The incoming Biden administration released a very big blue-print for COVID disaster relief, vaccination and testing last night. The package also contained significant policy proposals to lower the net premiums paid by some Americans for health insurance and also to reduce transitions of coverage:
Two big health coverage proposals in Biden's emergency relief package:
An increase in ACA subsidies and extension to the middle class by capping premiums at 8.5% of income.
A temporary subsidy of COBRA continuation coverage for people who have lost job-based insurance.
— Larry Levitt (@larry_levitt) January 14, 2021
COBRA subsidies were used in 2009-2010. I had one when I was out of work. COBRA was still unaffordable. COBRA is good to reduce transitions of care, learning costs and out of pocket resets. It also tends to be very expensive for everyone involved with notable administrative burden on both the recipient and the group manager. In the context where we expect jobs to rapidly come back as we envision COVID-19 as a global, slow moving hurricane instead of a massive burst of exogenous creative destruction, COBRA keeps people tied to their former and plausibly future employer and reduces transaction and transition costs. If we think that the pre-COVID jobs won’t come back and new businesses will need to form first to absorb the currently unemployed and underemployed people in the workforce, then making the ACA more attractive makes a lot more sense.
8.5% of income for a standard silver plan is a lot of premium for a modest plan. It is also a boon to families making over 300% FPL. Families that make over 400% FPL would be newly exposed to a lot of low to no premium bronze plans and these families are likely to have either the assets or the access to non-onerous credit to make a high deductible plan design a reasonable-ish choice. Senator Cassidy’s friend from Louisiana would be prime beneficiaries of this policy:
They work so much they don’t get a subsidy. There is a fellow back home with a special-needs child. He’s paid over $40,000 a year for his premiums…
This year, he said, his premium for a Blue Cross Blue Shield Blue Max plan is $2,654 a month, for a yearly total of $31,848. His deductible is $3,300. Under the law, the out-of-pocket maximum for 2017 is $14,300 for a family plan, so the family would easily hit that with the cost of medicine. So, that’s a total of almost $46,150.
Capping benchmark premiums to 8.5% will mostly make the ACA more attractive to upper income families. It won’t help low income families who make up the majority of currently uninsured and underinsured. Improvement in risk adjustment methods to boost silver benchmarks over gold is needed. Lubrication for the squeaky points of incidental and deliberate administrative friction is needed. Reducing choice confusion is needed. Reducing out of pocket spending for common care is needed. Lots of things are needed to make the ACA as useful and practical as possible.
But last night, we started to engage in an actual policy process again.
Emperor Lew
Back in 2009 I was laid-off. That COBRA subsidy was a (metaphorical, no heath crises popped up while I was out of work) life saver for my family. I’ve voted “D” ever since and am glad the wheels are turning for other people to get the same help!
Cheryl Rofer
Looking forward to his vaccine plan today. His team commented yesterday that the Trump plan was even more fouled up than they expected.
debbie
COBRA was a real life saver back when I was laid off in 1994. The second year of COBRA, however, led me to 15 years of being uninsured.
Baud
This is part of the emergency package. I’d imagine there will be a separate push for comprehensive ACA improvements at some point.
The other nice thing about the GA wins is that, if the oral arguments were not indicative and the Supreme Court does invalidate the ACA, we have it in our power to restore it.
Ohio Mom
Different topic:
Did I read somewhere recently that people using the Medicaid part of the ACA will have their estates subject to payback?
What a PR disaster in the making, especially for people who will only be using this option for a short period — for their heirs to find out decades later that they are on the hook. Lots of people will be feeling taken advantage of, that they were baited and switched.
(As a disabled person, Ohio Son has Medicaid, and dealing with the payback provision was included in our family’s estate planning — which was more complicated than that of a family with all typical members.)
Punchy
This makes no practical sense, in my experience. “Upper income families” are those with well-paying jobs. Well-paying jobs are–almost universally–jobs with benefits, so not those needing to enroll in ACA. Other than maybe a few high-paid self-employers (musicians, artists), who makes north of $100K/yr but doesn’t have employer-based insurance?
taumaturgo
Cosmetics patches to a disfigured, retrograde construct. Cobra is a money bomb for the insurers, beyond the exorbitant premium, there is an insulting tax called a deductible. The Democrats must stand for the patients, not the health care cartel members, and this tinkering around the edges is more of the same.
jonas
@Punchy: Lots of small business owners and freelancers fall into that category. If you own, say, a small contracting firm and clear a 100-200k a year, your options for affordable health insurance — in a risky job category — are pretty slim.
