A caucus of seven nervous Democratic senators, led by Mark Begich of Alaska, has been pushing a plan to “reform” the Affordable Care Act by allowing insurers to offer an even skimpier insurance plan than the skimpiest permitted now.
The idea of their “Expanded Consumer Choice Act” is to create a new “copper” tier of health plan permitted in the individual and small-business markets under the ACA. The copper tier would undercut the current tiers of health plans by covering only 50% of expected health costs. Under the current law, the stingiest “bronze” tier covers 60% of costs.
Begich and his fellow sponsors argue that copper plans would have premiums about 18% lower than bronze plans. They say this makes them cheaper. The truth is exactly the opposite.
The fact that millions of Americans have woken up to over the last year is that premiums are only one component of health insurance costs. The lower they are, the higher must be the other components -- co-pays, deductibles and out-of-pocket maximums. The Kaiser Family Foundation’s Larry Levitt estimated for Vox.com that a copper plan would require a deductible of $9,000 per person -- higher even than the ACA’s current out-of-pocket spending ceiling, which is $6,350.
In practical terms, this means that almost any copper customers who got sick -- that is, those who had to actually access their insurance -- would discover that they’re on the hook for almost all the cost. This is the essence of underinsurance -- one of the ills that the ACA was designed to combat -- according to Jay Angoff, a former Missouri insurance commissioner and a former top official at the Department of Health and Human Services.
“I’m not sure that requiring people who have insurance to nevertheless pay for 50% of their costs themselves can reasonably be defined as decent coverage,” Angoff told the Wall Street Journal.
A few notable things about this Democratic bill. It’s being presented by Begich, Mark Warner and Tim Kaine of Virginia, Mary Landrieu of Louisiana, Heidi Heitkamp of North Dakota, Joe Manchin of West Virginia and Angus King of Maine (an independent who caucuses with the Democrats) as a signal of their willingness to reform Obamacare without repealing it.
But it’s really just another signal of Democratic spinelessness. The ACA is a law that has reduced the ranks of America’s medically uninsured by roughly 10 million, reduced costs for millions more, ended a raft of abusive practices by the health insurance industry and ensured the availability of basic health coverage for women, young adults and people with pre-existing medical conditions.
The biggest problem the ACA has in public discourse is that many congressional Democrats have been too craven to stand up for their achievement. This is known as handing the ball to the other side. It’s shameful, and it should never have happened.
Moreover, there’s no evidence that insurance customers in the U.S. are clamoring for health plans that provide such meager coverage. The most popular plans under the ACA by far are silver plans, which are designed to cover 70% of projected healthcare costs on average and in practice cover much more. Silver plans are taken up by 60%-70% of buyers because they’re perceived to have the best value at the most affordable price, especially when government subsidies are factored in.
As few as 15% of buyers opt for bronze plans, currently the lowest tier. At all tiers, what customers complain about most are deductibles, co-pays and narrow networks of doctors and hospitals. All these phenomena would be much more pronounced in the copper tier.
The theory behind low-premium, high-deductible health plans always has been that they force policyholders to be discerning customers, avoiding unnecessary expenditures because they come out of their own pockets. The evidence for this effect is skimpy at best.
The most often-cited survey, by Rand Corp. in 2011, found that those customers did cut back their healthcare spending -- by cutting out unnecessary and necessary treatments alike, including child immunizations and cancer screening. The fallacy that people will sit around their kitchen tables pondering whether to go to the doctor or emergency room when they’re fearful or in pain is obvious to anyone who has had to, well, go to the doctor. Copper-tier customers would be exposed even more to medical bankruptcies in the case of illness.
All this is exactly the opposite of what the nation needs from its healthcare delivery system, and for seven Democratic senators to promote it in the hope of saving their own electoral skin is disgusting.
Who’s really behind the push for copper? It’s the health insurance industry, which sees an opportunity to expand its market by luring in more customer with lower premiums -- and less coverage. Copper plans are a classic bait and switch.
Health insurers, premium-paying employers and other providers allied as the “Council for Affordable Health Coverage” provided the Democrats with grist by commissioning a study by the consulting firm Avalere purporting to show that a copper tier “could lower Federal spending by $5.8 billion over 10 years (and)...cut the Federal deficit by $0.3 billion.”
Who would pick up the slack? The lowest-income consumers, of course, who would be tempted into this non-insurance insurance product. Beyond estimating premiums 18% lower than a bronze plan, the Avalere study is silent on the overall burden a copper plan would place on its owner. That’s may be a clue that the result would be ugly. The best prescription for copper plans is: Don’t ingest.