“A Range Of Options And A Very Good Deal”: Under The Affordable Care Act, Millions Eligible For Free Policies
Millions of people could qualify for federal subsidies that will pay the entire monthly cost of some health care plans being offered in the online marketplaces set up under President Obama’s health care law, a surprising figure that has not garnered much attention, in part because the zero-premium plans come with serious trade-offs.
Three independent estimates by Wall Street analysts and a consulting firm say up to seven million people could qualify for the plans, but federal officials and insurers are reluctant to push them too hard because they are concerned about encouraging people to sign up for something that might ultimately not fit their needs.
The bulk of these plans are so-called bronze policies, the least expensive available. They require people to pay the most in out-of-pocket costs, for doctor visits and other benefits like hospital stays.
Supporters of the Affordable Care Act say that the availability of free-premium plans — as well as inexpensive policies that cover more — shows that it is achieving its goal of making health insurance widely available. A large number of those who qualify have incomes that fall just above the threshold for Medicaid, the government program for the poor, according to an analysis by the consulting firm McKinsey and Company.
The latest analysis was conducted by McKinsey’s Center for U.S. Health System Reform, whose independent research has been cited by the federal government and others.
“The whole point of the law was not only to cover the uninsured, but so people didn’t have to make choices between food or drugs, or going to the doctor or dentist,” said Karen Davis, a health policy expert at the Johns Hopkins Bloomberg School of Public Health. “It’s what it is designed to do.”
Many insurers tried to price their least expensive plans so they would become free or nearly free with the addition of subsidies that are set based on a person’s income and the cost of a midlevel, or silver, plan.
Independence Blue Cross in Philadelphia has four plans that are free to some customers. But the company, along with other insurers, has been careful not to publicize its free coverage for fear of alienating customers who will need to pay more.
“We’re not advertising zero dollar,” said Brian Lobley, a senior vice president at Independence Blue Cross. But the company is promoting monthly premiums in the $20 to $30 range, he said.
The Obama administration has also stressed affordability over coverage with no monthly charge, frequently saying that the cost of coverage will be less than a monthly cellphone bill for many consumers. Officials at the Department of Health and Human Services would not comment on the McKinsey analysis, saying in a statement that the goal of the health law was to provide a range of options for people with differing needs and budgets.
The analysis found that five million to six million people who are uninsured will qualify for subsidies that will be greater than the cost of the cheapest bronze or silver plan. A million more people with individual insurance could also be eligible, according to McKinsey, although estimates of the size of the market for private individual insurance vary widely. None of the people in the analysis qualify for Medicaid.
The availability of zero-premium plans may make the deal especially enticing to the healthy young people the marketplace needs to succeed, said Mark V. Pauly, a professor of health care management at the University of Pennsylvania’s Wharton School. “This is such a good deal that you’d have to believe you were immortal not to really pick it up,” he said.
Although they vary in their design, bronze plans generally cover about 60 percent of a person’s medical costs. All plans, including bronze, must cover standard benefits like prescription drugs, maternity care and mental health treatment.
The availability of the zero-premium plans varies across the country. McKinsey found that about 40 percent of the uninsured in Missouri will be able to select a no-cost bronze plan, for example, compared with 2 percent of the uninsured in New Jersey.
Its estimate, based on an analysis of premiums for plans offered in the marketplaces in all 50 states and the District of Columbia, is in line with two other estimates, by Credit Suisse and Morgan Stanley.
The McKinsey researchers also found that about half of the people eligible for zero-premium plans were under 39 and uninsured. The Obama administration has been emphasizing the affordability of its plans for young people, a critical group because their participation in the marketplaces will help keep overall premiums low.
It is impossible to know who will actually sign up, and whether they will choose a zero-premium plan.
For many people, paying slightly more for a silver plan may be a much better option, experts said. Ninety percent of those who will have the option of buying the no-cost plans make less than 250 percent of the federal poverty level, which is $28,725 for an individual, and $58,875 for a family of four. People earning below those thresholds are eligible for the most generous assistance, but only if they choose a silver plan.
About a million of those who will qualify for free coverage will be able to buy a silver plan for no monthly cost. McKinsey, which is releasing a report about the new insurance marketplaces, estimates that the cost of silver plans for the people who qualify for a zero-premium bronze plan will range from $40 to $50 a month.
“They may be getting zero premiums, but they’re also leaving a lot of money on the table if they don’t enroll in a silver-level plan,” said Sabrina Corlette, a professor at Georgetown University’s Health Policy Institute.
