Bronze plans are terrible. Bronze plans are often the best choice.

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In discussion of the ACA marketplace (and health insurance generally), deductibles are often used as a stand-in for out-of-pocket costs. Now here cometh David Anderson to remind us that a plan's maximum out-of-pocket cost (MOOP) can be just as important -- and that the MOOP often does not particularly correspond to metal level.

The highest allowable MOOP at all metal levels is $8,150 (a travesty by international rich country standards).  Here is David's mapping of the range of MOOP for gold plans in HealthCare.gov states.  Dark green is $2,500 MOOP; dark red is $8,150.

As David points out, bronze plans will be a better deal for anyone who knows they'll hit the out-of-pocket max. As he's pointed out elsewhere (and in passing here), it takes a lot more spending to hit the high max in a gold plan -- say, $30,000 -- than in a bronze plan. That's because once you meet your deductible (likely to be relatively low in a gold plan with high MOOP), a high percentage of ensuing costs will be covered in a gold plan until the MOOP is reached, at which point coverage goes to 100% for ensuing costs (if you stay in network).

The catastrophic option in a degrading market for health insurance

Okay, so short-term health plans are back to not really being short-term -- or likely will be so, as of July. HHS has rolled back the Obama administration rule that limited such plans to three-month terms, a rule that only went into effect last April.  Once again, these plans -- which do not comply with ACA coverage rules and can be medically underwritten and exclude coverage for pre-existing conditions -- can be offered for up to a year.

So big deal, you might say. Short-term plans with year-long terms were available from 2014-2016 (and in the first quarter of 2017) and did not have a huge impact on ACA marketplace enrollment. Yes, but this time it's different, for two reasons. First, the individual mandate is effectively repealed as of 2019, so people need not obtain ACA-compliant coverage. Second, premiums in the ACA-compliant market have skyrocketed in the last two years (thanks largely to Republican sabotage), so more people are priced out. Louise Norris's analysis strongly implies that HHS is lowballing projected enrollment with its estimate of 100-200,000.  See Louise's post for a thorough overview of how short-term plans work and who's likely to buy them.

Short-term plans can be very cheap, and coverage can be very limited (especially if you have a serious pre-existing condition, which will be excluded). ACA-compliant plans, on the other hand, can be astronomically expensive if you're not subsidy-eligible, particularly if you're in your late fifties or early sixties.

As the individual market for health insurance fractures, I want to take a look at one tweener market that may help a few people navigate between the Scylla of unaffordable coverage (say, $1,000 per month for a solo plan with a $7000 deductible) and the Charybdis of unregulated coverage that may exclude, say, drug coverage or pregnancy, cap total coverage, and be medically underwritten.

"What if Obamacare works?" -- What Ross Douthat leaves out

Ross Douthat "fairly fairly" describes the differences between the cheapest health insurance plans available on the ACA exchanges and the cheapest plans currently available on the individual market, most of which will be phased out because they don't comply with ACA minimum coverage requirements.  But he leaves some important facts out.

Douthat acknowledges that the ACA's premium subsidies will offset the price increase for many who buy on the exchanges, and he fairly if too briefly presents the limitations of a cheap plan currently available on the individual market ("a $5,000 deductible, an annual out-of-pocket limit of $12,500, and all kinds of copays and coverage restrictions"). He then frames the ACA's political prospects like this:

With some grandfathered exceptions, Obamacare makes those kinds of plans illegal. The out-of-pocket limit for individuals is capped at $6,500 a year, preventive services are fully covered, and various “essential benefits” as well. 

If we ever get beyond the follies of HealthCare.gov, the politics of the rollout will probably be defined by how (and how vocally) middle-class Americans just above the subsidy threshold react to this “pay more, get more, subsidize other people” deal.

True, perhaps -- though the politics will also be defined by the reactions of those eligible for the subsidies, and those shut out of the current market by preexisting conditions or age (the ACA limits age-related price differentials to 3-to-1; currently they're as high as 6-to-1), or, to a lesser extent, by those newly eligible for Medicaid (who are less likely to be politically vocal and perhaps less likely to recognize that their new benefits are a product of the ACA).

