers who were eligible for CSR selected silver plans, including somewhat more than 80% of those with incomes under 200% FPL, most of whom could have bought a bronze plan below the 50% threshold.

The second half of Burwell's thought above (as reported by Bloomberg's Zachary Tracer and Matthew Winkler) is not encouraging:
To help [shoppers focus on factors other than premium], the government is now adding to its shopping website estimates of how much an individual should expect to spend in total under different plans, giving a better idea of what out-of-pocket costs will be. 
The "total cost estimator," now built into the "preview plans" tool, asks you whether you think your medical costs will be low, medium or high. If our 40 year-old earning $23k answers "medium," it shows a lower estimated yearly cost for the cheapest bronze plan, $70 per month with a $6,000 deductible, than for the cheapest silver, $119 per month  with a $500 deductible. What it doesn't show is risk, which is what insurance is for. The logical extension of cost estimator logic is that a healthy young adult's likely yearly costs are lowest with no insurance, which is not exactly the message HHS wants to project.

If Burwell really wants to help customers weigh premium against out-of-pocket costs, the following steps might help.
  • When showing available plans, show silver plans first to those eligible for CSR -- or at least to shoppers with incomes up to 200% FPL, where CSR is really strong. Connecticut has done this from day one and it has the best CSR takeup in the nation for buyers up to 200% FPL (where it counts).

  • For CSR-eligible buyers, precede the search results with a stand-alone notice that they're eligible for CSR with silver plans only. At present, the CSR explanation exists, but it is a pale afterthought.

  • Recalibrate the Total Cost Estimator to game out several scenarios.  If that's not soon feasible, decouple it from the plan preview feature -- make it an option at a later step.

  • Kill the "plans for under $75!" mantra. For too many, you're hawking underinsurance.


* Re those who can get silver plans for under $75 per month: Here is a rough calculation. According to HHS's March 10, 2015 enrollment report, 43% of enrollees in the 37 states using had incomes under 150% FPL, and another 25% had incomes in the 150-200% FPL range. Call it 50% under 163% FPL.  Those figures exclude the 6% of enrollees  for whom no income data was available, who can be assumed mostly to earn too much to qualify for subsidies. Counting them, probably about 47% of all enrollees as of the end of February on were under 163% FPL. The states that ran their own marketplaces have somewhat wealthier enrollee pools on average, in large part because all but one enacted the ACA Medicaid expansion. Assuming that the income profile in those states is close to that of states that accepted the expansion, the nationwide percentage of enrollees under 163% FPL was probably about 44% as of mid-February. Then came a spring audit of income claims on ACA applications that knocked 300,000 people off the rolls and adjusted subsidies (mostly downward, one would assume) for another 700,000. Judging from the June enrollment snapshot, which showed about a 3% drop in the percentage of enrollees with premium credits and a 1% drop in CSR,  the percentage with incomes under 163% FPL should probably be dropped a point or two. On the other hand, in some but not most markets, the cheapest silver plan is significantly below the benchmark, so at least some buyers with incomes somewhere between 163% and 200% FPL can get the cheapest silver plan for under $75 per month.

Affordable underinsurance? That's where the total cost estimator may steer you
The ACA's uncertain shield against underinsurance: A CSR compendium

1 comment:

  1. Great post! Thanks for this. Helped me understand the way forward, how to improve things. All I'd say is that for your "under-insurance" point: relatively poor people have a right to economize on health insurance if they want to, if it's a conscious decision. The tools should help them make an informed choice for what is effectively catastrophic coverage of that's what they really want given they holistic cash flow issues.