The Counter-Upshot: Obamacare is quite as egalitarian as it appears

Tyler Cowen draws a rather odd conclusion from the spike this year in premiums for health plans sold in the nongroup market: The ACA is not as egalitarian as it appears.

Cowen legitimately spotlights the weakness of the ACA value proposition for uninsured people with incomes above 250% of the Federal Poverty Level (FPL) and so for a large group of the remaining uninsured. But his discussion of its "egalitarian" impact is limited by his leaving the Medicaid expansion out of the equation (if not entirely out of the discussion).

Cowen bases his case that "by some measures, the Affordable Care Act has had only a limited impact on economic inequality" mainly on a recent study* by Wharton School researchers led by health economist Mark Pauly.* Pauly et al found that slightly less than half of the still-uninsured who are eligible to buy health plans on the ACA exchanges would not experience "welfare improvements" if they buy health plans. Cowen summarizes:

Can the ACA exchanges steer customers away from bad choices?

An important feature on Healthcare.gov -- improved for the new open season, I believe -- could steer significant numbers of users toward plans best suited to their needs -- and perhaps point a way towards solving the "auto-renewal" problem, whereby existing plan holders may face steep price hikes if they fail to comparison -shop.

The feature in question is addressed to those buyers who are eligible for Cost Sharing Reduction subsidies, which lower plan deductibles and out-of-pockets costs for lower-income buyers -- but only if they buy silver-level plans, which will cost them significantly more per month in premiums than bronze-level plans.

Lower income buyers who choose bronze plans, which have lower premiums, can forfeit thousands of dollars' worth of CSR benefits. Fortunately, the vast majority of CSR-eligible buyers do seem to have found their way to silver, notwithstanding premiums that can be tens of dollars per month higher for individuals and over $100 per month more for families.

Dave Chandra, a Senior Policy Analyst at the Center on Budget and Policy Priorities and a Certified Application Counselor, tells me that this year, if an applicant who qualifies for CSR takes steps toward buying a bronze plan (or, less probably, gold or platinum), a prominent pop-up message will warn her that she is eligible for CSR and will forfeit it if she proceeds. Here it is: