Robert Laszewski's ACA blind spot

Robert Laszewski, health insurance consultant and blogger, is among the critics of the Affordable Care Act whom supporters of the law respect the most. He knows the market, he knows the law, he wants to see everyone insured, he's not averse to calling out Republican idiocy and mendacity, and he wants to fix the law, not repeal it. Ezra Klein's Wonkblog named him "Pundit of the Year" for 2013.

Yet Laszewski has a bias, which progressive healthcare reporters, including Klein, are slow to call out.  His ur-insurance buyer is a veteran of the pre-ACA individual market, healthy, ineligible for ACA subsidies or for only limited subsidy, and so hit by rate shock.  His chief complaint seems to be that ACA-compliant plans are weighed down by unnecessary Essential Health Benefits, which drive up the base premiums and so increase the hit to the unsubsidzed.

The plight of this cohort is real, and the law could be amended to ease it. Yet Laszewski generally fails to acknowledge that such victims are far outnumbered by ACA beneficiaries, that negative responses to the law have been shaped in large part by five years of Republican disinformation, that guaranteed issue is a much larger driver of unsubsidized rate increases than the benefit mandates, and that the law is on target so far to meet long-term CBO projections.

Laszewski's bias in on display in his latest post -- which pleased progressives by acknowledging that Democrats pledging to modify the law are more in line with public opinion than Republicans vowing to repeal it. Here's the nub of his case that the law is in trouble because people do not like the core offering:

Don't deny ACA-driven rate-shock. Do put it in perspective

Most Obamacare horror stories trumpeted by Americans for Prosperity, Fox News et al did not hold up to scrutiny because the protagonists turned out to be eligible for subsidies. The law's enemies wanted real hardship cases, and even modest affluence apparently takes the edge off for propagandists.

That sloppiness has made it relatively easy for some of the law's supporters, including Paul Krugman (see update #7 here), to gloss over the substantial price hikes suffered by those who 1) are in the individual market for a relatively long haul, 2) earn too much to qualify for ACA subsidies, and 3) do not have a pre-existing condition or a family member who has one.

eHealth, the nation's best-known online health insurance broker pre-ACA, has published statistics indicating the extent of  premium price hikes for the unsubsidized under the ACA. The latest snapshot is based on 213,000 insurance applications completed on eHealth during the ACA's first open enrollment period, from October 2013 through March 2014;  a 2013 baseline is published here.   According to eHealth's most recent stats, the average individual plan premium rose from $197 in 2013 to $271 in 2014, a 38% increase. The average family plan rose from $426 to $667, a 57% hike.

The larger jump in family plan premiums is partly explained by a larger reduction in average deductibles, which shrank from $10,568 in 2013 to $7,771 in 2014 (that's for the whole family; each individual would have a smaller deducible). The average individual plan deductible fell less dramatically, from $4,900 to $4,164.  As open season wore on, eHealth customer trended toward lower premiums and higher deductibles.

More than half the families in four deep red states have a member with a pre-existing condition

Remember the rate-shocked -- those folks who received cancellation notices on their insurance policies last fall and who were faced with steep rate hikes as the Affordable Care Act took full effect? They exist, for sure. But there are probably fewer of them than earlier estimates indicate.  And there can't be a lot of them in four red states spotlighted in the Times/Kaiser poll released this week.

The people in those states -- Arkansas, Kentucky, Louisiana and North Carolina -- disapprove of the ACA by margins ranging from 31 points (AR. 62-29)  to 16 points (NC, 54-38), according to the poll. At the same time, however, majorities in each state, ranging from 57-60%, reported that someone in their household has a pre-existing condition. Think about that for a moment.

Tell me your ACA-shopping story

Always fair-minded, Jonathan Cohn pauses in his celebration of lower-than-forecast ACA premiums (as highlighted by the latest CBO update) to acknowledge:

In the transition from the old system, in which insurers could charge higher prices to the sick or avoid them altogether, to a new system, in which everybody pays the same price regardless of pre-existing condition, some young and healthy people must now pay more for their individual policies

The "and" in "young and healthy" is interesting, because, as the conjunction suggests if you look twice, it's not just the young who are paying more under ACA rules. Some if not most healthy older buyers who were in the individual market in 2013 are now paying more -- that is, if no one sharing the insurance has a preexisting condition.*

If you're in the individual market and you're paying more for your insurance in 2014 than you did in 2013, I'd like to speak to you (or, for that matter, if you're unsubsidized and paying less or about the same).  I'd like some detail about what your prior policy covered vs. what your current one does -- what were the tradeoffs. (I wrote up two such stories last month, and I'd like to do more.)

