Illustration: Soohee Cho/The Intercept

Joe Biden has a plan. Forget Medicare for All, he has argued throughout the campaign. The most important thing to do is protect and “build on” the Affordable Care Act: the legislation the former vice president famously whispered was a “big fucking deal” as President Barack Obama put his signature on it. has a plan. Forget Medicare for All, he has argued throughout the campaign. The most important thing to do is protect and “build on” the Affordable Care Act: the legislation the former vice president famously whispered was a “big fucking deal” as President Barack Obama put his signature on it. “I’m surprised that so many Democrats are running on getting rid of it,” Biden said in a video publicizing his health care platform. “The Affordable Care Act was a historic achievement for President Obama, and if I’m elected president, I’m going to do everything in my power to protect it and build on it.” His plan to “build” on the ACA is mainly to further subsidize it while leaving the basic structure unchanged: to increase subsidies and put a cap on premiums, to extend subsidy eligibility, and to add a public option. That, argues Biden, is the soundest and most fiscally prudent approach. Yet when it comes to actually making the system operate well, there’s a record that can be reviewed to gauge how reasonable a promise Biden is making. Across the country, Democrat-controlled states have had over a decade to work on improving the law, relying on existing authorities or ones they could acquire legislatively or through administrative waiver. The record is clear. Even without the partisan obstacles of a nihilistic Republican opposition, Democrats have failed to build on the Affordable Care Act — not from a lack of good intentions, but because of the fatal complexity of the law itself. That same complexity has kept the media from reporting on Democratic failures to build on its own law, which has created the space for Biden to be able to pretend that he’ll be able to do so. But ultimately, it’s as if the party still hasn’t figured out how to get the lights to work in the house, but are confident the answer is an expensive addition. It has been 10 years since the Affordable Care Act was signed into law and six years since the exchanges started, but many Democratic states still aren’t effectively managing their marketplaces. This has not been due to malice, budget constraints, or industry opposition. It is mainly because the system creates such a complex series of counterintuitive provisions that most state policymakers don’t understand the law or how to maximize every lever at their disposal. Collectively, these regulatory decisions made in blue states have cost low-income individuals billions, and needlessly caused tens of thousands to go uninsured. The fact that Democratic states currently have the power to make the ACA noticeably better, but simply haven’t because they don’t understand their own law, shouldn’t fill one with confidence about the party’s ability to build on it by just adding more money.

Take the way that the government’s subsidies for lower-income people are calculated, a major source of the law’s problems. An individual’s subsidies are determined by calculating how much is required to make the second-cheapest silver plan cost them a set percent of their income. That’s a level of design complexity that should have been rooted out in the beginning; instead, everything else is based on it. This means, perversely, that the lower official premiums are in one’s area for that second-cheapest silver plan, the more low-income people actually have to pay for health care. This issue is compounded by the fact that the Obama administration also decided to give insurers lots of freedom in how they design their insurance plans’ weird blend of copays, coinsurance rules, and deductibles. All silver plans were originally supposed to cover the cost of 70 percent of average covered benefits, also known as actuarial value or AV. The Obama administration brought that number to 68, and the Trump administration has since lowered it to 66 percent. While states have the ability to require insurance companies to offer silver plans that cover nearly 72 percent, almost none do. New York regulators require silver plans to cover at least 70 percent. California regulators have also required insurers to only sell one standardized silver plan that covers 71.8 percent since 2014, and finally this year, Connecticut regulators followed suit. In many Democratic states, the silver plan on which subsidies are calculated are ones that are as close to 66 percent AV as possible. Prohibiting these low value silver plans would cost the state nothing and would help both consumers and insurance companies, but almost none do it.

Insurance companies, quite naturally, are gaming the system by offering multiple, nearly identical plans.

If the insurance market includes buyers and sellers, complexity introduced into that market gives a clear advantage in the transaction to the seller — who creates the products, writes the language describing it, and sets the prices. They have an army of functionaries dedicated to the task; the buyer has at most a few hours they can afford to spend looking over the impenetrable paperwork. Insurance companies, quite naturally, are gaming the system by offering multiple, nearly identical plans. This ensures that subsidies go to one of their cheap, narrow-network plans rather than a competitor’s, making it difficult for low-income people to afford insurance from any other company. California and now Connecticut prevent this by only allowing insurance to sell one standard silver plan, but most states, including blue states, allow it. This not only makes insurance more expensive, it also significantly reduces an individual’s choice of providers and makes shopping for insurance much more confusing. There are some efforts in other Democratic-controlled states to stop this practice. For example, in Virginia this year, state Sen. Creigh Deeds, a Democrat, introduced a bill to prevent insurers from offering two narrow-network plans, but Deeds told The Intercept its passage is in no way guaranteed. “I have too many bills,” Deeds told The Intercept. “I don’t have time to work the bill the way I want to.” With so many issues to address this session, complex technical fixes to deal with the poor design of the ACA’s subsidy calculation — to ultimately help a small share of low-income residents — easily get lost in the scrum. This mishmash of incentives ends up hurting the working class. Last year, Colorado adopted a much-hailed reinsurance program — intended to reduce what insurances companies paid out, and therefore what they charge insurees. While it did reduce premiums for the segment of relatively well-off people paying full price for insurance on the exchange, it actually cut subsidies for low-income individuals, driving up their individual cost. Similarly, the public insurance plan run by Los Angeles made insurance cheaper for higher-income people in some years, but in 2018 made coverage marginally more expensive for some who qualified for subsidies. Recent efforts by Democrats to improve the insurance market in Maine by merging the individual market with the small business market could easily backfire by just increasing costs for businesses with most of the savings going to the federal government instead of individuals.



Photo: David McNew/Getty Images