All plans, including bronze policies, limit annual out-of-pocket costs to $6,350 for individuals and $12,700 for families. But insurers and advocates said out-of-pocket costs — even those under that limit — can be daunting to people with low incomes.
For Mark and Elisabeth Horst, both artists in Albuquerque, the risks of signing up for a bronze plan were outweighed by the prospect of getting it free. The Horsts, who make $24,000 a year between them, qualified for $612 in monthly subsidies, but the cost of a bronze plan was $581 a month.
“We’re in good health,” Mr. Horst said.
Besides, he said, they can always switch to a better plan next year. “At this point, it’s a little bit of a gamble.”
Not everyone selects the cheapest option. Dante Olivia Smith, a lighting designer from Manhattan, learned that federal subsidies would allow her to buy a bronze plan for $24 a month.
“It was astounding,” she said. “I almost started crying, and called my mom.”
In the end, however, she went with a silver plan for $91 a month that included dental and vision coverage. Ms. Smith, who is 30, said she opted for the more comprehensive plan because of her work, which requires her to climb ladders and use power tools.
“If I had a different job, for 24 dollars a month I would have been like ‘Woo-hoo!’ ” she said. “But the reality is, I know what my risks are in my life.”
By: Reed Abelson and Katie Thomas, The New York Times, November 3, 2013
“What Congress Didn’t Say”: Obamacare Outlaws Policies That Are Essentially Worthless
As I watched Health and Human Services Secretary Kathleen Sebelius being grilled by members of the House Energy and Commerce Committee last week, it was immediately clear to me just how many of them are in the pockets of the industry I used to work for.
Former colleagues of mine undoubtedly had a hand in writing the members’ comments and questions. Their behavior showed just how much more willing they are to protect the profits of health insurers than protect the health and financial well- being of their constituents.
I got the same treatment from many of those committee members when I provided testimony in March — or tried to. I had been invited to talk about the business practices of insurers — practices that have contributed to the rising number of uninsured and underinsured Americans. Among them: refusing to sell policies to millions of us because of preexisting conditions and charging exorbitant premiums for skimpy coverage to others.
When I tried to tell the tale of a Florida woman who died of cancer last year because she was priced out of the market and was unable to buy coverage at any price, Rep. Marsha Blackburn, a Republican from my home state of Tennessee, cut me off. She clearly had no interest in hearing about Leslie Elder or anything else I had to say. Instead, Blackburn held forth for more than five minutes and gave me all of 20 seconds to respond.
Throughout that hearing, a former co-worker from my Humana days, who later worked for the industry’s big lobbying group and then the Bush administration, stood a few feet behind Blackburn. That former co-worker now serves as senior policy adviser to the committee. So I was not the least bit surprised that Blackburn was determined to give me as little time to talk as possible.
During the Sebelius hearing, Blackburn and other GOP members talked about letters constituents have received informing them that their policies will not be available next year. How could that be, they asked, when the president assured us four years ago that, “If you like your health care plan, you can keep your health care plan.” Blackburn, et al accused the president of being dishonest.
Obama should not have used those exact words. That’s because one reason for the Affordable Care Act in the first place was to protect us from insurers all too willing to lure us into inadequate policies with slick marketing materials. Insurers have made billions in profits from selling such junk insurance, and people like Blackburn clearly want to get rid of the law that makes junk insurance illegal.
As I wrote in Deadly Spin, a years-long industry strategy has been to shift more and more medical expenses to patients. As part of that strategy, big insurance firms bought smaller companies that specialize in limited-benefit plans, which often provide such skimpy coverage that some insurance brokers have refused to sell them.
Cigna, for example, marketed a limited-benefit plan to narrowly targeted prospective customers: mid-sized employers with high employee turnover, such as chain restaurants. The underwriting criteria was specific. The average age of an employer’s workers couldn’t be higher than 40 and no more than 65 percent of the workers could be female. (Insurers have long charged women more than men because in their eyes being born female is a pre-existing condition.) In addition, employers had to have a 70 percent or higher annual employee-turnover rate, meaning that most employees wouldn’t stay on the job long enough to use their benefits. Employees also could not get coverage for care related to any pre-existing condition during their first six months of enrollment.
Limited-benefit plans like that one, blessedly, will not be available next year, and that’s because of the Affordable Care Act. Neither will plans with sky-high deductibles. Another way insurers have shifted costs to patients in order to enhance profits: luring or forcing them into plans with such high deductibles they join the ranks of the underinsured the moment they enroll. When people in these plans get seriously sick or injured, they are on the hook for thousands of dollars in medical bills they’ll have to pay out of their own pockets.