Healthy, relatively wealthy, and hit by ACA rate hikes

Past and forthcoming posts of mine have looked (and will look) at the situations of several people who do not qualify for ACA subsidies but were still satisfied with the coverage they obtained for 2014.  That is because they all either had pre-existing conditions or were in a household where someone else had one -- as do a very large percentage of Americans, particularly those over forty in households larger than one person. As for the young, the overwhelming majority of them are subsidy-eligible.

At the same time, of the 12-18 million people who bought insurance in the individual market in 2013, nearly half were not eligible for subsidies, according to the Urban Institute. Of the substantial percentage of them who were not punished for a pre-existing condition in the pre-ACA market, many will pay more for coverage in 2014 than they did last year (click here for more statistical detail on these fronts).  Some will get better coverage for the extra money, but some won't, and some will get coverage they would not buy if they did not have to.

In recent days I've heard from two of them, neither unsympathetic to the ACA (yes, my readership is skewed that way).  Sam, living in New Hampshire, was hit hard by a premium increase this year.  If the timing of certain life events had been somewhat different, however, he might have benefited directly from the law's enactment. His initial note indicates somewhat unusual circumstances:

Stat shots of the unsubsidized uninsured

Barring any slip between cup and lip, I should have an article coming out soon that recounts the experiences of several people who do not qualify for ACA subsidies but who have bought insurance plans for 2014 in the new ACA-enacted universe.  A preview is here. In the process, I've tried to get a grip on just how many such people there may be and how they're likely to fare under the ACA.

A Health Affairs post by Urban Institute researchers Lisa Clemans-Cope and Nathaniel Anderson has helped me bring the statistical picture into focus. I should say into relative focus, because there's a good deal of uncertainty in every stat shot. With that caveat, here goes:

• Estimates based on 2009 surveys conducted by different federal agencies as to how many Americans were buying insurance in the individual market vary widely, from 9.1 million in the Medical Expenditure Panels Survey to 25.3 million in the American Community Survey. A mid-range estimate from the National Health Interview Survey (NHIS) conducted by the CDC is 14.0 million.


• In December 2013, the Health Reform Monitoring Survey found that 18.6% of those insured in the individual market received cancellation notices attributing cancellation to the ACA, and  another 6% had their policies cancelled for other stated reasons.  Using that data, and the NHIS estimate of 14 million in in the individual market, Clemans-Cope and Anderson  estimate that 2.6 million people received policy cancellations that their insurers blamed on the ACA (and one might infer another 840,000 cancelled for other stated reasons).


• According to a March 2013 Urban Institute study, 48.6% of those currently in the individual market are ineligible for subsidies. If that ratio is right, and the estimate of 2.6 million cancellations attributed to the ACA is on target, about 1.2 million people who received cancellation notices blamed on the ACA would be ineligible for subsidies.  Of those, some probably had pre-existing conditions and will do better under the ACA.
  


• The Urban Institute study estimates the current individual market at 12.8 million, 6.2 million of whom would be subsidy-ineligible.

Buying unsubsidized insurance in the ACA universe: A preview

A few days ago, I noted that less than 20% of those who had completed applications on ACA exchanges and been found ineligible for subsidies had actually enrolled in plans through the exchanges.  I added an invitation to people who were shopping for insurance without a subsidy to share their experience with me.

I have since spoken to several people who have bought insurance off-exchange. I will report on their fascinating experiences in a few days: first, I want also to speak to brokers and perhaps others who can overview the off-exchange individual market (if you can help, please let me know). Here, I'd just like to overview a few patterns and general observations. Some are obvious but perhaps still not widely recognized. Here goes:

1) If you are subsidy-ineligible, there is no reason to complete the transaction through Healthcare.gov or a state ACA exchange.  Why add an extra layer of bureaucracy and send you application through the shaky "834" tunnel? (An 834 transmission is a reporting tool that brokers, and now the exchanges, sue to send completed applications to insurers.) Also, why not get a sense of how responsive competing insurers are? [Update, 2/17: a reader provides a reason to buy on the exchange: "future income is never guaranteed and if I end up unemployed or with a lower than expected income in 2014, I can get the subsidies later when I file my taxes if I’m eligible. "]

2) Price aside, the individual market is much easier to navigate than it used to be -- first, because the ACA exchanges offer a quick lay of the land and price benchmark, and second, because medical history is no longer relevant.  Two people told me that all you need is a credit card -- the insurers don't even ask for a driver's license.  And if you come to a broker quoting an exchange plan in your price range and asking if they can beat it, you are shopping with the benefit of solid price discovery.

