Connecticut's ACA exchange shows how to communicate with low-income health insurance buyers

In my ongoing quest to figure out why ACA private plan buyers bought low-premium, high-deductible bronze plans in much higher proportions in some states than in others (e.g., 41% in Hawaii, 8% in Mississippi), I have noted that bronze plan takeup correlates roughly, but by no means perfectly, with state median household income and public health measures.

Poorer, less healthy states tend to have lower bronze and higher silver plan takeup -- and that's as it should be. Buyers with household incomes under 200% of the Federal Poverty Level (FPL) are eligible for Cost Sharing Reduction (CSR) subsidies that radically reduce deductibles, copays and maximum yearly out-of-pocket (OOP) costs.  But CSR is only available with silver plans. (A much weaker CSR is available to buyers with incomes between 200 and 250% FPL, only marginally reducing OOP costs below the silver plan standard.)*

The tradeoff for low income shoppers is an often painfully higher monthly premium -- say, $30-$70 more for an individual -- in exchange for potentially thousands of dollars more coverage of out-of-pocket costs. For the most part, lower income shoppers made the right, if difficult, choice. Nationally, just 20% of all buyers on all exchanges chose bronze plans; just 15% of subsidy-eligible buyers in the 36 states on Healthcare.gov last year chose bronze; and the percentage among CSR-eligible buyers was even lower. In low-income Alabama, just 6% of subsidy-eligible plan buyers chose bronze. In Mississippi, just 7% did.

Not all poor states had low bronze takeup, though, and not all rich ones had high takeup. One outlier is Connecticut, the second richest state in the nation, with a 2013 median household income of 67,718. Just 16% of Connecticut buyers selected bronze, putting the state in a four-way tie for 12th-lowest nationally -- i.e., in the lower third of states. The only other relatively wealthy state in the top 16 was New Jersey, with 14% bronze takeup and a median household income of $61,782.

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:

Why go for the bronze?

I've devoted a lot of posts to worrying about who bought high deductible bronze plans but shouldn't have, especially those who were eligible for Cost Sharing Reduction subsidies if they bought silver (Fortunately, most CSR-eligible buyers did choose silver.) This evening I have a post up on healthinsurance.org digging into who should buy bronze -- that is, for whom is a plan with, say, a $5,000 deductible at least a rational choice.

One key: in  some states and counties, some bronze plans provide substantial benefits that kick in before the deductible is reached -- say, $20 primary doctor visits or $10 generic drug copays. Another: for the unsubsidized, premiums climb steeply with age, while deductibles and copays remain the same regardless of age. For the rest, I hope you'll take a look.

The ACA and the white working class

When Bill Gardner this morning pointed out, as many have, that Americans approve of the core components of the ACA but disapprove of the law, I expected the corollary to be "slander works," or"it's really hard to communicate how these moving parts fit together," or some combination of the two.

Instead, I was confronted with this chart from a paper by Henry Aaron and Gary Burtless:

Gruber clips inspire powerful condensed defenses of the ACA

On occasion, I've made my case against opinion writers' "paragraph briefs," which make an omnibus case for something by packing disparate and often dubious assertions in comma-separated series.

An often more powerful variant, though still subject to slipping in slugs and ringers, is the link-packed paragraph brief.  These cite an array of evidence in a way that dares the reader not to take the cited authorities on faith -- each of them, maybe a half-dozen, are a click away. Of course, most of us do take most of them on faith most of the time. But the cards are on the table.

The Gruber brouhaha has driven a lot of progressive policy wonks to retrospection -- reviewing the legislative and political history of the ACA while chewing over Gruber's assertions that the process was deceptive and his apparent early impression that federal subsidies to states that built their own exchanges might not be immediately forthcoming.  That process has given rise to what's struck me as two particularly powerful paragraph briefs.

First, Ezra Klein delivers a short legislative history that rebuts the preposterous Halbig/King contention that the ACA's drafters intended to make premium subsidies available only to buyers in state-run exchanges:

Fleshing out a (real) ACA hardship story in the WSJ

It's inevitable that reporters' vignettes about ACA shoppers will often lack context or essential details. Print space is limited, readers' attention is limited,  reporters' time is limited, and protagonists' grasp of their own experience may even be limited.