Millions of Americans — including my son, Alex — got letters from their insurers in the years before the ACA was enacted informing them that their plans were being discontinued. Why? To fulfill the industry strategy of moving people out of plans with affordable co-payments and co-insurance obligations and into high-deductible or limited-benefit plans. Such plans are far more profitable.
Keep this in mind the next time you hear a politician railing against Obamacare because people are getting letters from their insurers. The truth these politicians want to obscure is that Obamacare is protecting their constituents from buying coverage that provides little to no shield against financial ruin. And that protection is something the insurance industry wants to get rid of.
By: Wendell Potter, The Center for Public Integrity, November 4, 2013
“More Than Just A Message”: The Origins Of “If You Like Your Health Insurance, You Can Keep It”
There are good reasons why President Obama’s leading message on health care during the 2008 campaign, often repeated since, was “if you like your health insurance, you can keep it.” That message was created to overcome the fear-mongering that had blocked legislative efforts to make health care a government-guaranteed right in the United States for a century.
Our health is of central importance to our lives, deeply personal to our well-being and that of our loved ones. That concern has translated politically; for decades, people have told pollsters that health care is a top concern. It is why every 15 to 20 years – from 1912 to 2008 – the nation has returned to a discussion about whether and how the government should guarantee health coverage, the debate rising phoenix-like from one spectacular defeat after another. A big reason for those defeats has been that opponents have exploited those deep feelings to scare the public about proposed reforms.
As one of the people who engaged early on in building the effort that led to the passage of the Affordable Care Act, I am keenly aware of this history. I wrote in 2003 that debates over health care turn dramatically when they move from the problem to the solution. Almost everyone agrees there’s a problem, but when a solution is proposed, people’s first question will be, “how will it impact me?”
The extensive public opinion research we conducted from 2006 to 2008 emphasized that same point: people would look closely at how any proposed reforms impacted their lives. Yes, Americans are worried about high health care costs and alarmed at the prospect of losing coverage. Yes, they may be unhappy with the quality and security of the coverage they have. But at the same time, they are desperate to hold on to it, because at least it’s something.
We also knew that those who wanted to block health care reform would play on people’s fears, a lesson learned most recently in the 1993-1994 fight over the Clinton health plan, in which opponents made wild claims about government bureaucrats coming between you and your doctor and denying you coverage.
In that context, it was essential to assure the 85 percent of Americans with health coverage that reform would not be a threat. Hence, “If you like your health care, you can keep it.” That message reassured people and let them be open to the rest of the message: proposed reforms would guarantee quality, affordable coverage to everyone and fix the real problems people were facing. After all, the first part of that sentence, “if you like it,” implies that lots of people would love to improve their coverage by making it more affordable and secure and by ending insurance company abuses.
Hillary Clinton’s campaign understood this early on, and she used the message consistently when she talked about health care reform during the Democratic primaries. Soon after she dropped out, Obama made it a key part of his health care message. But the promise that you could keep your health care was more than just a message; for almost everyone, it was an accurate description of the almost identical reform policies proposed by Clinton and Obama, which became the foundation for the Affordable Care Act.
The ACA preserves (with small but important improvements) the current system of health care financing for the vast majority of Americans: employer-based coverage, Medicare, and Medicaid. Those are the 94 percent of people with coverage for whom the “if you like it, you can keep it” promise is true.
For the 6 percent of insured who buy coverage on their own, the more accurate message would have been, “If you have good insurance and you like it, you can keep it.” The ACA reforms a corrupt individual insurance market. No longer can insurers turn people down due to a pre-existing condition or raise rates and drop people because they get sick. The ACA bans the sale of plans with such skimpy benefits and high-out-of-pockets costs that they are worthless if someone gets seriously ill.
As we predicted, the opponents of reform used fear-mongering – death panels, government takeover of health care, and on and on – to try to kill the Affordable Care Act. They are still at it, including cynically jumping on the website’s enrollment problems and now insurance companies sending letters to customers which hide the fact that companies are being forced for the first time to sell a good, reliable product.
The opponents of reform have used reckless, baseless charges to try to kill reform. I’m glad that President Obama used a slight exaggeration to finally provide secure health coverage for all Americans.
