100 Years of ACA Repeal

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Please, Sir, may I have my inadequate calorie ration up front?

In its initial lightly sketched form, Senator Bill Cassidy’s ACA reform plan is the least bad of several Republican proposals, in that it extends funding for the enhanced ACA premium subsidies (eAPTC) that will otherwise expire at the end of 2025, while redirecting them.

As outlined to the Washington Examiner, Cassidy’s proposal would end eAPTC but use the $26 billion estimated cost to fund Flexible Spending Accounts (FSAs) for subsidy-eligible ACA enrollees — that is, funds to spend directly on out-of-pocket costs (or other medical costs, e.g., dental). As Charles Gaba notes, it’s unclear whether each enrollee’s FSA would be funded with the amount of eAPTC she would have been eligible for, or whether the FSA would be flat-rate or allocated by some other formula. (Cassidy emphasizes that HRAs, unlike Health Savings Accounts, are use-it-or-lose it, saving the federal government money from enrollees who access little or no medical care in a year.)

The incentive for most enrollees would be strong to use their reduced premium subsidies to buy a bronze plan (average deductible about $7,400) and use the FSA to cover first-dollar expenses. That’s donut-hole coverage, as the FSA wouldn’t cover all expenses up to the deductible or annual out-of-pocket maximum (as high as $10,600). It would work for a lot of people, while leaving lots more who would otherwise have been in high-CSR silver (actuarial value 94% or 87%, in contrast to 60% for bronze) saddled with thousands more in out-of-pocket expense.

For high out-of-pocket costs in employer plans, 3 shock absorbers

The Kaiser Family Foundation's annual Employer Health Benefits Survey was released this week. There are no big surprises. Premium growth remains relatively modest compared to the immediate pre-ACA era - 3% for single coverage and 5% for family -- though still outstripping wage growth. The percentage of workers covered by employer insurance is stable, as is total ESI enrollment, at 152 million. 79% of workers are offered coverage, and 76% take it up -- similar to last year.

Kaiser does emphasize continued rapid growth in deductibles: the average annual deductible has increased 53% in five years. That's a proxy for out-of-pocket costs continuing to rise. Here I want to quickly point out three partially mitigating factors.

1. Increase in HSAs and HRAs (Section 8) - the percentage of workers who hold these accounts dedicated to paying medical expenses, which are linked to high deductible health plans (HDHPs), spiked from 20% in 2014 to 29% in 2016 and has stayed at that higher level. Since employers generally fund these accounts, they partly offset high deductibles while also shrinking the employee's premium. In 2018, the average employer contribution to an HRA for a single person plan, $1149, outstripped the average employee share of the premium, $1142, and covered about half the average deductible, $2245. The average contribution to an HSA, $603, covered more than half the employee's average premium share, $1024, and about a quarter of the deductible. For family coverage, the average HRA employer contribution was $2288, and the average HSA contribution was $1073. HRA contributions are bigger because these accounts are "use it or lose it" for the employee -- whereas an employee owns an HSA, and contributions are tax-sheltered.

Mulvaney's ACA demands: Give him one out of three?

As David Anderson argued in The New York Times on Saturday, at this point Republicans need an ACA stabilization deal more than Democrats do, so Democrats have no real imperative to accede to Trump's ridiculous demands,

In brief: the damage from CSR uncertainty in 2018 is already done; CSR is priced into premiums; most states have adopted a "silver load" strategy to mitigate the damage (concentrating the premium increases in silver plans, the plans with which CSR is available); and pricing in CSR over the longer term actually produces a fiscally wasteful but genuine boost to subsidies for the more affluent among the subsidy-eligible, who really need extra help (making gold plans available for roughly the cost of silver).

The chief motive for Democrats to push for a deal is to win a measure of Republican buy-in and ownership, and therefore stability. That should keep more insurers in. And an appropriation for federal CSR reimbursement in 2019 should drive premiums down, dramatically, i.e. by almost as much as CSR uncertainty (and then stiffing) drove them up this ear. That's potentially a political win for Republicans. But Democrats are inhibited in their political calculations by a desire to, you know, make good insurance affordable for more people.

Given that desire, Democrats would be crazy to yield on repeal of the individual mandate, which would trigger another premium surge and more adverse selection, or on enabling a parallel market in non-comprehensive and medically underwritten insurance, which would also damage the risk pool for comprehensive plans.

There is, however, one White House ask that Democrats might consider addressing in some form. As reported by Axios' Sam Baker, OMB Director Mulvaney made these demands on Fox News Sunday:

Underinsurance: What's offsetting the rise in deductibles?

On the weekend, I posed a few questions raised by the Commonwealth Fund survey of underinsurance released this week. I've since heard from Commonwealth's Sara Collins, VP of health care coverage and access, the lead researcher in the study. Her answers highlight some significant unknowns about what's going on in employer-sponsored insurance.*

To recap, Commonwealth found that among those American adults under age 65 who were insured for a full twelve months, 23 percent were underinsured – that is, their deductibles and copays were high enough to cause severe financial strain. That top line is almost unchanged since 2010; the real damage on this front was done from 2005 to 2010, when employers started shifting costs en masse to employees. Among those who get insurance from an employer, the Commonwealth found an underinsurance rate of 20%, unchanged since 2012 and up from 17% in 2010.

Mysteries of underinsurance in the Commonwealth Fund survey

A Commonwealth Fund survey released this week found that among those American adults under age 65 who were insured throughout 2014, 23 percent were underinsured – that is, their deductibles and copays were high enough to cause severe financial strain. That top line is almost unchanged since 2010; the real damage on this front was done from 2005 to 2010, when employers started shifting costs en masse to employees.

I have several questions about the report, to which I'm seeking answers from the authors. If you have any insight, please let me know (email address is in profile to right).

In the questions below, please keep in mind Commonwealth's definition of underinsured: 1) total out-of-pocket costs exceed 10% of annual income, or 5% if the person's household income is under 200% of the Federal Poverty Level (FPL), or 2) the plan deductible exceeds 5% of the beneficiary's annual income.

1. While deductibles in employer-sponsored plans continue to rise, most notably among those with less than 100 employees, the underinsurance rate actually dropped among large employers from 2012 to 2014, from 16% to 14%.  In the same period, the percentage of large-firm employees whose deductible exceeded 5% of annual income rose from 6% to 8%.  What's offsetting that rise in the ranks of those whose deductibles alone classify them as underinsured? Do the free preventive services mandated by the ACA play a role? Or rather, since "the out-of-pocket cost component of the measure is only triggered if a person uses his or her plan," could reluctance to use (and pay for) any medical services be inhibiting the underinsured total?

2. More generally, , among all insured Americans under age 65, Commonwealth finds an increase of 7 million since 2010 in those whose deductibles qualify them as underinsured, but a net increase in underinsureds of only 2 million . Again, something seems to be offsetting the relentless rise in deductibles. Since 2010,