Still, the back stories are often worth probing (3, 2, 1. 0). Here's one from today's Wall Street Journal, with Louise Radnofsky, Stephanie Armour, and Anna Wilde Mathews reporting on the first day of Open Season II. There's no inaccuracy, but the rate-shock subplot in this brief account does leave a question mark:

The Times wrestles with ACA re-enrollment; I call some fouls

To a point, New York Times healthcare writers (see byline below) did a good job explaining the complexities of the renewal decision facing many buyers of health plans on the ACA exchanges for 2014. But I have three beefs with the front-page presentation.

The first is in the headline (not the reporters' responsibility). The lead that follows clarifies the problem -- but for many, of course, the headline shapes perception:

Cost of Coverage Under Affordable Care Act to Increase in 2015
By ROBERT PEAR, REED ABELSON and AGUSTIN ARMENDARIZ NOV. 14, 2014

WASHINGTON — The Obama administration on Friday unveiled data showing that many Americans with health insurance bought under the Affordable Care Act could face substantial price increases next year — in some cases as much as 20 percent — unless they switch plans.

Unless they switch plans is the key. For the 85% of buyers who qualify for federal subsidies, their costs will not go up at all if they buy the benchmark second-cheapest Silver-level plan, or a cheaper plan -- except insofar as their income rises. Their share of the premium is a fixed percentage of their income. In fact, if their income is flat they may qualify for higher Cost Sharing Reduction (CSR) benefits, since the formula for determining those benefits is adjusted yearly for inflation.

Getting the word to the uninsured: Can Healthcare.gov show the subsidy, pronto?

More than half of the uninsured don't know that the government will help fund their insurance, according to the Kaiser Family Foundation. More than half of the subsidy-eligible who shopped but didn't buy on healthcare.gov didn't recognize that they were eligible for subsidies, according to McKinsey and Company.

A functioning shop-around feature, in which a user punches in location, household members and income and gets price quotes with subsidies included, could be a major weapon against that widespread ignorance. When Healthcare.gov launched, or failed to launch, last fall, it didn't have one. In December a shoparound was up and functioning -- but many folks never saw it; the home page didn't particularly steer you to it.

This year is different. The shoparound showing quotes for 2015 was up before Open Season launched, and you couldn't miss it (good news: now that Open Season has kicked off, that's still true). How effective is it?

I have an article up on Healthinsurance.org that explores its strengths and weaknesses, with expert health. In brief, the good news: you can't miss the shoparound when you visit hc.gov, and if you try it, you can get price quotes in under a minute.  And the bad: the guidance toward silver plans for those eligible for Cost Sharing Reduction subsidies, which are available only with silver, is still weak, and the information about CSR subsidies is incomplete. More generally, the level of decision support is not up to that of select states, like Idaho, the only state to exit Healthcare.gov and launch its own exchange this year.

Is the tax code the best route to attacking wage stagnation?

David Leonhardt identifies stagnant wages as the political issue of our time and the prime mover of Democrats' current woes, as they've been left holding the bag during a period in which median income has fallen. He runs through a list of measures that in part address the problem, of which some (infrastructure) have been blocked by Republicans, others (investment in education) work slowly (if at all), and still others (health reform) have made some headway -- but without much direct or immediate impact on most middle class voters. He then segues to a short-term solution that he suggests might provide at least political relief:

Truly new ideas don’t come along very often in any field, including economics.

So it goes with lifting middle-class incomes. The best hope for doing so, in the immediate future, is probably the oldest and most obvious play in the book: a tax cut.

A few years ago, a middle-class tax cut would have seemed a silly idea. Both Mr. Bush and Mr. Obama had already cut taxes, and the federal budget deficit was enormous. But the deficit has since fallen sharply, thanks in part to lower health costs. Meanwhile, middle- and lower-income families are reaping a disproportionately small share of economic growth. Having the government try to rectify the situation doesn’t sound so silly now — and probably won’t in the 2016 presidential campaign.

Leonhardt admits that the country as a whole is under-taxed, short of revenue for other economy-building action. Hence he suggests pairing a middle class tax cut with a further hike on the wealthy, which of course Republicans will never allow. It's not entirely clear whether he's touting the tax cut because it helps plug the income gap a bit, or because it may stimulate the economy and thus tighten the labor market enough to generate upward pressure on wages. Most likely both.

Healthcare.gov 2.0 is live. A couple of problems...

Healthcare.gov's shop-around feature for 2015 went live last night. While there are some notable improvements, I see a couple of problems that I want to highlight right away.

