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.
Major Major Major Major
Are republicans likely to about-face and support giving health insurance to more people, though?
dr. bloor
So, this is perfect for about 2,000 healthy trustafarians. Unfortunately, many more people will buy the plan than should buy the plan. Even if the number isn’t big, a disproportionate number of purchasers will end up in medical bankruptcy.
I hate this slippery slope. Before you know it, we’re going to be talking “lead” plans that cover %50 of office visits but no ER or hospital services.
MazeDancer
Pre-ACA, as a self-employed person, I had many years of de-facto Copper, except it cost a fortune. $600 a month with a 6K deductible. Decent insurance would be impossible 1K or more a month. Only claim I made was when needed surgery. And 6K seemed a bargain against 100K bill.
If I could have paid $200 a month with a 10K deductible would have been thrilled. Many self-employed people would have happily done same. Even now, if you don’t qualify for subsidies, ACA is still very expensive. People with families, pay it. But single, self-employed people have few ways to save monthly costs.
Major Major Major Major
@MazeDancer: I had to do some absurd residency gymnastics when I was self-employed pre-ACA to get insurance due to preëxisting conditions. It was insane. People forget how bad it was.
Another Scott
Thanks for keeping us informed.
It’s infuriating that things like this take up the attention when they are intended to be “camel’s nose” policies that hollow-out a basically decent starting point for universal coverage.
If the concern is the risk pools aren’t broad and deep enough and that more young, healthy people need to be included, then include them. Don’t do this “here’s your policy that’s real cheap, (but it doesn’t cover anything)!!11”. It reminds me of the “insurance” benefit I got as a temp at Manpower decades ago. It was a $2,000.00 life insurance policy, IIRC. :-/
Talking points matter to the GOP much more than policy. “It’s affordable!!11” Cheap health insurance policies that don’t cover anything until the person has paid $10k (+ the policy costs) are worthless to someone who doesn’t have any money. They’ll pay the fine instead, just as they do now. And when they get hit by the (improperly maintained, due to lack of transit funding) bus, they’ll have their GoFundMe and have collection agencies after then for the next 20 years. And they’ll still come out ahead over someone who tried to be responsible and bought a worthless Copper policy…
:-/
It’s infuriating that we know how to fix this problem – raise a little more money (as a percentage of GDP) and have decent baseline coverage that covers routine care at no cost, and also covers catastrophic care. And slowly squeeze the healthcare system to be more efficient (“Call now to Get your Hoverround and Catheters and Insulin Testing Supplies and Humira (which may kill you but your skin will be 15% clearer!!111) and … at no cost to you!!11”). But we refuse to do so because GOP prion disease has infected too much of the polity.
So, yeah, incremental progress FTW. If Copper helps, I’ll grudgingly accept it, while I keep pushing for us to do much better.
Thanks.
Cheers,
Scott.
Major Major Major Major
@Another Scott:
How so? They’ll only be on the hook for the deductible, not the entire $300,000 course of treatment for the brain contusion or whatever.
Another Scott
@Major Major Major Major: The details matter, of course, but my understanding is that these Copper plans are being talked about in the context of “high risk pools”. My fuzzy recollection is that those were intended to be a back-door lifetime cap.
“Follow the money.”
All the GOP seems to care about in this context is reducing the amount of money the federal government takes in for health care (and anything else). It doesn’t care about reducing the share of GDP taken by health care, or the health of the population, or efficient allocation of resources. Only how much money the Treasury takes….
(Almost) nobody wants to “run naked” without insurance. If the choice is buying a Copper policy that covers something (even with a huge deductible, even with coverage exclusions and a (probable) lifetime cap), and nothing, then people will try to buy a Copper plan. But those aren’t the choices, really. The choice for too many is going to be between paying the fine and trying to find a way not to pay the fine. (And recall that Price is working on ways to effectively remove the fine.) They won’t be able to afford a Copper plan.
Copper plans are much more about talking points (“It’s cheaper, just like we promised!!11”) than fixing the problem.
And, realistically, for someone without money, a $10,000 insurance deductible is just as impossible to pay as a $300,000 medical bill. It’s not going to get paid. Remember our artist friend in LV and his wife Sylv…
My $0.02.
Cheers,
Scott.
David Anderson
@Another Scott: These would have the same rules as the current Bronze-Silver-Gold-Platinum plans regarding no lifetime limits, no pre-ex conditions etc. Remember, if this was to pass, it needs 60 votes in the Senate, so that means the decisive vote is probably Sherrod Brown or Tim Kaine in terms of vulnerable Democrats (and that assumes every Republican votes for it). If they are on board with this change, I’m probably not too worried. As long as subsidies are still based on 2nd Silver, I am not worried.
The target audience is not a poor person. It is someone who has money and assets and good health and makes too much to qualify for a subsidy. If I had no kids and my wife and I were not covered through work, Copper could be a reasonable option for us. The beneficiaries of Copper are not many but I don’t think it is intrinsically harmful.
