The O'Donnell Family Premium Mystery Solved...and the answer is kind of head scratch-inducing.
On Sunday evening/Monday morning, I wrote up a detailed analysis of the puzzling "premium increase" question posed to Hillary Clinton at a Democratic Town Hall broadcast on CNN.
As you'll recall, the woman worded her question as follows:
O'DONNELL: Hello, I voted for Obama, but then my health insurance skyrocketed, from $490 a month to $1,081 a month, for a family of 4. I know Obama told us that we'd be paying a little more, but doubling...more than doubling our health insurance costs has not been a "little" more. It has been difficult to come up with that kind of payment every month. I would like to vote Democratic, but it's cost me a lot of money, and I'm just wondering if Democrats really realize how difficult it's been on working-class Americans to finance Obamacare.
Clinton confirmed a couple of points:
- Yes, the O'Donnell's had already been enrolled in individual market policies (as opposed to employer-sponsored coverage), via a private broker.
- No, their current policy was not purchased via HealthCare.Gov, because (according to O'Donnell) that would have been more expensive.
Beyond that, Mrs. O'Donnell provided no additional details. Granted, I'm sure CNN required her to keep her question brief, but without further details, there was absolutely no way for Clinton to properly respond.
As I noted in a follow-up piece this morning there were no fewer than fifteen questions which Hillary Clinton would have had to pester O'Donnell about in order to narrow down the mystery of her 120% rate hike, including:
- Was your old policy the equivalent of a current Bronze, Silver, Gold or Platinum plan?
- Was your old policy an HMO, PPO or EPO?
- Is your new policy Bronze, Silver, Gold or Platinum?
- Is you new policy an HMO, PPO or EPO?
- Which carrier was your old policy through?
- Which carrier is your new policy through?
- How old are you? How old is your husband?
- Do you smoke? Does your husband smoke?
- If so, what year did you/he start smoking?
- What year were you paying $490/month? (2013? 2014? 2015?)
- What year did you start paying $1,081/month (2014? 2015? 2016?)
- What was your household income whichever year you started the new policy?
- Do you or your husband work for an employer which has offered a policy which you've declined to sign up for ("family glitch")?
Well, this evening, Michael Hiltzik of the L.A. Times posted an update to his own story about the O'Donnells. He managed to get ahold of Mrs. O'Donnell, who filled in many of the blanks above:
- Both Mr. & Mrs. O'Donnell are 53 years old; their two children are 20 and 23 years old.
In other words, their adult children are allowed to stay on their parents policy thanks to the ACA, which requires policies to allow kids up to 26 years old to stay on the parents plan.
- Their income is too high for ACA exchange subsidies (which means over 400% FPL, or at least $97,000, assuming the kids are considered dependents, or $64,000 if they aren't)
In other words, Mrs. O'Donnell's description of her family as being "working-class" may be stretching the definition a bit. Different people define the term differently, but according to Investopedia:
At the bottom of the middle classes is the working class, also known as the blue-collar class or as the anxious middle. This class is the most dissatisfied and downbeat of the middle classes, and don't have as much education, meaning that they may have gone to college, but have more technical or vocational training. They are also usually paid by the hour, and have a variety of jobs, including: police officer, truck driver and factory worker. Salaries in this class fall between lower middle class and the poverty level, with a range of $23,050 to $32,500.
Again, there's no official rules for calling yourself "working class", but a $64K or $97K income certainly seems outside any reasonable definition of it to me. Opinions may vary, of course.
- The "$490/month" they were paying actually refers to their premiums in 2006-2007.
...which was 3-4 years before the ACA was even signed, and 7-8 years before the ACA exchange policies/rules even went into effect.
As Hiltzik notes:
...the family's premiums have risen by a total of 120% in nine or 10 years. That about matches the overall rate of premium inflation in the individual market even before enactment of the ACA, which ran 10%-12% in 2008, 2009, and 2010, according to a survey by the Commonwealth Fund.
In other words, their premiums increased at exactly the same rate you'd have expected them to if the ACA hadn't been passed. Critics will rightly point out that when pushing for the ACA, President Obama often claimed that premiums would be cut by "up to $2,500/year" versus how much they'd otherwise increase. Obviously that didn't prove to be the case, but at the same time, they didn't go up any more than they would have otherwise either.