In the quest to design a website that helps people find the health insurance that's right for them, there's a tension between making the process easy and providing essential information. The new shop-around has come down on the side of "more info" than the prior one. But the info is not always more accessible.

First problem: sometime in the off-season, on the shop-around feature, hc.gov added pop-up definitions of "deductible" and "out-of-pocket maximum" and "co-payments/co-insurance" on all price quotes. Inexplicably, they're gone in the 2015 shop-around.  Maybe they'll be coming online shortly? (Shop-around for the remainder of 2014 is still live if you want to compare.)

Healthcare.gov is already better than it was when Open Season ended

On the eve when Healthcare.gov is scheduled to go live with the shop-around feature for plans available in 2015, here's a spot of good news about how that feature's already been upgraded. This is a pull-out from something I noticed mid-post, and so buried a bit, late last week.

[Update: 2015 shop-around is live now. As HealthSherpa did during the last open season, its starts with a single prompt for a zip code to draw a user in. While it asks for the same info as last season, it breaks the presentation into several screens, probably help people avoid missing key questions. BUT...the mouseovers are gone! Update post here.]

One complaint often voiced about healthcare.gov last year was that important information was not provided in context. For example, when University of Pennsylvania researchers studies the experiences of young,  well-educated users of the site, their first recommendation for improvement was to provide instantly accessible glossary definitions of key insurance terms -- i.e., popup definitions that appear when you mouse over the terms, on the plan price quotes or elsewhere.

The shop-around feature on hc.gov has remained live (though somewhat difficult to find) during the off-season, for the benefit of people eligible for "special enrollment periods" because they've undergone life-changing events such as job loss or divorce or marriage.  And I'm happy to report that at some point in recent months (or weeks), pop-up definitions have appeared. They work on the screen grab below:

Evidence from Kaiser: Most ACA shoppers made informed choices

How well-equipped are America's uninsured to shop for private health insurance in the ACA's marketplace?

The scary news going in was that most of the target population had a poor grasp of fundamental insurance concepts such as "deductible" and "copay." The good news is that most buyers seem to have picked up a working knowledge of the basic tradeoff between monthly premiums and likely out-of-pocket costs by the time they pulled the trigger.

I have noted in multiple posts, summarized here, that the vast majority of lower-income ACA shoppers avoided high deductible bronze plans and availed themselves of the Cost Sharing Reduction  (CSR) subsidies available only with silver plans -- even when, as in Mississippi, the silver plans cost them significantly more per month.  Now, Kaiser Family Foundation survey data, reported this week, suggest that private plan buyers considered deductibles and co-pays almost as important as monthly premiums.

Master saboteurs

You've got to hand it to Mitch McConnell and the Republicans generally: Basically every aspect of their strategy and execution since Obama was first elected has been effective. Poison public perception of effective legislation like the stimulus and the ACA? Check.  Block all constructive legislation since winning the House, and blame Obama for inaction?  Check. Inhibit economic growth with savage austerity during a demand slump?  Check. Outmaneuver the president on budget issues by proving willing, or seeming willing, to shut down the government, default on the national debt, and pull the trigger on spending cuts beyond what anyone would have dreamed a few years ago? Check.  Depopulate the executive branch by slow-walking all appointments (until the filibuster rule change this year)? Check. Disenfranchise hundreds of thousands of black and Hispanic voters with voter suppression measures? Check. Flood the airwaves with dark money supplied by their corporate and ideological masters? Check.

It's all worked. Some say the victories are Pyrrhic and will be short-lived. But if they can keep Obama's approval numbers in the low 40s or worse, and keep economic growth at a steady sputter, they may win control of the only branch and level of government they don't dominate.

Two ways to reform the ACA's free preventive services

The Wharton School's Mark Pauly has co-authored an article (with Duke's Frank A. Sloane and Sean D. Sullivan at U. Washington) arguing that the free preventive care services mandated by the ACA to be covered by all insurance plans should be subject to cost-benefit analysis. Currently they are not; the decisions of the two entities that determine which preventive services must be provided for free  "are based on a comparison of health benefits and risks alone," as Rebecka Rosenquist summarizes on the blog of the Leonard Davis Institute at Penn. She further notes:

Pauly and colleagues note that the groups “have no responsibility for a total expenditures budget for medical services that would constrain their recommendations.” They cite an analysis that shows a 1.5 percent increase in private insurance premiums due to the cost of the US Preventive Services Task Force recommendations. “When they do recommend a new costly vaccine or service, that recommendation usually increases both public and private spending (including insurance premiums).”