David Anderson
@taumaturgo: Okay, go find 60 votes in the Senate, 218 in the House, a friendly president and 5 votes on the Supreme Court to get a radical reform.
I’ll stick to improvements versus pissing into the wind for perfection… but that is just me.
Bob Hertz
Thanks for an excellent article.
I am amazed at some insurance premiums. A respectable company can charge $31,000+ per year for a family plan with a $3,000 deductible.
On this basis, the insurer would collect $3.1 million from 100 insured families. One must assume that most of the $3.1 million will be paid out in claims.
Obviously this is a very sick group of families. And that is exactly what happens as the ACA becomes more and more of a high-risk pool.
That is not the end of the world, if high-risk insurance buyers are subsidized. The proposed expansion of ACA subsidies beyond 400% of poverty is long overdue.
Other MJS
It seems surreal to imagine actual sanity and policy. 5 days to go …
Gin & Tonic
Kinda OT, but this is a good place to ask, since this blog has a lot of – ahem – older citizens: what do people do for dental coverage once they’re on Medicare and no longer on an employer plan that includes dental?
L85NJGT
@taumaturgo:
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Dorothy A. Winsor
@Gin & Tonic: You buy separate insurance. It’s not nearly as good as what we had from John Deere.
dmsilev
@Cheryl Rofer: It doesn’t help that, as pretty much everyone expected, the Trump team was dragging their heels on cooperating with the transition on vaccine planning along with everything else.
L85NJGT
@Ohio Mom:
That’s a policy that predates the ACA, applies to those over 55, and is aimed at recouping long-term care (i.e. nursing home) costs.
dmsilev
Oh, and speaking about “wouldn’t it be nice to have competent and honest people running the government again?”,
Vaccine reserve was already exhausted when Trump administration vowed to release it, dashing hopes of expanded access
taumaturgo
Correct me if I’m wrong, Obamacare became law with 51 votes. Today, conservative Democrats, those who fatten their bank accounts with money from the cartel, are busy blocking a M4A bill from coming up for a vote in the House. None of them wish to be honest on the record opposing what an overwhelming number of Americans from both parties want. Ask for little and that’s what you’ll receive pretentious, dubious reforms.
debbie
@Dorothy A. Winsor:
Isn’t it part of the Advantage plans?
Baud
@taumaturgo: You are wrong. Obamacare is two bills. The first bill got 60 votes during the 90 days when the Dems had 60 Senators. The follow-up law was passed through reconciliation with less than 60 votes, but I think more than 51.
JanieM
@debbie: I think it is sometimes, but not always…? I haven’t paid much attention to Advantage plans because I knew from the start that I wanted to go the Medigap route.
stinger
@L85NJGT: Yes, when my 94-year-old mother died, we had to prove to the state that she’d left no estate at all; otherwise, we’d have had to pay back her Medicaid expenses out of our “inheritance”.
Gin & Tonic
@debbie: There’s a lot of different Medicare supplement plans. I don’t need a regular one, since my medical supplementary needs will continue to be covered by my soon-to-be former employer (paid out of my pension.)
dmsilev
@taumaturgo: The original ACA bill passed the Senate with 60 votes. That’s why things like a public option had to be dropped; the 60 votes included Joe Lieberman and Ben Nelson and so on and so forth. After Ted Kennedy died and Scott Brown won the special election, the Democrats were down to 59 votes and weren’t able to pass a “fix the small technical glitches” update that would normally happen as part of the House-Senate reconciliation process.
David Anderson
@taumaturgo: the main part of the law passed with a 60 vote threshold in the Senate with money changes passing in a 51 vote threshold reconciliation side-car.
Doing a full reconstruction of 18% of the US economy won’t fit in as a 51 vote threshold under current rules.
Now if there are 51 votes to blow up the filibuster, the opportunity space gets a whole lot bigger but I don’t think there are 51 votes for that for health finance bills.
JanieM
@stinger: We went through this last spring when my 96-year-old mother died. She didn’t own a car or any real estate, and her bank account was jointly under my sister’s control via a power of attorney. My sister worked closely with the nursing home and the Medicaid office through the whole period when my mom was in care, and we knew about the “clawback.”
We told the probate court the situation and they said we didn’t have to go through probate. The relevant authority in my mom’s state wrote to my sister as part of the routine Medicaid process after my mom died, and my sister sent them all kinds of paperwork (bank records, Medicaid and nursing home records, etc.).