It's Douthat's presentation of the likely long-term consequences of a successful ACA rollout that tilts our view of past and future playing fields:

Three possible surprise rulings on the Affordable Care Act

Supporters of the Affordable Care Act would regard a Supreme Court ruling that the individual mandate is unconstitutional as a chaos-inducing disaster; a strike-down of the entire law as a catastrophe; and an unconditional upholding as an unlikely consummation devoutly to be wished.  There are, however, more ambiguous possibilities -- each unlikely in itself, but taken together, representing a reasonable chance of not-entirely-awful surprise.  Here are three.

1. Kick the can.  The first question the justices considered in oral argument is whether the constitutionality of the mandate can be challenged before anyone is subject to the mandate, which won't happen until the exchanges open in 2014. The case that they cannot rests on the Anti-Injunction Act, which bars challenges to a tax until the tax has been assessed. Both the government and the plaintiffs argued that the Anti-Injunction Act does not apply in this case; the Court appointed an outside attorney (Richard Long) to argue that it does. The arguments were arcane -- a plain-English summary is available on Scotusblog --  and most observers did not think that the justices seemed to seriously entertain the notion that the AIA applies in this case.

But a punt remains a legally viable option if five justices can't coalesce in a coherent decision to strike all or part of the law. What if, say, two justices want to strike the whole thing, and three want to strike the mandate alone, or in some way reshape it (see below), and they can't agree on instructions to give Congress if they leave a law on the books while destroying or reshaping a part that affects the whole? Mightn't they decide to defer decision until the mandate (and the exchanges) are actually operating?

The bogus economic basis of the case against the individual mandate

As I have noted before, the plaintiff's argument against the constitutionality of the individual mandate in the Affordable Care Act centered largely on a morality tale spun by the plaintiffs, in which the main characters were hoards of healthy young adults being forced to buy more coverage than they need in order to subsidize the coverage of older adults. The ACA is structured "to compel the uninsured into engaging in economic activity that is harmful for them" (Michael Carvin brief on the individual mandate, p. 1). "They're making young, healthy people subsidize insurance premiums for the cost that the nondiscrimination provisions have put on insurance premiums and insurance companies" (Carvin, oral argument, p. 100). In the 3/27 pleadings, Justices Alito, Roberts and Scalia appeared to buy this argument, voicing various aspects of it.

I have also pointed out that the Michael Carvin misrepresented the mandate in oral argument when he stated. "Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance" (p. 105). In fact, the ACA provides the catastrophic coverage option for others exempt from the mandate, e.g. on grounds of financial hardship. In the 3/27oral session, no one pointed noted explicitly that the ACA provides a catastrophic coverage option for those under 30, let alone that it extends that option to others exempt from the mandate on financial or other grounds -- or that the bronze plans offered in the exchanges, as the Kaiser Family Foundation recently detailed, might also reasonably be labeled "catastrophic" coverage.

Now, two economists from the University of Michigan, Jill Horwitz and Helen Levy, writing on the Health Affairs blog, demonstrate on several fronts that  bogus economic premises underpin the plaintiff's argument that the mandate exploits the healthy young uninsured for the sake of the sick and old -- and that it grants Congress unlimited powers to impose purchase mandates. The main thrust of their argument is that the health insurance market is unique across several dimensions, while bogus analogies to mandated purchases of cars or broccoli or whatever are each analogous in only one dimension. Then, regarding the emotional core of the plaintiffs' case -- those imagined legions of healthy young people exploited by the mandate -- Horowitz and Levy write:

Don Taylor envisions a distant healthcare compromise; might Justice Kennedy impose something like it next month?

At present it would seem that there is no common ground between the parties on healthcare -- though the Democrats built the ACA on Republican ground, which the GOP fled (and rhetorically bombarded) as soon as the Dems set foot on it.

