Revisiting Alexander-Murray copper

Alexander-Murray was a fairly straightforward proposal.  It was an honest attempt to solve problems.  Almost every section I could read through the bill and do the following:

  • Identify what problem the new language was attempting to address
  • Identify a clear pathway to resolve that problem
  • Assess a reasonable likelihood that the identified problem would be resolved in a manner favorable to the advocates of that section.

I may not have liked all of the sections on policy grounds (Iowa 1332 waiver revision section for instance) but mechanically the bill made a lot of sense.  The Problem-Change-Solution chain was clear and strong.

However there was one instance where Underpants Gnomes were involved.  And that was the section on expanding Catastrophic plans that would then be renamed Copper plans.  This never made sense to me.  The problem that the bill was trying to solve was to offer more low premium plans to more people while also bringing the Catastrophic plans into the Metal risk adjustment process.

The 2017 risk adjustment data shows the morbidity differences between Catastrophic and Bronze plans quite well (Figure 5)

Catastrophic plans are, from a benefit design viewpoint, merely funny looking Bronze plans. Catastrophic plans have a pricing advantage over Bronze plans because they have a massive risk adjustment advantage.  Catastrophic plans only risk adjust against themselves.  As you can see, Catastrophic has perhaps a third of the morbidity of Silver plans.  This is because Catastrophic plans are mostly limited to people under the age of 30.

Bronze plans are APTC subsidy eligible and they also contribute net risk adjustment payments to the rest of the Metal plans.  A portion of the Bronze premiums are in excess of Bronze claim costs as that money is shifted to cover some of the claims incurred by people who bought Silver, Gold and Platinum plans.

I could see the logic of expanding Catastrophic plans with split risk adjustment as a means of offering more people lower cost premium plans.  It would be attractive to most off-Exchange and some on-Exchange Bronze buyers.  Average morbidity in the Catastrophic pool would increase but the new entrants would see premium savings as they would not be paying risk adjustment to other metal plans.  Incumbent Catastrophic buyers would be worse off as the morbidity increase would lead to premium increases.  Silver, Gold and Platinum buyers would see higher premiums as significant risk adjustment support from Bronze would disappear.

But expanding Catastrophic plans that are rebranded as Copper plans and then bringing those plans into the Metal risk adjustment process makes no sense from any perspective.

This is 99.4% irrelevant to policy going forward as Alexander-Murray is dead but this has bugged me for months.






10 replies
  1. 1
    hitchhiker says:

    David, just wanted to say thanks for your work & for keeping us somewhat close to a rough understanding of what the hell is going on wrt healthcare. As somebody whose family has lived through an actual medical catastrophe (high spinal cord injury in midlife to main provider), I just choke on my own spit every time I see the words, “catastrophic plan.”

    People have no idea. None.

  2. 2
    ArchTeryx says:

    People will find out soon enough when our neo-Lochner court repeals the ACA.

  3. 3
    Yarrow says:

    FYI, The Today Show ran a segment today on a married couple that is thinking of divorcing so they can get medical coverage for their daughter who has a severe genetic issue that affects her development. I think the Today Show doesn’t have it up yet but here’s a local Texas story on them. He’s a veteran and makes too much money ($40K/yr) to qualify for Medicaid. Of course Texas is not a Medicaid expansion state. As a single mother with a special needs child I think she’d qualify for Medicaid.

    They went public to show what the holes are in the system and also to encourage others to come forward. Thought you might be interested in the story.

  4. 4
    Litlebritdifrnt says:

    I went to the doctor on Friday, let him know about the possible TIA I had, follow up yesterday, blood tests and EKG. Cost to me? Zero. I am so glad I now live in a country that values the health of its citizens over everything else. In other good news my husband’s immigration interview is now set for August 20. We get the train up to Glasgow stay over night and then have the interview at 8:30 am. Should get a decision that day. Then we are taking the train to Edinburgh and going to the Tattoo on the 21st before getting on the train back to Lancaster on the 22nd. Husband should be able to start applying for jobs on the 23rd in order for him to start work in September when school goes back. If we have any problem with the immigration folks I will basically tell them that they are issuing me with a death sentence. If I have to leave the UK and go back to the US, I will die, plain and simple. Without the NHS I will not survive.

  5. 5
    Yarrow says:

    @Litlebritdifrnt: Hope you’re okay. Sending good thoughts for your husband’s immigration interview.

  6. 6
    Litlebritdifrnt says:

    @Yarrow: I am fairly confident that we will be okay. DH more than meets the income requirements with his retirement, I have every document they have asked for and then some. I have it in a folder, organized and tabbed for each question on the form. For good measure I am throwing in my service record from the RN. If they want to screw with me I will bring the full weight of my RN friends down on them. You do not want to upset a bunch of retired Royal Navy Warrant Officers, with a voice and a vote. There is no telling with the current conservative government but I have a lot of people on my team, I doubt they want to take them on.

  7. 7
    Yutsano says:

    @Litlebritdifrnt:

    Then we are taking the train to Edinburgh and going to the Tattoo

    Oh THAT Tattoo. I thought you and DH were getting celebratory tattoos for some reason.

    Also: massive jealous.

  8. 8
    TriassicSands says:

    @Litlebritdifrnt:

    Good luck with all that. It’s appalling that you would have to avoid the US in order to say alive. Tens of millions of Americans don’t care whether their fellow citizens (or any human beings they aren’t directly related to) live or die. What they don’t realize is that someday they could be the ones on “death row.” Lack of empathy and foresight are increasingly common in this country, and they are requirements to be a Republican in good standing.

  9. 9
    Litlebritdifrnt says:

    @Yutsano: @Yutsano: It is a wonder to be sure . I can’t wait, it will bring back memories for DH and I of the Royal Tournament. The day we met, the day we realised each was the one. Goosbumps for sure.

  10. 10
    Yarrow says:

    @Yarrow:
    The story is now up on the Today Show website. Link.

    Jake and Maria Grey are happily married with two children. But they’re considering a divorce, for the sake of one of their kids.

    The Texas couple say it’s the only way their developmentally disabled daughter can qualify for Medicaid and get the health care she needs.

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