In fact, while rates on the total individual market did go up slightly more this year (12-13%, as projected by myself and confirmed by the Robert Wood Johnson Foundation), rates on the ACA exchanges only went up about 9% this year (as I also projected, and as the HHS Dept. later confirmed). And this was after only going up an average of 5.6% in 2015.
Yes, that's right: Premium rates have increased at a slower rate the past 2 years than they did prior to the ACA being passed.
So, what else?
- The O'Donnell's had $2,500 deductibles per person with their old, 2006 plan...and $4,000 per person deductibles today (?)
- Mrs. O'Donnell "appreciates" that thanks to the ACA, their new policy covers preventive procedures such as check-ups, mammograms, colonoscopies, etc. with no co-pay.
- The ACA preventing coverage denial for pre-existing conditions "wsan't a concern" of hers prior to the ACA. OK, fair enough.
- She says that they did plug their info into HC.gov, but found the off-exchange policy to be a better deal.
I went ahead and plugged the O'Donnell's info into HealthCare.Gov. Their children both being 18 does change their specs a bit, but here's what I came up with:
ASSUMING THEY DON'T LIST THEIR KIDS AS DEPENDENTS:
- The Gold plans ranged from $1,080/month with a $2,000 total family deductible to $1,386/month with a $2,500 total deductible.
- The Silver plans ranged from $862/month ($7,000 total deductible) to $1,355/month ($5,000 deductible).
ASSUMING THEY DO LIST THEIR KIDS AS DEPENDENTS:
- The Gold plans range from $1,513/mo, $2,000 deductible to $2,267/mo, $4,000 deductible
- The Silver plans range from $1,208/mo, $7,000 deductible to $1,898/mo, $5,000 deductible
In other words, while the $1,081 premium sounds about right after all, that "$4,000 per person" deductible still sounds rather odd to me.
However, the key point here is that Mrs. O'Donnell used the amount they were paying in 2006 as the starting point instead of the obvious year of 2013 (the last year before the exchange policies became available).
Again, I realize that she had to keep her question brief, but why did she go back nearly 10 years, to the 6th year of the Bush administration? At the very least she should have used her family's 2009 rates, since the ACA wasn't even signed until March 2010. It's certainly possible that the $490 rate was frozen in place right up through 2014, but I find that pretty difficult to believe.
Anyway, Hiltzik continues:
It's fair to say that Teresa and her family fall into the category of consumers who may not have been disadvantaged by the Affordable Care Act, but don't feel they've gained much, either. Their income places them beyond the reach of government assistance, and on the face of it they didn't have "junk" insurance that overcharged them for minimal coverage. It's conceivable that without the ACA their costs would have risen at about the same rate they have since 2006. The consumer-protection provisions of the law might have helped if they needed them, but they were comfortable as things were. And the prospect that the ACA would dramatically control costs, much less reduce them, hasn't materialized for them.
Their perception is that the law actually has driven up costs. "We're very surprised that it's had this kind of effect."
...and in politics, of course, perception is often more important than reality. Plus, of course, without the ACA, her children would most likely have been kicked off their policy upon turning 18 back in 2011 and 2014 respectively (pre-ACA, a few states did already have this requirement in place; I'm not sure if Ohio was among them).
On the other hand...
That said, she supports Hillary Clinton in the election; on Tuesday, before we talked, she voted for Clinton in the Ohio Democratic primary.
And there you have it: Mystery solved. It turns out that the "strange" number here wasn't so much the $1,081 that they're paying now, it was the $490 that they were paying in 2006.
In the end, no, Mrs. O'Donnell was not (as I've seen some suggest) a "GOP plant", nor was she "stupid" (as some falsely claimed I was accusing her of being). She just left out some rather crucial details...which was kind of my point in the first place.
UPDATE: Another reason the "2006" factor is significant, pointed out by commenter InTheKnow:
If they are 20 and 23 now, they were 10 and 13 in 2006. Mr. And Mrs. O'Donnell would also have been 43 then. Age rating, both pre and post ACA, induce premium increases that are outside the published "rate increase" figures. Add in that composite rating was permissible prior to 2014 and it is a big apples to oranges comparison on rating methods.
Exactly. One of the reasons why most people's premiums increase year to year has nothing to do with inflation itself, but with the fact that rates tend to increase as you get older, since you're considered a higher risk.
Basically, there's a dozen factors which caused the $490 figure to "increase" to $1,081 between 2006 and 2016 which have nothing whatsoever to do with the ACA.
Still, it's good to know that she ended up voting for a Democrat after all :)