I spent a lot of time over the past couple of days being very confused. I had been reading Alexander-Murray and the Copper/Catastrophic section was confusing to me. Every other section I could find the example of the problem it was trying to address. However as the Copper-Catastrophic section was written, I saw vagueness that could accomplish the mission it is trying to address or certainty where it does very little.
I was wrong. Copper/Catastrophic plans for all ages is not a risk adjustment play. It is a possible slight actuarial value decrease that will fold Catastrophic plans into the same risk adjustment process. I have been told that by multiple sources who are in a position to know that Catastrophic is intended to be folded up into the same risk adjustment pool as the other Metal plans.
Why did I get this wrong?
I was trying to figure out why adding this provision mattered. There had been a lot of talk that identified a real problem; premiums are too high for non-subsidized individuals. I thought this Copper/Catastrophic plan was meant to address this problem. Every other section of the bill had very direct applications to known issues so I thought that this section would too. And the only way that Catastrophic can sustain a significant pricing advantage over Bronze plans is by keeping the split risk adjustment.
Catastrophic policies, from a benefit design point of view, are merely a funny looking Bronze plans. It has slightly lower actuarial value than the some Bronze plans but there is usually a significant pricing advantage for the same age/same company/same county Catastrophic plan compared to the Bronze plan. Most of that price spread is because the Catastrophic plan does not have risk adjustment outflows that fund Silver-Gold-Premium buying sick people built into the base premium. Bronze plans have to build risk adjustment outflows into the premium.
The rest of the bill directly addressed problems in ways that I think have a high probability of resolving the issue, so I thought that this section was doing the same thing.
MomSense
Why did you get this wrong? You were assuming reason and logic in the process.
Brachiator
Still confused? Would the catastrophic plans reduce the point of requiring MEC and undermine the entire Affordable Care Act?
David Anderson
@Brachiator: If Catastrophic/Copper is part of the common risk adjustment process, they are a funny looking Bronze plan and that is all.
Mary G
Is there a snowball’s chance in hell that Alexander/Murray will pass both houses of Congress and be signed into law by Twitler?
Marmot
I know — I know! — 40% of my comments are about grammar or style, but for the love of everything good and right, please don’t use an adjective a noun. “Catastrophic” is not the name of a thing. “Catastrophic coverage” helps us uninitiated clods.
I know “digital” and “social” are trendy, but so are a lot of dumb things. And I did say please.
Marmot
I mean “adjective as a noun,” damn blast.
Brachiator
@David Anderson:
I may be missing something here. The current law says that individuals must have a health plan that provides for minimum essential coverage or pay a penalty. Would this new proposal repeal this requirement? If so, wouldn’t people be encouraged to get a catastrophic plan even if it were crappy, to make sure that they could avoid any health penalty?
Or does this proposed law change define and restrict the type of catastrophic plan that would be acceptable (even though this still opens the door for mischief)?
Another Scott
Axios has a link to one of those embedded PDF thingies of the text, and an embedded PDF of the changes, but I can’t make heads or tails of it.
Maybe you’ll have better luck.
[eta:] That was supposed to be a reply to Brachiator
Cheers,
Scott.
David Anderson
@Brachiator: Catastrophic is already defined in the ACA as a plan that covers all EHB and complies with Out of Pocket maximum regulations but does not otherwise qualify as a Metal plan. Catastrophic in the ACA can only be sold to people under the age of 30 OR those who have a hardship exemption if over age 30. In the 2014 Exchange rule, HHS made the reasonable at the time technical decision to split out risk adjustment because Catastrophic is a very different group of people than those covered by the Metals.
Now as medical prices increase faster than allowed OOP limits, Catastrophic looks like Bronze from a benefit POV so the only difference is the risk adjustment split.
Rick Gundlach
What I can’t figure out is why Cat policies would be so spectacular either way. The appeal is that the premiums are low because the insured is agreeing to a $10,000 or so deductible. But whether Cat is part of the same risk pool, or a separate risk pool, the people who buy Cat are going to be based on what the cost of the other (Bronze, Silver, etc.) policies cost. If I can get Cat for $5 a month, that may seem like a deal. Except, then when people who know that they will pay $10,000 either in deductible or Metal plan show up. Their annual costs might be something like $40,000 out of pocket, so the $5/month premium is nothing. Silver was asking $1,200 a month, so they may be way ahead.
Cat policies are only favorable if you can trick those with heavy medical bills not to shop the Cat policies. “Nothing to see here, folks!” Waiving the possibility of Cat just seems like a way to pretend to resurrect the the pre-2014 junk policies. “Look, you can pay $150/month, and get this insurance card! With the snake thingy on it or a shield, it looks so credible or at least like marketing genius!” And the suckers would buy those policies. If they didn’t need to use them, then it seemed like everything was fine. If they had to use them for something serious, they probably wouldn’t be around too long afterwards to write any letters to the editor about what scams those polices were.
I don’t understand why there is this persistent myth that somehow huge medical bills can be not covered or avoided, either by the insurance companies, or the insureds through premiums, or by the government, or by the lending community. Someone ends up paying for these. Is there some magical way of making these costs go away? Or is it a dog-chasing-tail game?
Brachiator
@David Anderson:
OK. When I have more time, I have to go back and catch up on a couple of past threads and other material.
I’m still a bit unclear whether any of these compromise proposals would expand the availability of catastrophic plans to those over 30 and those who do not qualify for hardship exemption.
jl
If the bill looks like it will go someplace, please provide some updates as you have time to figure things out, with a handy-dandy bottom line.
Maybe for people who will be contacting Congress, you could adopt a zero, one and two thumbs up, or thumbs down. If that is still acceptable coming from a distinguished academic, as opposed to an insurance oligarch on too much hookers and blow.
EthylEster
I’ve lost the thread on this matter so many times that I have given up. The “matter” being health care insurance.
Would someone like to estimate the % of “regular citizens” who understand enough about this to engage in a discussion of this policy?
I’m thinking < 1%.