The Obamacare repeal effort is dead. But the Obamacare reform effort is just beginning.
One of the most interesting examples of the reform effort are the "copper plans" being proposed in the Expanded Consumer Choice Act, which is being pushed by seven moderate Senate Democrats: Mark Begich, Mark Warner, Heidi Heitkamp, Tim Kaine, Mary Landrieu, Angus King, and Joe Manchin.
The bill has been around for a few months, but it's gained more attention in recent weeks because Begich — one of the most vulnerable Democrats in the 2014 election — is using it as proof that he really does want to fix Obamacare, rather than just protect it. If he wins his election, it could become a model for Democrats trying to run on Obamacare going forward. It might even end up being part of a Republican reform package.
What's a copper plan?
The Expanded Consumer Choice Act is a brief bill — less than 2,000 words in all. What it does is open Obamacare's exchanges to a new kind of insurance product: a "copper plan," that is both skimpier, and more affordable, than the plans being offered today.
Obamacare names its insurance tiers after metals: there are the platinum plans, which cover 90 percent of an enrollee's expected health costs; the gold plans, which cover 80 percent; the silver plans, which cover 70 percent; and the bronze plans, which cover — you guessed it — 60 percent.
Copper plans cover 50 percent of expected health costs (or, as the health wonks put it, they have an "actuarial value" of 50 percent). That means premiums are cheaper than the platinum, gold, bronze or silver plans — the consulting group Avalere Health estimates that copper plan premiums would be 18 percent lower than bronze plan premiums.
But if you get sick, the deductibles and co-pays are much higher. Larry Levitt, a vice president at the Kaiser Family Foundation, says that the deductibles would have to be in the range of $9,000 — which would make them higher than the $6,350 out-of-pocket maximum that the law currently allows.
What's the case for adding copper plans to Obamacare?
The case for a copper plan is simple: it's cheaper, and cost is still a barrier to many people signing up for insurance. "It would give people eligible for ACA subsidies an option that, in many cases, would require zero premiums once their tax credits are taken into account," says Levitt. "There is real appeal to being able to tell people they can enroll for free."
A lot of major business groups back the copper plan. The Council for Affordable Health Coverage — a coalition that includes the National Association of Manufacturers as well as the National Association for the Self-Employed — endorsed the legislation, saying it "would give consumers more affordable coverage options than are currently available and potentially encourage small businesses to retain their employee plans".
Health insurers also have strongly pushed for the copper plans, which they believe will lure more consumers into buying exchange coverage with cheaper premiums.
The copper plan would also reduce deficits slightly. Avalere's analysis — which was commissioned by the Council for Affordable Health Coverage — found that adding the option would reduce "federal spending by $5.8 billion over 10 years; reduce taxes by $5.5 billion over the same period; [and] cut the federal deficit by $0.3 billion."
What's the case against a copper plan?
Basically, you're paying for insurance that doesn't protect you unless you get really, really sick. "While lower-income people might be attracted to a copper plan for the very low or even in some cases zero premium, it would almost be like having no insurance at all for them because of the very high deductible," says Levitt.
Ron Pollack, head of Families USA, agrees. Copper plans "would do far more harm than good," he says. He worries that the plans would "provide the illusion of coverage affordability when, in fact, they force people to spend huge amounts of money when they need care."
There's a more technical reason that copper plans might be a problem, too: the law 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.
Are copper plans likely to pass?
Not at the moment. But perhaps someday.
What's interesting about the 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.
But copper plans expose a political problem with that theory: the sparsest plans in Obamacare are really pretty sparse. The deductibles are high, the co-pays are rough, and people don't much like them. It's a good applause line to say that insurance is too expensive under Obamacare, but the politics get harder when you need to make the tradeoffs necessary to make it cheaper. This is pretty much the argument Ramesh Ponnuru, a conservative pundit, makes against copper plans:
The high deductibles in Obamacare plans have already generated a lot of criticism. Last year, CBS News reported that the average individual deductible in a bronze plan was "a whopping $5,081 per year." Copper plans would have even higher deductibles than bronze ones.
This trade-off should appeal to a small number of people who foresee themselves being pretty healthy. Their low premiums would entitle them to the preventative care that Obamacare requires all insurance plans to cover, but in the event of a major problem would leave them with big bills to pay. This is more or less the opposite of the way insurance should work.
Ponnuru suggests that rather than cutting the actuarial value of insurance, that Obamacare plans should be able to opt out of covering some of the law's "essential benefits." But that, of course, creates new problems: what happens when someone needs one of those benefits, only to realize their insurance doesn't cover the procedure their doctor is recommending?
In the coming years, both Democrats and Republicans are going to need to come forward with ways to "fix" Obamacare. Democrats largely like the law, but they need to distance themselves from its problems. Republicans loathe the law, but they're going to need to come up with a response other than repeal. The fact that seven Democrats and some key business interest groups offered copper plans as an opening bid suggests one direction this conversation could go: towards sparer plans with higher deductibles and copays.
But lurking behind this debate is whether copper plans would even matter. "Bronze plans weren't all that popular in year one, particularly for people eligible for tax credits," says Levitt. "So, I wouldn't think that an even less shiny plan like copper would be all that attractive to consumers."