Indeed. Outcomes research funded by the ACA should also shape Medicare reimbursements, but demagogic screams about health care "rationing" made that impossible. Recall, too, the outcry in November 2009 when the US Preventive Services Task Force -- one of the two agencies* charged with setting the ACA's free preventive services mandates -- downgraded its mammography recommendation for women under 40, deeming that the decision whether to undergo the test should be based on individual circumstance.  The ACA drafters rushed to mandate free mammograms at any age.

Rational choice in the ACA marketplace

Here's another piece of the puzzle in my quest to figure out why ACA private plan buyers bought low-premium, high-deductible bronze plans in much higher proportions in some states than in others (8% of Mississippi plan buyers selected bronze; 41% of Hawaiian shoppers did). A good predictor is each state's public health profile. (Thanks to Brad G. for putting me on the trail.)

Bronze plans, in which deductibles average over $5,000 per person, are bad deals for people who are likely to make heavy use of medical services. They're also bad deals for low-income buyers, who can access generous Cost Sharing Reduction subsidies that reduce deductibles and co-pays (radically for those with incomes under 200% of the Federal Poverty Level) -- but only if the buyer chooses a silver plan. Low income buyers are often in poor health, and know it. Most ACA buyers have been uninsured and so may have pent-up healthcare needs.

I have previously noted that a very high percentage of buyers eligible for CSR did in fact choose silver plans, and that lower income states did have lower percentages of bronze buyers -- though there are notable exceptions up and down the scale. The same is true for measures of public health in each state. Wealthier states tend to have healthier residents -- though wealth disparities within states can complicate the picture.

In the chart below, I have tabulated three public health measures drawn from the Kaiser Family Foundation's State Health Facts: life expectancy, incidence of  Diabetes, and obesity -- for the ten states with the lowest and highest takeup of bronze plans. The average bronze takeup states in the former group is 14.25% of all plan buyers, and in the latter group, 31.1%.  In all three health measures, the low-bronze-takeup states as a group significantly underperform the high-bronze-takeup group. The income disparity between the two groups is also stark.*

Maybe we should call blue states bronze states

In several posts, I have tried to track how successful the ACA exchanges were in steering lower-income buyers of private plans toward silver plans, the only metal level at which subsidies that reduce deductibles and out-of-pocket costs are available. Low-income buyers of bronze plans, which offer low premiums but sky-high deductibles, forfeit access to these Cost Sharing Reduction (CSR) subsidies, which radically reduce costs for those with household incomes under 200% of the Federal Poverty Level and phase out at 250% FPL.

On the whole, the news is good, though information that correlates metal level selection with buyers' income is sketchy. In New York, the only state that breaks out metal level selection by income bracket, 89% of buyers under 200% FPL chose silver plans and so took advantage of CSR. In the federal exchange, only 15% of buyers who qualified for any kind of subsidy bought bronze plans.

Bronze plan selection varies quite a bit by state, however, for reasons that are hard to tease out.  For starters, more people on average bought bronze in the 14 states (plus D.C.) that built their own exchanges -- most of which are also among the wealthier states.

State per capita income seems to affect metal level selection. interacting with other factors such as premium prices, the quality of outreach to the uninsured, whether the state expanded Medicaid (which takes out potential buyers between 100 and 138% FPL), and the age composition of the buying pool.*

My thanks to a friendly stranger on Twitter who put together a scatterplot correlating state median income and bronze plan selection. That led me to the latest census data on median household income by state. Below, I've matched it up with HHS state-by-state data on ACA buyers' metal level selections.

For ACA buyers at all income levels, here are the bronze takeup rates for the thirteen highest- and thirteen lowest-earning states:

In Mississippi ACA rollout, one big disaster, one small success

Politico's Sarah Varney has a beautifully reported, infuriating account of how Tea Party government in Mississippi sabotaged the state's ACA rollout, leaving Mississippi "the only state in the union where the percentage of uninsured residents has gone up, not down."

The tale has three parts: 1) the state's Tea Party governor elected in 2012, Phil Bryant, undercut and induced the closure of the state's home-built insurance exchange, a project in which the state insurance commissioner (and Haley Barbour crony) Mike Chaney was deeply invested, and which was briefly operative before full ACA implementation. 2) The state refused to participate in outreach to the uninsured and, by closing its exchange, forfeited substantial federal aid for outreach. 3) The state rejected the ACA's Medicaid expansion, which would have extended Medicaid eligibility to an estimated 333,000 uninsured residents. Mississippi was also among the poorest performers in attracting competition to the exchange: most counties had only insurer, Humana, offering plans.

