The ACA subsidy system only can be applied to “Essential Health Benefits.” (EHB). EHB are benefits that cover ten categories of care. Insurers can offer non-EHB benefits like a gym membership but the cost of that benefit must be paid for by the individual. The most common non-EHB benefit offered is non-Hyde voluntary abortion coverage. Subsidies, due to Hyde/Stupak, can’t be spent on abortion except in the most unusual set of cases. By law, the non-Hyde benefit must cost at least $1 per person per month, even as that is way above the actual cost of the benefit. Some states, like California, require all insurers to offer non-Hyde abortion benefits on all ACA plans. This means that the minimum premium that a consumer can see is at least $1.00.
Does this matter?
In a 2020 Health Affairs article, Coleman Drake and I found that on Healthcare.gov, enrollment of individuals earning between 151-200% Federal Poverty Level were sensitive to that last $1. Using within-county changes in premiums, we found a 14% increase in enrollment in this subgroup when the group was exposed to a zero premium plan. We could not provide a mechanism as it could be an administrative burden story or it could be that zero was unique and special.
In a current working paper, we, along with Dan Sacks and Sih-Ting Cai, looking at Colorado state based marketplace data, propose a mechanism that explains the enrollment bump. We saw no difference in year end enrollment of people who were just exposed to a zero premium plan and those whose cheapest plan was between a penny and the price of a large cup of gas station coffee. Plan choices were the same, metal choices were the same, and observed demographics were the same. The big difference was that the people who were exposed to zero premium plans had more days of coverage. They started earlier. Zero premium exposure was a strong predictor of a high probability of starting coverage on January 1st. What we are finding is that the burden of setting up a payment scheme is a significant barrier to coverage. Colorado has run an open enrollment through January so someone who had a modest premium for a plan that they selected in December for a January 1st start date could come back and fix things up in January for a February start date if the payment set-up was messed up.
That’s cool! (for certain definitions of cool). But does it matter?
California has passed a state health insurance affordability plan. Part of that plan is a wrap-around subsidy that pays that last dollar of state mandated benefits. California residents will now be newly exposed to zero premium plans and thus see much less administrative friction.
And h/t to @cdrake219 and @bjdickmayhew for recent @Health_Affairs article that brought more visibility to the last $1. https://t.co/YtgX0bKDha
— Isaac Menashe (@IMenashe) October 1, 2021
Coleman and I started to chat about the ACA markets in November 2018 just as I noticed that Oklahoma had twelve counties with zero premium gold plans available to everyone. This was weird. This was worth poking at. We could not get the specific data that we wanted for an Oklahoma specific question, so we broadened our question to how did people respond to zero premium on Healthcare.gov. We submitted that paper in April 2019, had it accepted in September 2019, and published in January 2020. And Now, in November 2021, we will see explicit policy impact that started from a “Hmm, I’m seeing something weird in Oklahoma, what do yo think about this….” conversation three years ago.
I can’t imagine Oklahoma was covering $1 abortion plans, so how were they getting zero-premium plans? No abortion services provided?
 Though I have recently seen Texas politicians claiming the new law doesn’t restrict abortion, because women can travel to other states for it. So maybe Oklahoma really has been a hotbed of abortion-rights liberalism?
Villago Delenda Est
The evil that was Henry Hyde reaches beyond the grave with his fucked up amendment. I hope he’s having fun in his sulfur hot tub with the Ayatollah Khomeini.
@Ken (and @bjdickmayhew)
I was going to post the same question. Thanks.
To take it a step further, in a universe of Hyde (+) states, no exchange plan offering abortion services can be $0, only $1.
(however, this may not be an issue as I recall. Few or any Hyde states offer add on reproductive services)
@Brad F: yep.
Interesting how effective a dollar can be.
@Neldob: Part of this is just the hassle of having to pay a $1 monthly bill. It’s a cognitive load that you know could cost you your health insurance, so easier emotionally just not to risk it. Also, if you are someone who has to pay bills via money orders, it’s going to cost a good bit more that $1 a month to pay the bill. I would hope that the cost would actually be billed as $12 for the year, that might actually be workable.
Interesting. I am glad you pursued your question three years ago.
A different topic – do you ever have to explain your Twitter handle or do your colleagues all use pseudonyms? Tom Mayhew, Dick Mayhew, Harry Mayhew…
(tl/dr – pay your ins premiums by direct debit from your bank if you can and know the money will be there, check that your loved ones, especially older ones do too.)
Even small monthly payments can be an issue. I know someone who lost Tricare (young-adult) coverage because it was being billed to a credit card and they forgot about the recurring payment when the card had to be closed due to fraud. It was the usual type of fraud charges from overseas, easily dealt with, but the memory slip about the Tricare payment was a disaster. (This was around a decade ago, things may have changed.) They had the money and would have gladly paid but you _cannot_ get back on Tricare Young Adult for a year after being kicked off, so they had to go through the ACA – much more expensive for much worse coverage and much more hassle at every step, from sign up to monthly billing to actually trying to use the coverage.
I mentioned it to my folks, and they couldn’t believe that we couldn’t just explain it to Tricare and make the payment and everything would go back to normal. My dad eventually mentioned it to the lady who deals with the insurance at his union hall, and she told him that yes, if you missed payment they dropped you permanently. They at least had a grace period, but if you didn’t notice the issue in time you were out of luck. He was shocked and quite worried as they have medicare but the union ins is their secondary – my mom had been paying by check monthly and he could easily imagine it being forgotten in a crisis. The lady helped him switch it to direct payment from their bank account. I worry that with the post office issues this may start affecting seniors even more, as they are most likely to still pay bills by mail.
Friction really, really matters in so many areas – from health care to food stamps, WIC, welfare, student loans and so much more.
@JCJ: Mayhew is the Bourbaki of insurance.
@JCJ: Most of my colleagues have a twitter handle of FirstName_LastName _ Random number or some variant of that.
I mainly explain that Richard Mayhew was my pen name and not a sophomoric snigger on Twitter
That’s awesome! Research that makes a difference to people who will never hear of you.
Health insurance aside, how does a family of four in Oakland actually live on $40,000 a year? Oaklandhas a very high cost of living.
I was never an ACA navigator or I probably would have run into actual cases.