Fair Economist
The point of a Copper plan is to protect yourself from gouging by medical providers. Providers will charge you 2 to 3 times the reasonable cost if they can. The chance of going over the deductible is small and for most people who will buy it irrelevant because they don’t have that much assets.
The problem with a Copper plan is that since really sick people are never going to want it, it automatically provides risk segregation. I don’t know if they can arrange the markets so that’s not a problem.
Another Scott
@David Anderson: Thanks. It still seems like a bad idea to me.
Presumably most of the “young invincibles” get health insurance through their employers. Giving employers the opportunity to push even more of their health costs on to their employees via a Copper (or Tin or Lead or Uranium) plan isn’t something to be encouraged either.
Those who would get a Copper plan on the exchange and can get subsidies, maybe fine. Maybe there’s some marginal benefit. But presumably a Silver (with the CSRs) would still be a better deal, right? I thought that was your main argument for not getting a Bronze plan – they didn’t get the CSRs and so for many/most people would actually be more expensive than Silver.
Anyway, there are too many details and I have learned enough to never trust Republicans to act in good faith on things like this. Yes, let’s see what Brown and Kaine and even Manchin (who did vote for the PPACA and has protected it thus far, after all) have to say about it. The Democrats have been pretty good about rolling the Teabaggers on these big policy questions for quite a while – it’s reasonably safe to assume that they won’t suddenly get stupid about questions like these.
Thanks again.
Cheers,
Scott.
Major Major Major Major
@Fair Economist: well, it puts people into the common risk pool, as David says.
StringOnAStick
Too many people still don’t know that without insurance they pay the highest rates for service, not the various reduced rates that individual insurance plans negotiate. It seems like the only people who know this are the same, self selected group of wonks such as those who read David, industry people like David, or people who have grappled with this since they were self employed. Those who’ve always gotten HI as a work benefit have no freakin’ idea but they complain a lot about how their “insurance keeps getting worse”, not seeing the bigger picture. As more get forced into the gig economy, eyes are opening.
This may be the optics behind some D’s push for Medicare for all, even though Medicaid has better AV. Most have relatives on Medicare and can see that it hasn’t sucked away their precious bodily fluids so that’s a lot less scary to promote than the much easier to demonize unfamiliar idea of single payer (eek! Socialized medicine!). Medicaid has better AV but has ” poor people and welfare” connotations so tactically Medicare for all is an easier lift. I kind of see this Copper idea as another facet of the same idea and maybe a but easier to swallow for some. As much as the purity ponies want instant Swedish style health care, it should be obvious to anyone with a brain that the US will only get there by incremental changes and copper may be one of them.
StringOnAStick
@Another Scott: One thing to know about young invincibles is they are the ones being hit hardest by the gig (no benefits) economy. I’ve heard many of my young dental patients complain how hard it is to get a job with benefits, and I’m in a city with one of the lowest unemployment rates in the country. Until age 26 they can stay on mom and dad’s policies provided their folks haven’t also been “gigged”.
The trend of offloading benefit costs that started with changing from lifetime pensions to 401k’s is still grinding along.
Raven Onthill
My guess is many young healthy people who haven’t experienced a major injury or illness will go for the cheap copper plans. This could hurt a lot.
Another Scott
@StringOnAStick: Good points in both your comments.
It doesn’t have to be this way. There are more efficient and sensible ways to fix these problems than coming up with plans that have lower benefits. But I know how politics works and the importance of incremental progress.
I just hope that any changes are actually making things better and not a “camel’s nose” type of thing…
Cheers,
Scott.
StringOnAStick
@Another Scott: The camel’s nose is indeed a risk when R’s are involved. Like is said here fairly often, we have to fight them every day.
Major Major Major Major
@Raven Onthill: hurt a lot? This is aimed at people who don’t have any insurance. David just estimated around a million more insured.
I really don’t get the freak out here.
Another Scott
@Major Major Major Major: Dunno if I’d call it a “freak-out”. More of a “show me” that it won’t make things worse.
Cheers,
Scott.
Brachiator
@MazeDancer:
Good point. I keep hearing from self employed people that available ACA plans don’t work well for them.
Seth Owen
We are down to ‘copper.’ What’s going to be the next, even cheaper, plan? Iron? Lead? Mercury?
Raven Onthill
@Major Major Major Major: Because it could take members and funding away from better-paying plans. Depends on the details, but not hopeful that it will be made to work well.
Anne Paulson
People always talk about the healthy young people who don’t have insurance, but forget the healthy olds who do, for whom the Copper is a no-brainer over Bronze. For me, 10-15% of my premium is maybe $1500. Hmm, should I save $1500 to raise my deductible from $6750 to $10,000? I would be worse off only if my deductible expenses were greater than $8250, which is unlikely. Most likely an extra $1500 will be switched from paying health costs for a sick person to buying bike parts for me. Good for me, but is this the system we want?