By: Richard Kirsch, The National Memo, November 4, 2013
“Happiness Today, Bankruptcy Tomorrow”: Why Letting Everyone Keep Their Health-Care Plan Is A Terrible Idea
The current furor over President Obama’s broken “keep your plan” promise confusingly melds together two very different claims. The first is a simple question of accuracy and honesty: Obama made a promise about his legislation, the promise has not come true, and a certain level of abuse is deserved. (Karl Rove huffs, “This is a serious breach of trust with the American people.” And you know that Karl Rove takes breaches of presidential trust with the utmost seriousness.)
The justifiable scrutiny of Obama’s veracity has melded seamlessly into a second and very different claim: That Obama’s broken promise is not merely a violation of trust, a fair enough charge, but an act of unfairness to those who have lost their plans.
The health-care debate has suddenly come to focus almost obsessively on the alleged victims of Obamacare, who have lost their cheap individual insurance. Here’s Matthew Fleischer mourning the loss of his bare-bones plan in the Los Angeles Times; here’s David Frum doing the same for the Daily Beast. Mary Landrieu, a vulnerable red-state Democrat, is introducing legislation to ensure that nobody can lose their individual health-care plan.
The idea underlying this notion, while facially appealing, is in fact misguided and morally perverse. No decent health-care reform can keep in place every currently existing private plan.
The New York Times has a helpful graphic displaying the structure of the insurance market:
The left and top-right squares show the four fifths of Americans who get coverage through the government. Those on the left who get covered through their employer get tax-subsidized insurance, and those in the top right get insured by the government directly. Obamacare leaves that structure in place (though it has a series of mechanisms designed to hold down their cost inflation).
The main coverage provisions affect the people in the bottom right quadrant. Most of that quadrant lacks any insurance at all, which points to the dysfunctionality of buying individual insurance before Obamacare. Some of them — 5 percent of the population — have a health-insurance plan. Health-care reforms have always thought of the people within that segment as being essentially the same group of people. Those are mainly healthy, non-poor people who have been skimmed out of the insurance pool, leaving behind those too poor, or too likely to need medical care.
Obamacare is designed to pool the bottom-right quadrant into risk pools, somewhat like the people on the left and the upper right. The poorest of the uninsured are eligible for Medicaid, though a Republican Supreme Court and Republican state governments collectively decided to leave them uninsured. The rest have coverage through the new health exchanges. By design, those exchanges prevent insurers from skimming out the healthy and excluding the sick. Some of the 5 percenters will get less expensive health care, mainly because they qualify for tax credits. Others think they will have to pay higher costs but, upon inspection, will be getting cheaper coverage on the exchanges.
But some other portion — an as-yet-undefined fraction of the 5 percent — will actually be paying higher insurance premiums in the exchanges, and their complaints are echoing across the land. Should we feel concerned for their plight? No, we should not, for three reasons.
First, a great many of the people who are happy with their individual health-insurance plan are happy only because they are unaware of its actual value. This sounds patronizing, but it also happens to be demonstrably true. Even highly educated consumers within this market were frequently snookered by insurance plans that turned out to leave them exposed to surprise costs — they incur a sudden high medical cost and discover their plan does not actually cover them. The fine print is a game of wits between insurer and customer that the insurer always wins. A large share of the people telling us now they’re happy with their individual insurance simply haven’t been exposed to a negative surprise. The handful of reporters who closely followed the individual-insurance market before last week are all watching the eulogies for the lost individual plans and having their brains explode.
Second, it is true that some people actually are getting decent individual health insurance, and have to pay more under Obamacare. Before, insurers could charge them a rate based on their individual likelihood of needing medical care, and some people are lucky enough to present a very low actuarial health risk. Now those people will have to pay a rate averaging in the cost of others who are less medically fortunate.
Have those healthy 5 percenters who do have decent insurance “lost” under Obamacare? In the very immediate sense, yes. That is what Obamacare advocate Jon Gruber is getting at when he concedes that 3 percent of Americans will be worse off under the new law. They’ll be paying higher rates in 2014 than they would have.
Yet this takes an oddly narrow view of their self-interest. You may pose a low actuarial risk today, but you cannot be certain your luck will continue for the rest of your life (or until you qualify for Medicare). Even people living the healthiest lifestyles suffer illnesses and accidents, or marry people who have a uterus. Those who are paying a higher rate are getting something for their money: a guarantee that some future misfortune won’t lock them out of the market. You might call such a guarantee “insurance.”