Nonetheless, looking down the road and seeking the contours of a future compromise, Don Taylor, in his new book Balancing the Budget is a Progressive Priority, identifies Democrats' top priority as universal coverage, and Republicans', insofar as they have one, as ensuring that everyone has "skin in the game," i.e. is on the hook for some of the medical expense they generate.  He therefore envisions this future deal:

• Universal catastrophic coverage implemented through Medicare, with gap insurance available to persons wanting it (no mandate!) via state based exchanges
• With a massive deductible (I suggest $10,000/persons; $15,000/family to maintain a key role for private insurance; far larger out of pocket exposure than Bronze level cover in the ACA)

While such further compromise might strike most progressives as equal parts unlikely and undesirable, it caught my eye because, as I have noted repeatedly, there's an outside chance that Justice Kennedy (as swing vote) may impose something akin to it in the Supreme Court's ruling on the constitutionality of the mandate.

A catastrophic error: The misrepresentation of the ACA's individual mandate in the Supreme Court

[I am reposting this at intervals.  Justice Kennedy: come in for some cookies and tea?] For those who've noted that, contra the 3/27 oral arguments in the Supreme Court on the constitutionality of the individual mandate in the Affordable Care Act, the ACA does in fact offer various catastrophic coverage options, an index of coverage of this issue, here and elsewhere:

Michael Carvin misrepresented the mandate in oral argument (4/12) 

Attention SG Verrilli and Justices Kennedy, Roberts: A plea for one more pleading (4/29)
Kaiser weighs in: the ACA offers catastrophic coverage to all comers (4/27)
Patient cost-sharing under the Affordable Care Act (Kaiser Family Foundation. 4/27)
Another limiting principle for mandate: states can opt out (4/23)
Jonathan Cohn tells the justices: the ACA has catastrophic coverage options (4/20)
Will the justices make a catastrophic error? (Jonathan Cohn, 4/19)
The ACA offers catastrophic coverage: the AP notices  (4/10)
Supreme Court misunderstanding on health overhaul? (AP's Ricardo Alonso-Salvidar, 4/10)
Marty Lederman concurs: the individual mandate could be trimmed, not killed (4/5)
The bounded, minimalist way to uphold the ACA (Marty Lederman at Balkinization, 4/2)
Go tell the justices: the ACA has a catastrophic coverage option (3/31, updated 4/2)
Was Verrilli just the wrong man for the job? Part I (Ragbatz Tumblr, courtesy of Anon below, 3/28)

A Catastrophic Error: The Misrepresentation of the ACA's Individual Mandate in the Supreme Court

For those who've noted that, contra the 3/27 oral arguments in the Supreme Court on the constitutionality of the individual mandate in the Affordable Care Act, the ACA does in fact offer various catastrophic coverage options, an index of coverage of this issue, here and elsewhere. The first, out of sequence, is the most comprehensive statement of the plaintiffs' misrepresentation of the mandate. The rest are in chronological order, by category.

Misrepresentation of the mandate in the Supreme Court: Why it still matters (5/10)
A postscript about the ACA's Basic Health Plan option for states (8/13)
What about state-imposed individual mandates? (6/24)

Three possible surprise rulings on the Affordable Care Act (6/15)

Late pleadings for the ACA (5/31)

The bogus economic basis of the case against the mandate (5/29)

Ask whom the mandate tolls (5/23)

Don Taylor envisions a distant healthcare compromise; might Kennedy impose something like it next month? (5/16)

Attention, Justices Kennedy, Roberts et al: Read the young people's brief (5/5)

A plea for one more pleading (4/29)
Kaiser weighs in: the ACA offers catastrophic coverage to all comers (4/27

Another 'limiting principle' to the individual mandate: states can opt out (4/23)
Jonathan Cohn tells the justices: the ACA has catastrophic coverage options (4/20)
Michael Carvin misrepresented the mandate in oral argument (4/12)
The ACA offers catastrophic coverage: the AP notices  (4/10)
Marty Lederman concurs: the individual mandate could be trimmed, not killed (4/5)
Go tell the justices: the ACA has a catastrophic coverage option (3/31, updated 4/2)

