Here are two facts that have gotten very little attention amid all the controversy about insurance plan cancellations and “rate shock.”
Fact one: Thanks to Obamacare’ subsidies, several million people now have the opportunity to get private insurance at essentially no cost.
Fact two: Those ultra-cheap policies are pretty threadbare. They might keep people out of bankruptcy, but they still would leave beneficiaries exposed to thousands of dollars in out-of-pocket expenses a year.
The facts lend themselves to very different narratives about Obamacare, which is one reason, I'm sure, not many people have noticed them. Among the few who have are Reed Abelson and Katie Thomas, reporters for the New York Times. As their Monday story explains, the least expensive insurance plans available in many state marketplaces cost very little—in some cases just $200 or $300 a month. Some people buying insurance will qualify for tax credits worth more money than those premiums, which means they’ll be able to get those policies for free or close to free if they’d like.
That’s a great deal, right? Not necessarily. As Abelson and Thomas explain, the Affordable Care Act divides policies into “metal” categories—platinum, gold, silver, and bronze. The cheapest policies are the bronze plans and there’s a reason they cost so little: They don’t cover much. They’ll take care of free preventative visits, as all plans must do under Obamacare, and they might make some small contribution on particular services like doctor visits or prescriptions. But for the most part the people who hold these policies will be responsible for paying bills out-of-pocket until those expenses hit $6,250 for an individual or $12,500 for a family—the maximum allowed under the law. (If you read the story about Dianne Barrette, the Florida woman looking for a new policy, you may remember that bronze plans were among her options—and they didn't provide much financial protection upfront.)
According to Abelson and Thomas, an analysis for the McKinsey Center on U.S. Health Reform suggested that between five and six million presently uninsured people could get these skimpy plans for free, while another million presently insured could do the same. How you feel about that depends, in part, on what you think health care insurance—and health care reform—should do.
To simplify things a bit, some advocates and experts believe it’s important to insulate people even from more modest medical costs. They argue that the burden of paying even a few thousand dollars a year can cause serious hardship and discourage people from getting care they really need. The folks who hold this view would much rather see consumers sign up for silver plans. Those plans are more expensive, but they tend to be at least a little more generous—and, in some cases, will entitle people to supplemental subsidies that offer more help with out-of-pocket expenses. (Those extra subsidies work only with the sliver plans, not the bronze plans.)
Other advocates and experts believe that insurance should exist primarily for protecting people from catastrophic expenses—and that leaving people directly responsible for other costs will encourage them to be smarter consumers of medical care. As this argument goes, consumers who must spend more money out of their own pockets will insist upon better value for their money. That pressure, in turn, will discipline the health care system to be more efficient and less expensive.
It’s an issue about which serious people can disagree and, generally, find some middle ground. But the political debate over this issue lately has been mystifying—and occasionally maddening. Conservatives tend to be ones who oppose making coverage more generous. They are the ones who hold up catastrophic policies as the ideal. But you never hear them applauding Obamacare for making such policies available and financially attractive. On the contrary, they say Obamacare fails to encourage catastrophic-only insurance—when, in fact, the law seems to do just that.