A caveat for Ezra Klein

[updated, with a rather large caveat to the caveat...]

..who has a cogent set of questions about how well HealthCare.gov will be working as of Dec. 1 and going forward.  On one key question I think there's a moderating factor:

9. Where the Dec.1 deadline really matters is for people who've already had their plans canceled and who need to be able to sign up for a new one in time for it to start on Jan.  1. If the Web site isn't working smoothly for these people in the next week or so it'll be an utter disaster when 2014 comes and many of these people find themselves uninsured and some get sick.

Most people subject to policy cancellations in the individual market are probably not eligible for subsidies, since they've already found insurance affordable. That means they don't really need HealthCare.gov.  They can easily get complete information about their options on ValuePenguin and then sign up directly with an insurer. [UPDATE: I'm afraid my premise here is severely compromised; William Ocasio reminds me that a recent Families USA study found that 71% of those currently in the individual market are below 400% of the Federal Poverty Level, and thus potentially eligible for subsidies. In practice, though, many people above about 270% FPL are not subsidy-eligible -- you only get a subsidy if the full cost of the benchmark silver plan exeeds a benchmark percentage of your income, and plan prices vary pretty widely from market to market. Still, probably more than half of those subject to cancellation are in fact eligible for at least some subsidy.]

Those who have received policy cancellations and are eligible for subsidies will need to get a subsidy application processed by hook or crook (that is, by online, phone or print application to the federal government) by Jan. 1. If they can't, I would imagine that some kind of retroactive subsidy payment will have to be worked out, after a lot of angst. For what it's worth, the subsidy-eligible probably won't be subject to rate shock, unless they're at the very top end of the scale, where the subsidy can shrink to near nothing.

Related:
Bypassing HealthCare.gov, cont.
Who needs HealthCare.gov?

WSJ leans into the "rate shock" narrative for Obamacare

[Updated 7/13, per "Blows to Obama's Health-Care Law Pile Up"...]

The WSJ's Louise Radnofsky is an experienced healthcare reporter, and her front-page story today about pending "rate shock" for healthy singles when the ACA takes effect is factually accurate. Since the focus is on the risk that the healthy uninsured will stay out of the ACA's healthcare exchanges, it's arguably fair to focus on the subset -- a minority of those who don't get insurance from an employer or the government -- whose premiums may go up. But nonetheless I find the emphasis and framing misleading in some particulars (e.g., the online home page teaser, "Insurance Rates Could Soar Under New Law"). .

The lede goes for maximum shock effect, setting reader perceptions before multiple caveats qualify the picture:

Who might suffer "rate shock" under the Affordable Care Act?

Avik Roy's much-debated screed implying that the launching of the ACA exchanges will trigger widespread "rate shock" among legions of healthy young people who could previously by insurance more cheaply relies on misleading comparisons, as Ezra Klein, Jonathan Cohn and Rick Ungar charged. None deny, though, that the price of the most minimal available insurance will rise for a subset of healthy young adults

In an essay suggesting that rate shock is real, Will WIlkinson recounts that for a brief time a year or so ago he was paying about $100 a month for a catastrophic plan that he found through the Freelancer's Union (presumably a more honest broker than the scammy online broker Roy relied on).

I clicked through and tried the union's plan-finder with random zip codes in the northeast, south and west; it wasn't until  my fifth try that I found a zip code -- 27108, in Winston-Salem, NC -- in which a UnitedHealth quote was available. If I were my 22 year-old son, I could get a plan for $79 a month with a $10,000 deductible and 70% of expenses paid after that, with a total out-of-pocket expense cap of $15,000 (except that if I were my son I couldn't, because he had hip labral surgery this year, which would doubtless jack up his rate if he were searching now -- see Ezra Klein on this.) For $105 per month, I (or 22-me) can get the same deal with a $5,000 deductible and $10,000 annual cap on my out-of-pocket expenses. (Of course, that's a posted plan from just one provider in one market, and comparing ACA offerings to the current individual market is not just comparing apples to oranges, but 50 different fruits to hundreds of other different fruits. But the offering is roughly in line with what Roy found on eHealthInsurance.com)