By Lambert Strether of Corrente.

The condition of the Alexander-Murray fix for ObamaCare’s markets remains day-to-day (although we seem to be running out of factions who want to take a bite at the apple: first Ryan, then McConnnell, then Cassidy-Graham, then Trump himself, and now Alexander-Murray, the first bipartisan effort, recommended to Trump by Chuck Schumer). Here’s a summary of the bill. In this brief post, I want to look at one face of Alexander-Murray: The “copper” plans.

The plans available to people on the ObamaCare exchanges are labeled by metal: Platinum, Gold, Silver, and Bronze. You would infer that Copper plans are the worst of all, and you would be right: The first four plans must offer ObamaCare’s essential benefits. The Copper (or Catastrophic) plans do as well, but with two qualifications. First, a massive deductible:

Catastrophic plans will cover all of the essential benefits defined by the ACA, after the out-of-pocket maximum ($6,850 for an individual in 2016) is reached. Catastrophic plans cover up to three primary care visits per year with no cost-sharing, and preventive care with no cost-sharing, but virtually all [other] services will be paid by the insured until the deductible is met.

Second, there are no subsidies:

Premium subsidies are not available for catastrophic plans (nor are cost-sharing subsidies).

Now, Copper plans are available on the ObamaCare exchanges today but, ObamaCare being ObamaCare, with some complex eligibility requirements and means-testing: “[T]hese plans are currently only available to individuals under the age of 30 or those who qualify for an economic hardship waiver.” In 2014, only 2% of ObamaCare “customers” bought them. Alexander-Murray would remove these limits and make them available to everyone. Let’s look at the upsides of Copper plans, and the downsides.

The Upsides of Copper Plans

First, Copper plans could attract young, healthy risk takers into ObamaCare. Kaiser Health News:

The [Copper plan] proposals aim to attract people who haven’t yet bought coverage on the state marketplaces, and young or healthy people who may want a less expensive option. “Plans do considerable outreach, and they’re hearing that affordability is a top priority for consumers,” says Karen Ignagni, president and chief executive of AHIP. “This is about access. It’s about how do we give people the opportunity to get into the market.”

(Ah! “Access” to health care, as opposed to “health care.”) From Forbes:

We all have different risk tolerance[1], different medical histories, and different levels of savings that we could access in the event of a significant medical claim. For some consumers however, Copper plans could be just right….Copper plans would have higher out-of-pocket maximums than the plans currently being sold, but beyond that, they would be solid coverage.

Second, and as a result, Copper plans could help stabilize the ObamaCare risk pool. Health Affairs:

The key goal of the Copper plan strategy is to bring healthier individuals in to the market to balance the costs of higher-need patients.

However, analysis by Avalere Health in 2014 concluded that Copper plans would bring in only 350,000 additional enrollees over a decade, and it’s not clear to me that’s enough. The performance of Bronze plans has also been underwhelming, so it’s not clear how many of those young, healthy risk-takers there really are out there.

It’s also not clear that Ignagi is right in her assumptions about price sensitivity. From Health Insurance:

During the first open enrollment period, only 20 percent of exchange applicants selected Bronze plans. 65 percent selected Silver plans, including the Silver plans that come with cost-sharing reductions for eligible enrollees.

The Downsides of Copper Plans

First, Copper plans add more choice. Senators Angus King, Joe Manchin, Heidi Heitkamp, Mary Landrieu, Mark Begich, and Mark Warner, writing in Politico, 2014:

[W]e want to give consumers as many choices as possible when it comes to selecting their health plans. By providing a new, lower cost, high deductible option called the Copper Plan (in addition to the existing Platinum, Gold, Silver and Bronze-level options in the marketplace) we will give consumers more control over their own coverage, spur competition and, most importantly, increase affordability.

“Choice” is, of course, a tax on time, and another choice raises that tax, which is why I regard this as a downside. (The only “choice” we should have to make is our doctor, like Canadians.)

Second, Copper plans may have a lower price, and be a worse deal. Vox:

[ObamaCare] is designed to push people lower-income enrollees towards midrange silver plans, where they get special cost-sharing protections. “Through those protections, the actuarial value of the silver plan can rise from 70 percent to as high as 94 percent,” says Pollack. Bronze plans don’t have those added protections, and copper plans, at least as currently conceived, wouldn’t have them, either. The result is that copper plans might be a worse deal than is evident just from the price tag.

Third, Copper plans may not prevent bankruptcy. CNBC:

“With an average American family bringing home $50,000 in income, a high medical bill and a high-deductible insurance plan can quickly become something they are unable to pay,” [NerdWallet Health Vice President Christina LaMontagne] said. “If you have an out-of-pocket maximum of $5,000 or $10,000, that’s really tough,” she said.

(Recall the current out-of-pocket individual maximum of $6,850 is in that ballpark.)

Finally, people with high-deductible plans save money by foregoing care. From the Philadelphia Inquirer:

A recent study examined a large self-insured firm that shifted more than 75,000 of its employees from a zero-deductible health care plan to a high-deductible health plan. The company also contributed a $3,750 subsidy for employees to set up a health savings account that they could use for any health cost, along with online tools to look up prices. The shift saved the firm a lot of money, as expected – a decline of about 15% in a single year. But, here’s the bad news: these savings didn’t happen because people became “better shoppers”, they just received less medical care—including fewer preventive services like recommended cancer screenings. The plan didn’t create smarter shoppers – it risked creating sicker patients. Other studies have reached similar conclusions. A 2007 survey found that 29% of people with high-deductible health plans delayed or skipped care because of cost compared to 16% of those with low-deductible plans.

Of course, sometimes the “smart shopper” is smartest when they don’t buy the product. But when the “product” is cancer screenings?

Conclusion

For people who have chosen to pay the ObamaCare penalty, I can see why Copper plans would be attractive. After all, why pay the IRS and get nothing, when you can pay for a Copper plan, and get something, maybe? But the Alexander-Murray effort to stabilize the marketplace looks like a piece of accounting chicanery, to me. Considered as a mechanism of delivering health care, Copper plans fall short.

Oh, and Alexander-Murray looks like a lovely case of conservatives and liberals joining together to support a neoliberal solution and kick the left, which is pushing for single payer Vox, on the last Copper plan effort in 2014:

What’s interesting about the [2014] Expanded Consumer Choice Act is that seven Democrats are joining major business lobbies and the insurers to push Obamacare in a direction Republicans might well like. A longtime conservative complaint with Obamacare is that prices are too high because the government is demanding insurers offer overly lavish insurance. This would make that insurance a bit less lavish.

Why shouldn’t Schumer get together with Trump to kick the #MedicareForAll can down the road for another decade or so? What could go wrong?

NOTES

[1] Amazing that people’s health care should be an outcome of their “risk tolerance,” as opposed to being a public good. Neoliberalism!