On the mandate more broadly
The individual mandate is a piece of Cake (4/25)
Verrilli's limiting principles (4/24)
If only Verrilli had said (A, B, C) (3/31)
Verrilli, slapped silly, recovers willy-nilly (3/28)
External links
The morality tale that could sink the ACA (xpostfactoid in the Atlantic, 6/22)
Patient cost-sharing under the Affordable Care Act (Kaiser Family Foundation. 4/27)
Will the justices make a catastrophic error? (Jonathan Cohn, 4/19)
Policy ignorance at the Supreme Court (Steve Benen, Maddow blog, 4/16)
Supreme Court misunderstanding on health overhaul? (AP's Ricardo Alonso-Salvidar, 4/10)
The bounded, minimalist way to uphold the ACA (Marty Lederman at Balkinization, 4/2) 
Ragbatz on the catastrophic coverage options in the ACA - a healthcare attorney picks up the plaintiff's con in real time ( 3/28)

CC Justices Kennedy, Roberts: A healthcare attorney details the catastrophic coverage options in the ACA

Re my monthlong quest (begun 3/31) to highlight the catastrophic coverage options in the Affordable Care Act that the plaintiffs labored successfully to obfuscate: a healthcare attorney, keeper of the tumblr Ragbatz, apparently picked this dynamic up in real time as news emerged from the 3/27 oral arguments and wrote on 3/28:

Imagine answering Scalia’s yammering that the mandate should have been limited to catastrophic plans, with the short answer that, in essence, it was limited to catastrophic plans.  The Affordable Care Act requires insurers participating in an exchange to offer a “Bronze” level of coverage that has a higher deductible than “Silver” and “Gold” offerings.  The levels of the deductibles are determined by an actuarial formula; for 2014, a leading actuarial company has projected that the deductible in “Bronze” category would be $6,350.  Those healthy but cash-strapped youngsters Scalia is worried about are, under Obamacare, free to choose to a Bronze plan and thus to self-insure below that level.

Furthermore, community rating under the ACA permits age-related premium rates.  The youngest cohort can expect to pay a third of the amount charged to the pre-Medicare cohort.

Kaiser weighs in: the ACA offers catastrophic coverage to all comers

As I have noted several times this month, the plaintiffs seeking to get the Affordable Care Act struck down have based their case in large part on assertions that the individual mandate will force masses of healthy young people to buy coverage far in excess of their needs, exploiting them as "golden geese" to fund insurance for older and sicker citizens. I have pointed out that the ACA in fact includes a catastrophic insurance option not only for all adults under 30 but for others who can show financial hardship or are otherwise exempt from the mandate. The AP's Ricardo Alonso-Zaldivar chimed in with an article citing several experts asserting that the cheapest class of plans to be offered in the insurance exchanges, the "bronze" plans, also offer extremely limited coverage -- just 60% of an average policyholder's expenses -- and can also be reasonably deemed "catastrophic." Steve Benen and Jonathan Cohn have also taken up the point.

Now cometh the Kaiser Family Foundation -- perhaps prompted by Cohn, who has written for them -- with a detailed breakdown of the coverage levels and likely deductibles to be faced by policyholders selecting the various levels of coverage made available by the ACA.  Seconding the experts cited by Alonso-Zaldivar, Kaiser deems the "bronze" plans tantamount to catastrophic coverage:

Jonathan Cohn tells the justices: the ACA has catastrophic coverage options

Jonathan Cohn, one of the foremost bloggers on the U.S. healthcare system and healthcare reform, has taken up the cudgels regarding the Supreme Court justices' apparent ignorance of catastrophic coverage options provided in the Affordable Care Act.  While Cohn is wary of catastrophic coverage on the merits, he regards the "bronze" plans, the cheapest option in the subsidized healthcare exchanges, as providing it, noting too that the ACA allows people under 30 (and others exempt from the mandate, I would add, e.g. those showing financial hardship) to buy catastrophic coverage more strictly construed.

Cohn does not think that the availability of catastrophic coverage in the ACA ought to matter on the legal merits, and there I would take partial issue with him. He writes:

Even if the Affordable Care Act didn’t have a catastrophic coverage option and established a higher standard for benefits, you could make the same constitutional arguments for it—that the law is a perfectly reasonable exercise of federal power to tax, regulate interstate commerce, and do what is “necessary and proper” for carrying out its duties.  

