As part of the Senate hearings on changing and stabilizing the ACA this week, the Copper plan keeps coming back:
Ideas from yday's hearing that made it into Alexander's opening remarks: Faster approval for state-based reinsurance & low-cost copper plans
— Adam Cancryn (@adamcancryn) September 7, 2017
Copper plans were proposed by Senator Begich (D-AK) in 2013. They would be plans that have a 50% actuarial value, be part of the common risk pool and be eligible for premium tax credits. Currently the lowest actuarial value plans that can be sold with subsidies are Bronze plans at a nominal actuarial value of 60% while Catastrophic plans with a target actuarial value of 57% are available without subsidy to people under the age of 30.
The policy logic of a Copper plan is that they would lower premiums at the trade-off of much higher out of pocket costs. A $10,000 deductible for a single individual’s Copper plan in 2018 would be plausible. This is not attractive for most people who are subsidized on the Exchange but there is a market for this:
The segment where Copper is a toss up are the people who bought their insurance on the Exchange with minimal to no subsidy. The May 2014 data says that 17% or 18% of people bought on the Exchange without subsidy. 5% of the Exchange policies were no-subsidy Bronzes and another 2% were Catastrophic which can not receive subsidy. This is the market for Copper. People buying no-subsidy Bronze and Catastrophic plans were buying minimal coverage. Cheaper but skimpier minimal coverage could be appealing. People on Catastrophic might see a better deal with subsidized Copper for slightly higher deductibles.
I am not a big fan of high or very high deductible plans for most people. The one situation where they are appropriate is when the buyer has no pre-exisiting conditions, fairly young and can quickly access the entire deductible for the year without destroying their future.
It would be attractive to people who are in good health with significant liquid assets who want hit by a bus coverage that they don’t think they would use. If it brings more people into the risk pool, it improves the quality of the risk pool and providers more stability.
I don’t think it would be an incredibly attractive plan that brings in a tidal wave of new people. Evan Saltzman at Penn has a recent paper that looks at the buy/no buy decision in California and Oregon. The elasticity is moderate.
. I use the demand estimates to simulate the impact of policies targeting adverse selection, including subsidies and the individual mandate. I find (1) high own-premium elasticities of −6.9 to −7.8, but low insurance coverage elasticities of −0.5 to −0.6
I am estimating, that all else being equal, a Copper plan would be 10%-15% less expensive than a Bronze plan. That means maybe a 5% to 9% increase in individual market enrollment. The individual market, on and off-exchange, is estimated to be 18 million people. This would imply adding Copper plans would increase enrollment by 800,000 to 1.6 million people. All else being equal, these new buyers are likely to be fairly healthy.
This makes sense as an incremental change. It is not a game changer, but it makes insurance more affordable for healthy people without subsidies and improves the risk pool. It is a plan that if passed this afternoon it could not be implemented until 2019 but it could be worth doing.