Obamacare's Silver Surprise

There was some surprisingly good news this month about the cost of insurance under Obamacare.  It will be cheaper than expected.  But it remains to be seen – will cheaper insurance satisfy Obamacare doubters on either the left or the right?

I doubt it, but first let’s take a look at the details.

A few months ago, the Wall Street Journal warned of health insurance sticker shock when the Obamacare insurance exchanges open for business in another ten weeks. 

There could be an up-to-50 percent increase in health insurance premiums, the Journal warned.

But a report this month from the Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation (ASPE) brought a surprise. 

Based on data from the first eleven states reporting actual premium numbers, ASPE now says that insurance costs for Obamacare “silver” plans for individuals will be 18 percent lower than originally projected by CBO.

Premiums for the least expensive plans were averaging around $321 per month – before income-based tax credits were subtracted from those costs.

And in five states plus the District of Columbia reporting small group plan numbers, insurance premiums for the all-important “second lowest cost” silver level plans will range from 6 percent to 36 percent less than they would have been if Obamacare were not the law of the land.

What makes a plan a “silver” plan?

Despite what you might assume from the headlines, plan categories are not based on insurance premiums.  They are based on the percentage of the total cost of health care that the plan will pay for everyone in the plan, versus what the plan’s policyholders will pay out-of-pocket.

There are four categories of plans – bronze, silver, gold, and platinum.  All plans will provide coverage for the same group of essential benefits.  But bronze plans will cover 60 percent of the cost of these benefits, silver plans will cover 70 percent, gold plans will cover 80 percent, and platinum plans will cover 90 percent.  Policyholders will pay the rest.

This does not mean that if you have a silver plan, at the end of the year you will have paid 30 percent of your total health care costs and your insurer will have paid 70 percent. 

Those are just the averages, and everyone’s individual experience will vary from the average at least somewhat.

There are two reasons that the cost of the silver plans will get so much attention.

The first is that, along with gold plans, they will be the most widely-available plans.  The second is that the tax subsidies built into Obamacare are based on the projected cost of the second-lowest-cost silver plan.

But not all silver plans will be alike.

One silver plan, for example, may charge a higher premium than another silver plan.  But that plan might cover 75 percent of hospital costs, while the other pays only 70 percent.

Other silver plans might be less expensive than some bronze plans – particularly if they provide less “first dollar” coverage for care – or more expensive than some bold plans.

But while the premium costs of the silver plans may dominate the news and public policy analysis in the coming months, I don’t think that how good you feel about Obamacare is ultimately going to be based on the cost of a silver plan. 

Here’s why.

Deductibles, co-pays, and uncovered health expenses also factor into how satisfied we are with our insurance.

If you believe that being expected to absorb, on average, 30 percent of your health care cost burden when you already have insurance is too big a price to pay, then you will not be happy with a silver plan.  You will either hope you or your employer can afford to pay extra for a gold or platinum plan if one is available, or you will complain as much as you do today about your lousy coverage.

And you will dream again of government-sponsored health care for all.

Conversely, if you think that Obamacare goes too far in requiring insurers to cover at least 60 percent of the health care costs of the people they insure, then you may decline to participate in the system at all and pay the small fine.

And you will join Eric Cantor in the march to health policy irrelevancy by asking the U.S House to repeal Obamacare for a 40^th time.

Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/

What We Worry About Least in the Health Policy Debate

You shouldn’t have to worry about anything during vacation season.

So this column is my vacation gift to you. It is about all the health policy matters we seem to worry about the least. 

I have written close to 150 columns.  If you look down the right side of the page, you will find links to the ten most-read ones.  The subjects won’t surprise you – fairness in mental health treatment, Obamacare and private insurance, and cursed football players lead the way.

But do you ever wonder about the columns with the fewest readers?

Based solely and unscientifically on my numbers, here are a half dozen or so health policy matters we seem to care about the least.

Long Term Care. 

Are you worried about continuing high unemployment rates, taxes on small businesses, or another stock market crash ruining your family’s financial security?   If so, you should redirect that worry.  Because US Trust CEO Keith Banks called long term care costs “the biggest risk to family wealth” during a June 27, 2013 CNBC interview.

That’s because neither regular health insurance nor Medicare covers them.

So you can either pay $80,000 or more per year for long term care, or hope states continue to spend billions of dollars to expand Medicaid, or wait for Congress to create a national private long term care insurance program– something a new national Commission on Long Term Care has just been given three months to do.  That should get anyone’s anxiety level up.  But chances are – if you are still reading this column – your mind is wandering already, and you are ready to move on.

Medicare.

Whenever I write about Medicare, I lose 30 percent of my readers that week.  For example, I wrote two columns earlier this spring about something I found really intriguing and have never read anywhere else – that Medicare regularly pays more for men with depression than it does for women.  To me, this is blockbuster news about disparities in care.  But not to my readers. Maybe we need to be eligible for Medicare before we really start thinking about it?

Research.

Without research, there would be no modern healthcare system.  There would be no effective cancer treatments and no once-deadly communicable diseases – like polio – that ruined more than just children’s summers as recently as sixty years ago.  But the one time I wrote about why research matters – just two weeks after I wrote my most popular column ever – it was one of my least-read ones ever.

