Monday, March 14, 2016

In which Hillary Clinton is confronted by a likely ACA loser (UPDATED)

[Please see 3/16 and 3/17 updates at bottom]

In last night's Democratic town hall forum, an audience member, Teresa O'Donnell of Powell, Ohio, told Hillary Clinton that she voted for Obama, "but then my health insurance skyrocketed, from $490 a month to $1,081 a month, for a family of 4." Charles Gaba has the clip, his own transcription, and an analysis here.

The question's a toughie, because Clinton couldn't very interrogate Ms. O'Donnell to determine all the factors behind her claim.  She did ascertain that the family had previously bought their insurance in the individual market. She then faintly intimated that perhaps O'Donnell hadn't fully checked out her options; credited the ACA with getting costs down generally (though not for all); stressed that she wanted to work to better contain costs; and implicitly blamed the absence in many markets of nonprofit insurers for much of continued cost hikes.

Not a terrible answer, though scapegoating exclusively insurance companies is a little cheap. The major hole in the response, as Gaba highlights, is that she did not ascertain whether the family should have been subsidy-eligible. Given that O'Donnell said that they were in the individual market because of "bouts of unemployment," it seems unlikely that they earn too much to qualify for a subsidy.But as Gaba points out in an update, they may be stuck in the "family glitch," i.e., one of the adults may have an offer employment-sponsored insurance that's affordable for the individual but not the family -- disqualifying them from a subsidy.

Drilling down into O'Donnell's situation may have backfired, because if the family is indeed not subsidy eligible, the price quote is credible. Gaba scoped out their likely costs if the family income is $40,000 per year, or a bit over 150% FPL,and not stuck in the family glitch. In that case, the premium for the most expensive silver* plan in the market would be just $479 a month. That's partly because they'd qualify for a $386 per month subsidy -- the plan would be $865 with no tax credit. The cheapest silver plan available, which comes with strong Cost Sharing Reduction subsidies at that income level, would be just $164 per month ($550 unsubsidized).

But -- those premium quotes are just for two adults, because at that income level, their children would qualify for CHIP.  If indeed the family is not subsidy eligible, then the price quote is credible. If the family income is $98,000 per year, disqualifying the children from CHIP, the cheapest silver plan would be $818 per month, with a $6,000 family deductible. Not pretty. The most expensive of a dizzying array of 32 silver on-exchange plans would be $1,287 per month.

It does seem likely that the family is stuck in the family glitch -- that is, has an income below the subsidy threshold ($97,000) but is disqualified from subsidy because of an employer offer of insurance that's affordable for the employee but not for the family as a whole. If that's the case, the children would be eligible for CHIP if the family income is below 206% FPL, or a bit under $49,000 for this family. For two unsubsidized adults aged 42 and 40, the cheapest silver plan in Powell, OH would be $550 per month, and the most expensive would be $865.

Now, door #4: The family is in the family glitch, and earns just too much to qualify for CHIP (say $50,000).  Then we're back to full freight for four -- again, $818 for cheapest silver. In fact, if the adults are 52 and 50 rather than 42 and 40, then cheapest silver is $1093, with a $7,000 family deductible. I fear that's the winner.

One footnote: O'Donnell bought an ACA-compliant plan off-exchange. It could be marginally better or worse value. But the range for cheapest silver if they're paying full freight for four is correct.

If the inference that the family is in the family glitch and ineligible for CHIP is right, a real killer answer for Clinton would have been, first to ascertain that they were in the glitch ("does your employer or your husband's offer insurance?") and then vow to fix the glitch either via legislation or, if a GOP Congress won't deal, by administrative fiat, which Timothy Jost and Harold Pollack suggest is doable.  But that's admittedly a fantasy debate scenario.

Update: Via Twitter, Mike James points out that Powell "is one of the richest zip codes in Ohio." It's a suburb of Columbus, with a median family income of $118k, 88.5% white and 7.5% Asian (2010 census). That does not tell us anything specific about the O'Donnell family situation, of course, but it does increase the odds that the family either earns too much to qualify for a subsidy (over $97k) or is in the family glitch and earns too much to qualify for CHIP (over $49,955, if the 2.06% FPL cutoff can simply be multiplied the by $24,250 FPL for a family of four in 2015, operative in the marketplace in 2016). Since Ms. O'Donnell referred to her family as "working class," I'd guess, again, that they're in the family glitch and CHIP-ineligible.

UPDATE, 3/16: The LA Times' Michael Hiltzik reached Teresa O'Donnell and learned their situation. They're both 53, and their children are 20 and 23. They earn too much to qualify for subsidies. I was close.

UPDATE 3/17: Since Ohio has expanded Medicaid, it might make sense for their children to apply on their own -- though they can't do that if they qualify as their parents' dependents. They are dependents if they are students (and under 24, which they are), or if they earn under $4,100 (or are disabled) and their parents provide more than half their support.  If either of them is not a dependent and has an income under $15,564, he would qualify for Medicaid. If a non-dependent son earns too much to qualify for Medicaid but less than $23,540, he would qualify for strong Cost Sharing Reduction subsidies along with a premium subsidy for a private plan bought through the marketplace. As for their current coverage: since both sons are under 26, they need not be dependents to be covered under the plan for which their parents are paying cash. Thanks to Tara Straw and Judy Solomon of the Center on Budget Policy and Priorities (CPBB) for clarifying the tax rules for me.

UPDATE 2, 3/17: Hiltzik also learned that Teresa O'Donnell's quote for what the family was paying pre-ACA dated from 2006 -- which, Gaba points out, means that age-rating is a major factor in the premium increases they've experienced.. They paid $490 then, with a $2,500 per-person deductible. If they were all their 2006 ages today, the cheapest silver plan would cost them $825 today, with a $3,500 deductible, but also with more comprehensive coverage. For $965, they could get a silver plan with a $2,000 per-person deductible. As Hiltzik points out, that inflation rate appear lower than the yearly rate for health insurance prior to ACA implementation.  Still, I imagine that their premium spiked in 2014, when ACA rules went into full effect and medical underwriting was prohibited.

* At an income of $40,000 for a family of four, the silver level should be a default, because strong Cost Sharing Reduction subsidies are available only with silver plans.

1 comment:

  1. Thanks for an informative piece.
    Let's say the family income actually is $100,000, so no subsidies.
    That is about $6,000 a month after taxes.

    A health insurance policy for $1,000 a month is 20 per cent of their real income!

    That is why subsidies must go beyond the 400% of poverty.

    And we have not even gone into the fact that $1,000 is cheap for a 4 person policy compared to many other states, or compared to a decent corporate policy.

    People who work for government or large businesses regularly receive family policies costing $1500 or even $2000 a month and this never makes the news.

    But in the individual market, even a cheaper policy can cause disruption of a family's budget. It just goes to show the huge problem of inequality in health insurance, which the ACA made a few dents in but surely did not solve.