I would add a footnote. Of those three factors, the refusal to expand Medicaid in the nation's poorest state was by far the most consequential.  As part of Healthcare.gov, Mississippi's state exchange did not ultimately perform so badly.  The state exchange enrolled 61,494 people in private plans, 20.6% of the estimated 298,000 uninsured residents eligible to buy insurance on the exchange. That's not great, but it's a higher percentage than that achieved in several states that built their own troubled exchanges, and better than 17 states overall.

Had Mississippi achieved the national average percentage of eligible signups, 28%, another 22,000 residents would be insured. An estimated 138,000 Mississippians, by contrast, fell into the so-called Medicaid gap -- that is, they would have been eligible for the blocked expansion but earn too little to qualify for subsidized coverage on the exchange. Again, 333,000 state residents were estimated to be newly eligible for Medicaid under the expansion. And many states that expanded Medicaid actually exceeded their target enrollments.

What the ACA can't cure

I recently referred to Investor's Business Daily reporter Jed Graham's coverage of the ACA as "adversarial." He objected. I responded, "I don't ignore or minimize ACA flaws but would not object to a characterization of my writing on it as "sympathetic."

That set me thinking about everything that troubles me about the ACA -- or, more accurately, things that trouble me about the US healthcare system that the ACA is unlikely to fix -- though it may help catalyze reform on several of these fronts. Here's the list:

1. All private health insurance in the U.S. is inadequate -- thanks to the shameful out-of-network billing, balance billing, and creative billing by hospitals, physicians and other providers documented in sickening detail by Elisabeth Rosenthal in her Paying Till it Hurts series. We are in the grip of a depraved system in which hospitals often operate as free billing zones and payers' attempts to control costs just generate new loopholes.

2. For the unsubsidized and lightly subsidized, private insurance on the ACA exchanges is too expensive. Or rather, medical care obtained under the insurance is too expensive.  One of the law's strengths is the Cost Sharing Reduction (CSR) that reduces deductibles and out-of-pocket costs for buyers with incomes below 200% of the Federal Poverty Level to levels comparable to those offered in top-grade employer-sponsored insurance (much more modest CSR is offered to those between 200% and 250% FPL).  Those cost control come into play if low income buyers choose silver plans (fortunately, most do) and if  they are not hit by the kind of out-of-network and balance billing that Rosenthal documents. Those above 200% FPL, however, have to choose between high monthly premiums and often sky-high deductibles, average over $5,000 for bronze plans (which may be tempting to many at the upper range of subsidy eligibility).

Ebola's Information Paradox, Part II: Do we hear?

Looking back to a devastating Cholera outbreak in a poor neighborhood of London in 1854, Steven Johnson notes that "it took two entire weeks before the press began treating the outbreak as a major news event for the city."  A hundred and sixty years later, we're safer (although more fearful) because news travels faster:

Compare this pattern of information flow to the way news spreads now. On Thursday, Craig Spencer, a New York doctor, was given a diagnosis of Ebola after presenting a high fever, and the entire world learned of the test result within hours of the patient himself learning it. News spread with similar velocity several weeks ago with the Dallas Ebola victim, Thomas Duncan. In a sense, it took news of the cholera outbreak a week to travel the 20 blocks from Soho to Fleet Street in 1854; today, the news travels at nearly the speed of light, as data traverses fiber-optic cables. Thanks to that technology, the news channels have been on permanent Ebola watch for weeks now, despite the fact that, as the joke went on Twitter, more Americans have been married to Kim Kardashian than have died in the United States from Ebola.

Well yes, wonderful. But how long did it take for news of a deadly, fast-developing epidemic in West Africa to bubble up into full public consciousness in the United States? The psychological quarantining of a poor region in the grip of a terrible affliction persists.

A surprise (to me) regarding Medicaid eligibility under the ACA

I learned an interesting fact about the ACA from Kaiser's Larry Levitt on Twitter today.

It's well-known to ACA watchers that a low-income worker whose employer offers insurance deemed "affordable" according to ACA formula cannot buy subsidized private coverage on the exchanges. What I suspect is less well-known, and what Larry spelled out, is that the availability of employer-sponsored insurance does not negate Medicaid eligibility for someone whose household income is low enough to qualify for Medicaid.