More on catastrophic options in the ACA

Joanne Kenen (@JoanneKenen) and Paul Houchens (@PaulHouchens) were tweeting about the Basic Health Plan (BHP) option provided to states for enrolling persons under 200% of the poverty level, pointing to this op-ed by Micah Weinberg raising questions about the wisdom of California’s plan to use a BHP for such persons. Micah’s most basic worry is that putting all Californian’s below 200% of poverty who are eligible for exchange subsidies into a BHP will pull out a large number of persons from the health insurance exchange (where consumers pick between Bronze, Silver, Gold or Platinum levels of cover, from different insurers) reducing the chance for competition between insurers for business to work.

One of the primary arguments for the BHP is to allow for unified insurance coverage (same insurance company) for a family that would be eligible for different plans. For example, at 150% poverty, a mom who was pregnant and a child would both be eligible for Medicaid, while the dad would not, but would be eligible for premium subsidies to defray the cost of private insurance sold in the state-based exchange. Paul Houchens tweeted out this document from Tennessee evaluating the use of the BHP v. other bridge product options available to states to unify family insurance coverage. This interesting document further expands on worries of providers (in Tennessee anyway, see pages 3-4) of low-income folks choosing the Bronze (catastrophic) level of private insurance coverage, which would have the lowest premiums but very high cost sharing, therefore not ameliorating the “bad debt” problem as viewed from the provider side of things. Several thoughts:

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Taylor v. Feldstein: Comparing Catastrophic Plans

I have been blogging about the path to a health reform deal that I offer in my book: universal catastrophic coverage implemented via Medicare. Martin Feldstein, chair of the Council of Economic Advisors under President Reagan, offered a universal catastrophic coverage proposal in October, 2009, that would:

  • provide tax credits to purchase a catastrophic private health insurance policy, with catastrophic defined as costs above 15% of income (financed by ending the tax exclusion of employer paid insurance; people could purchase additional coverage with after tax dollars)
  • issue each person/family a “health care credit card” that could be used to purchase care in the deductible amount

A few quick comments about Prof. Feldstein’s proposal and how it compares to mine.

  • Defining catastrophic as a percentage of income makes conceptual sense, but introduces some technical challenges. All of the issues related to timing, what happens if your income changes, and perverse incentives related to loss of subsidy if your income increases that have been raised with respect to the income-based subsidies in the ACA apply to Prof. Feldstein’s proposal as well (and to just about any public policy that provides a differential government expenditure/subsidy based on income).
  • Prof. Feldstein’s proposal provides a guaranteed means of financing needed care if someone makes a bad choice in choosing catastrophic coverage only, while mine does not. A huge concern under my proposal is what will persons who choose to only have catastrophic insurance, but who get sick, actually do? Will some avoid the care they need? If so, this will likely increase the catastrophic costs that Medicare will incur down the road if they spend through the catastrophic coverage amount.

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More on High Deductible Health Plans and the ACA

Yesterday I speculated about what form a health reform deal between Progressives and Conservatives might look take (Universal catastrophic coverage implemented via Medicare).

Like many of the complaints about the ACA, the idea that everyone is forced to purchase the same plan is untrue–it does not mandate a one size fits all policy. Below are actuarial estimates produced by 3 insurance companies commissioned by Kaiser Family Foundation of what various insurance options to be sold in ACA exchanges would look like.

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