So some of the 5 percenters are wrong, some of them are short-sighted, but they have identified a basic moral principle: Why is it fair to steal from them, the healthy, and give to others, who are sick? If they have truly mastered the fine print of the individual insurance market and want to gamble on remaining a good actuarial risk forever, should they be permitted to keep their winnings? Having drilled down through the practical arguments, here we get to the final reason, the moral bedrock of the issue.
Their objection has an intuitive, libertarian appeal that obscures the fact that the vast majority of insured Americans already submit to this form of redistribution. Indeed, they’re submitting to a much more stringent form of this redistribution. The exchanges are allowed to charge older people up to three times the premium they charge the young. But in the employer system, they’re not allowed to charge older people any higher rate at all. The shift from healthy to sick in the employer insurance pool is massive. Adrianna McIntyre, a 24-year-old wonk prodigy, notes that her employer-based coverage charges her more than three times the rate she could get in the new exchanges.
People accept this transfer from the healthy to the sick because it is the only way to make medical care affordable to the sick. This is a simple mathematical truism. If your medical care costs more than you can afford to pay, the difference must be borne by those whose medical care costs less than they can afford to pay. There are any number of ways to handle this transfer. One is taxes, and Obamacare does use taxes to make insurance more affordable for many of its recipients. There are other potential methods — conservatives like to tout high-risk pools, at least in the abstract — but none escape the basic math.
The healthy 5 percenters do recognize that Obamacare carries out this transfer. Fleischer complains he is “being taken advantage of.” Frum, writing in the same spirit, complains that he must pay $200 more now that insurers can no longer reward him for his excellent health:
That $200 a month differential seems to be the cost of community rating: I had to answer a bunch of questions about my health before qualifying for my prior plan; the new plan will be issued, no questions asked. Presumably somewhere there is a D.C. resident who smokes or who has some pre-existing condition who will receive a corresponding $200 a month windfall.
The complainers are right. But they won’t quite face up to the full implications of their complaint. If you believe the healthy are entitled to keep the financial benefits of their good health, then you must also believe the sick must be denied medical care. Should that principle be the foundation of our health-care system?
By: Jonathan Chait, New York Magazine, November 1, 2013
“The Uproar Over Insurance “Cancellation” Letters”: Offering Terrible Products To Desperate People Is No Longer Acceptable
Kathleen Sebelius, the Health and Human Services secretary, took a lot of grief this morning from Republicans on the House Energy and Commerce Committee who were outraged that some people’s individual insurance policies had been “cancelled” because of health care reform.
Some of the rants bordered on the comical. Cory Gardner, Republican of Colorado, brandished his “cancellation” letter and demanded that Ms. Sebelius nullify the health law for all residents of his congressional district.
Most lawmakers mentioned President Obama’s unfortunate blanket statement that all Americans would be allowed to keep their insurance policies if they liked them. He failed to make an exception for inadequate policies that don’t meet the new minimum standards.
But in between lashings, Ms. Sebelius managed to make an important point. Yes, some people will be forced to upgrade their policies, she said. But that’s preferable to the status quo before the passage of the Affordable Care Act, when insurers could cancel policies on a whim.
“The individual market in Kansas and anywhere in the country has never had consumer protections,” she testified at the hearing. “People are on their own. They could be locked out, priced out, dumped out. And that happened each and every day. So this will finally provide the kind of protections that we all enjoy in our health care plans.”
A true cancellation is when someone gets a letter saying that she’s losing her insurance and cannot renew. That was common practice in the individual market for people with expensive conditions. Under the new law, no one will ever get a letter like that again. They cannot be turned down for insurance.
The so-called cancellation letters waved around at yesterday’s hearing were simply notices that policies would have to be upgraded or changed. Some of those old policies were so full of holes that they didn’t include hospitalization, or maternity care, or coverage of other serious conditions.
Republicans were apparently furious that government would dare intrude on an insurance company’s freedom to offer a terrible product to desperate people.
“Some people like to drive a Ford, not a Ferrari,” said Marsha Blackburn of Tennessee. “And some people like to drink out of a red Solo cup, not a crystal stem. You’re taking away their choice.”
Luckily, a comprehensive and affordable insurance policy is no longer a Ferrari; it is now a basic right. In the face of absurd comments and analogies like this one, Ms. Sebelius never lost her cool in three-and-a-half hours of testimony, perhaps because she knows that once the computer problems and the bellowing die down, the country will be far better off.
By: David Firestone, Editors Blog, The New York Times, October 30, 2013
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