That might be true in a depoliticized legal vacuum.  But the plaintiffs' arguments plainly made a deep impression on Alito, Robert, Scalia -- and, somewhat more equivocally, on Kennedy, all of whom voiced various aspects of those arguments. And Michael Carvin's brief on the individual mandate hammered home relentlessly the claim that the mandate was "forcing healthy individuals to immediately start paying inflated premiums that exceed their actuarial risk" (p. 38); that the mandate would "compel the uninsured into engaging in economic activity that is harmful for them but beneficial to third parties" (p. 1), etc. etc. -- and the conservative justices seem to have bought this argument.

Michael Carvin misrepresented the mandate in oral argument

Arguing before the Supreme Court on March 27 that the individual mandate in the Affordable Care Act forces people to buy more health insurance coverage than they need -- an argument that Alito, Roberts and Scalia also voiced -- plaintiff's counsel Michael Carvin asserted,  "Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance"  (p. 105).

I've noted that someone should have stressed to the justices that the ACA does allow those under 30 to purchase purely catastrophic coverage. The AP has weighed in with a story citing insurance experts who assert that the "bronze" plans offered in the insurance exchanges are skimpy enough to reasonably be dubbed catastrophic coverage. Randy Barnett, a prime mover of the case against the ACA, rebutted that claim today, as did Carvin himself in the AP story.

In a way it's a perverse argument. Why should defenders of the law have to argue that the ACA allows people to buy coverage crummy enough not to be construed as an undue infringement on personal liberty? Be that as it may, I want to return to one point noted in passing in my original post.

While the assertion that the ACA offers "catastrophic" coverage to those who want the bare minimum depends on your definition of 'catastrophic,'Carvin's assertion that "Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance" is simply not true.

The point is technical but telling. Carvin was exaggerating the extent to which the law requires Americans to buy more coverage than they might conceivably individually need, or think they need. 

The ACA offers catastrophic coverage: the AP notices!

For almost two weeks, I have been beating a drum, waving a flag, screaming from the bleachers that justices Alito, Roberts and Scalia seemed unaware of a fundamental feature of the Affordable Care Act (and were not disabused during oral argument on 3/27): the ACA has a catastrophic coverage option.  All three seemed convinced that the mandate requires individuals to buy more coverage than many people will ever need, such as substance abuse treatment, and that the young were being exploited as "golden geese" to subsidize the cost of covering older citizens.

My focus was on provisions in the ACA, Section 1302 (e), allowing those under 30 and others who could show financial hardship to buy purely catastrophic coverage. Now, the AP's Ricardo Alonso-Zaldivar is out with a story* citing several experts who assert that the bronze plans to be offered in the insurance exchanges, available to all, are also essentially catastrophic coverage plans -- though that definition is contested. Those calling it catastrophic focus mainly on the percentage of costs covered:

Marty Lederman concurs: individual mandate could be trimmed not killed

On March 31, I put up a post (updated 4/2) arguing that a highly germane provision of the Affordable Care Act went unmentioned during the Supreme Court grilling of Verrilli: the option for adults under 30 and others showing financial hardship to buy catastrophic coverage only, rather than a bronze, silver or gold plan on the exchanges. That was germane because Alito, Roberts and Scalia all asserted that not everyone in the market needs the range of services that policies offered in the insurance exchanges are required to cover -- implying that the young and healthy were being treated as "golden geese," as plaintiff's attorney Paul Clement later claimed, being tapped to finance coverage for the older and sicker.

Given the concern that the government's intrusion be as limited as possible, I wondered "whether the catastrophic care option for those under 30  does not suggest a way out: it could be extended. Could the judges rule that the mandate can extend to catastrophic care only -- in effect, legislating from the bench?  I am pleased to note that Marty Lederman at Balkinization, former deputy assistant attorney general in the Obama administration's OLC, has raised the same possibility.