Child health.

Everybody loves children, but my columns on child health – even ones with sensational headlines – don’t seem to attract much attention.  It may be that we feel that we have solved most of our child health problems over the last few decades.  But as a brand-new Annie E. Casey Kids Count report points out, while we’re trending in the right direction, we still have a way to go.

Personal Responsibility and Wellness. 

This is another subject I have shied away from, after dipping a toe in the water two years ago.  I wrote about the way in which Connecticut, a liberal state, added a component of personal responsibility, a historically conservative concept, to its state employee health plan.  The state believes that it has saved money by doing this, and the approach has proved popular with employees.  But the column wasn’t popular with readers.  Why not?  We all want to be healthier. But maybe we don’t want health insurance to be tied to health!

Environmental health. 

While environmental health is a huge part of public health, environmentalists and public health officials often go their separate ways in policy advocacy.  I wish it were different.  But even when I wrote about the environmental devastation in the immediate aftermath of the Japanese nuclear disaster in March 2011 and put it in a broader public health context, not too many people paid attention.  The column drew fewer readers than almost every other column I wrote that spring.

Eric Cantor.

Don’t ask me why, but the least-read of my 150 columns was the only one that used the words “Eric Cantor” in the title.  If you have forgotten who Eric Cantor is, I am not going to remind you.  But once upon a time, he was actually relevant to the health policy debate in this country.

Lately he seems to be taking a vacation.  A long one.  As we all should be!

Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/

How Eric Cantor is Missing It

Discussing health reform over the weekend, House Republican leader Eric Cantor told the New York Times that “it is my intention to begin repealing it piece by piece, blocking funding for its implementation and blocking the issuance of the regulations necessary to implement it.”

Congressman Cantor’s Problem

To which “it” does Congressman Cantor refer?  The “it” creating a new long term care insurance program so that elders will be able to fund nursing or home care as they age?  Or the “it” creating a new catastrophic care insurance plan so that healthy young people will be able to afford some insurance coverage as they age out of their parents’ plans?  Perhaps it’s the “it” that provides new grants to community health centers, or the “it” providing new training for primary care physicians to recognize and treat chronic conditions, or the “it” creating thousands of needed new jobs in the health care workforce. 

Congressman Cantor’s problem is that there isn’t an “it” to be repealed piece by piece. 

He seems to confuse the health legislation itself with its substantive parts, as if it were like one giant private corporation that could be cut up into its constituent parts and sold off piece by piece until nothing remained.  The substantive components of the health reform bill, however, are more like dozens of small businesses, each independent of the other and every one of them providing a product that meets a consumer demand.

Consider the real implications of Mr. Cantor’s position:

·         Is he proposing to block the regulations that will reduce costs to the Medicare program over the next ten years, thereby raising the cost of federal government?  That’s hardly fiscal conservatism; it sounds like wasteful spending to me.

·         Or is he proposing to block the funding that will reimburse state governments for new costs to their Medicaid programs, thereby pushing a new unfunded mandate onto the states? 

·         Or does he hope to delay implementation of the provisions of the legislation that will add 30 million people to the insurance rolls, and replace these provisions with the proposal he backed that would insure only a small fraction of them?

Insured Consumers Pay for the Uninsured 

It’s most likely delay Mr. Cantor has in mind, but while it might be good politics to argue for “piece by piece” repeal as he had done, or “repeal and replace,” like his colleague, Rep. Paul Ryan, our health policy matters to us more than just as taxpayers or health care consumers.  This is because everyone’s cost of care is connected to everyone else’s.  None of us sits on a health care island. 

One of the biggest hidden prices we pay each year is the portion of our health insurance premium that pays for people who have no insurance.  Since someone has to pay for the care we all receive, it stands to reason that the smaller the number of people who are insured, the higher the costs will be for those of us who are – unless, of course, the government were to pay more than its fair share of health care costs.  But it doesn’t. 

Historically, Medicare has paid less for the same health care than private insurers do, Medicaid has paid even less than Medicare, and uninsured “self-pays” pay the least.  Who makes up the difference?  We do, to the tune of over $1,000 per year in excess premium costs on our insurance.

Protecting Deadbeats?

Governing by sound bite may strike a chord in the short term, but the fact is that when the guy next store who can afford health insurance decides not to buy it, those of us who do have it are the ones paying to help cover him. 

Remember this when you hear people talking about getting rid of the mandate, or covering fewer people.  The bottom line is that they care more about the deadbeat than they do about you.  And to add insult to injury, the deadbeat probably doesn’t even vote, either.

So “it” isn’t as simple as Mr. Cantor’s chorus and Mr. Ryan’s refrain. 

We need more than this from our new Congressional leaders.  We need them to remember that health care policy in this country has evolved considerably over the last hundred years, that we provide and pay for health care in a uniquely American way, and that what’s best in our system – the quality of our care – has come about because of partnerships between the public and private sectors, and not in spite of them.  There’s plenty of room for improvement, but only if they make a real effort.      

 Will they be up to the task?