Beyond that, how do you “prove” a negative”? As in…”My mom owned nothing but personal effects of no particular monetary value.”
This process, like e.g. figuring out what coverage you want beyond basic Medicare, is a Kafka-esque nightmare. I can’t even imagine the lost productivity in this country because of people having to deal with this shit.
Citizen Alan
@stinger: Speaking from personal experience, this is yet another area where the wealthy are privileged over the poor. With proper estate planning, it is fairly easy to protect an elderly person’s estate from this law by transferring assets to non-revocable trusts and conveying real property into life estates so long as you do so at least five years before the elder has to go into a nursing home. But the vast majority of people simply don’t know to do this because “estate planning” isn’t something they give consideration to. Hell, we only did that for my mom because I’m a lawyer and was made familiar with the relevant laws in law school even though I never practiced elder law afterwards. And, of course, I made sure another attorney handled everything.
stinger
@JanieM: Yep, our situation too. It was lovely to get a letter from the governor — like getting one from the President when you have a 50th wedding anniversary — except this one said “Sorry about your loss, now send us $20,000.”
My mother had sold her car years before just to become eligible for Medicaid, and we had to send copies of her bank statements that showed only Social Security $$ coming in and Medicare and assisted living $$ going out. With virtually nothing left over. She wasn’t allowed even to have a life insurance policy, so I paid for her funeral out of my own pocket.
JanieM
@Citizen Alan: This. Besides the vast majority of people not knowing to do this, the vast majority of people are in too precarious a position to lock up what assets they have, which costs money (to pay the lawyers) in its own right.
So yes, yet another area where the wealthy are privileged over the poor — and enabled to stay wealthy.
stinger
@Citizen Alan: It wasn’t as if she’d ever had much. But once on Medicaid, her bank balance was not allowed to be over $2000.
This 100%. What a system.
debbie
@Gin & Tonic:
I’m still working, so I don’t need it yet, either. I get those yearly “Medicare and You” books from the government and looking through it last summer made my head spin.
Ohio Mom
Ohio Son has had a Medicaid Waiver since, I don’t remember, he was about six. So I am well aware of the payback rules.
Somewhere in Columbus, there is a metaphorical file folder where every expense on Son’s behalf is continually being totaled, to the penny. Medicaid paid $13.84 for that prescription co-pay? Into the folder it goes.
I am thinking about the people who were thrilled to finally get coverage under the ACA via the Medicaid expansion. I don’t know if they even know they will be paying that back.
They probably think it is like the Insurance you get through a job.
I am thinking that when the payback bill comes due, people will be very unpleasantly surprised and it will turn out to be yet another thing held against Obamacare. That’s all.
Ohio Mom
debbie:
You can get a free Medicare consult through the State Council on Aging. Look up your county office and give them a call.
Our volunteer gave us a crash course on Traditional vs. Advantage plans, along with booklets and websites for further information. We met at the library but it must be a Zoom session these days.
Our heads still spin but maybe not as fast.
Another Scott
@Ohio Mom: I was under the impression that the Medicare “look-back” stuff only applied to institutional long-term care stuff.
Let’s see…
HealthAffairs:
So, it looks like there were some ACA-related changes, but it may depend bigly on the state.
Cheers,
Scott.
J R in WV
@Gin & Tonic:
I’m much like you, signed up for my former employer’s supplemental insurance, which is with Humana.
My employer also offered a Delta Dental policy which I have had for many years. I was able to add my wife to that policy, which has covered both our dental needs, including her need for a wider variety of oral surgery, braces, etc.
Including my partial, crowns, etc, etc. All comes out of my pension, not V expensive, covers regular cleaning, everything so far as I know.
Pittsburgh Mike
@Punchy: No, this is a great idea. My only complaint is that the percentage should be even lower, like 5%. But getting rid of the 400% FPL cap for subsidies is a wonderful idea.
400 of FPL for an individual is $51K. You’re probably paying at least $20K of federal, FICA, state and local taxes, so you have $31K in net income. Without subsidies, you’re probably looking at over $10K in premiums coming out of that $35K, while Biden’s proposal would reduce the premiums to $4,335. That’s a huge help, and I bet there are a lot of people who aren’t covered by insurance at that income level, either because they’re small businesses or because companies are cheap, or because they’re in the gig economy.
The fact is that with Medicaid expansion, poor people can get health insurance, while lower middle class people without insurance can’t actually afford the ACA premiums.
And, of course, if you’re right, and everyone earning more than $51K ($104K for a family of 4) has insurance through their job, then this program won’t actually cost anything :-)