Attention Alito, Roberts, Scalia: the ACA has a catastrophic coverage option

Excuse the (edited) repost: I think the info below is important (see also 4/5 update - Marty Lederman raises the possibility of a more limited mandate; 4/10 update - the AP weighs in; 4/12 update, the mandate as self-limiting principle; and 4/20 update - response to Jon Cohn). If I'm missing something, please let me know:
 ---
Attention, Justices Roberts, Alito, Scalia: your objection to the extent of the individual mandate in the ACA may be based on at a partial misunderstanding. Or at least, on a failure by Solicitor General Donald Verrilli and the four justices supportive of the ACA to highlight an important provision of the law. That is:  the Affordable Care Act includes a catastrophic coverage option for people under thirty and others who meet certain financial requirements.

In questioning the right of the Federal government to require individuals to buy insurance, the justices glided past the argument that the requirement was justified because the cost of care for the uninsured drives up the cost of health care for everyone -- that we are all in the health care market -- by asserting that not everyone in the market needs the range of services that policies offered in the insurance exchanges are required to cover. This objection was hammered repeatedly, in a variety of ways, by Roberts, Alito and Scalia, and by Michael Carvin arguing for the plaintiffs.  Here's the first such assertion in the transcript:

JUSTICE ALITO: But isn't that really a small part of what the mandate is doing? You can correct me if these figures are wrong, but it appears to me that the CBO has estimated that the average premium for a single insurance policy in the non-group market would be roughly $5,800 in -- in 2016.

Respondents -- the economists who have supported the Respondents estimate that a young, healthy individual targeted by the mandate on average consumes about $854 in health services each year. So the mandate is forcing these people to provide a huge subsidy to the insurance companies for other purposes that the Act wishes to serve, but isn't -- if those figures are right, isn't it the case that what this mandate is really doing is not requiring the people who are subject to it to pay for the services that they are going to consume? It is requiring them to subsidize services that will be received by somebody else.

And Roberts, broadening the objection:

CHIEF JUSTICE ROBERTS: Well, but it's critical how you define the market. If I understand the law, the policies that you're requiring people to purchase involve -- must contain provision for maternity and newborn care, pediatric services, and substance use treatment. It seems to me that you cannot say that everybody is going to need substance use treatment -substance use treatment or pediatric services, and yet that is part of what you require them to purchase (pp 31-32).

And Scalia, following up a couple of minutes later:

Go tell the justices: the ACA has a catastrophic coverage option

Attention, Justices Roberts, Alito, Scalia: your objection to the extent of the individual mandate in the ACA may be based on at a partial misunderstanding. Or at least, on a failure by Solicitor General Donald Verrilli and the four justices supportive of the ACA to highlight an important provision of the law.

In questioning the right of the Federal government to require individuals to buy insurance, the justices glided past the argument that the requirement was justified because the cost of care for the uninsured drives up the cost of health care for everyone -- that we are all in the health care market -- by asserting that not everyone in the market needs the range of services that policies offered in the insurance exchanges are required to cover. This objection was hammered repeatedly, in a variety of ways, by Roberts, Alito and Scalia, and by Michael Carvin arguing for the plaintiffs.  Here's the first such assertion in the transcript:

JUSTICE ALITO: But isn't that really a small part of what the mandate is doing? You can correct me if these figures are wrong, but it appears to me that the CBO has estimated that the average premium for a single insurance policy in the non-group market would be roughly $5,800 in -- in 2016.

Respondents -- the economists who have supported the Respondents estimate that a young, healthy individual targeted by the mandate on average consumes about $854 in health services each year. So the mandate is forcing these people to provide a huge subsidy to the insurance companies for other purposes that the Act wishes to serve, but isn't -- if those figures are right, isn't it the case that what this mandate is really doing is not requiring the people who are subject to it to pay for the services that they are going to consume? It is requiring them to subsidize services that will be received by somebody else.

And Roberts, broadening the objection:

CHIEF JUSTICE ROBERTS: Well, but it's critical how you define the market. If I understand the law, the policies that you're requiring people to purchase involve -- must contain provision for maternity and newborn care, pediatric services, and substance use treatment. It seems to me that you cannot say that everybody is going to need substance use treatment -substance use treatment or pediatric services, and yet that is part of what you require them to purchase (pp 31-32).

And Scalia, following up a couple of minutes later: