[LUCKY GUESS: A day later the Spokesman-Review has a chat with the woman I identified.]
In the Republican response to Obama's SOTU Congresswoman McMorris-Rodgers told us this about Obamacare:
Not long ago I got a letter from Bette in Spokane, who hoped the President’s health care law would save her money – but found out instead that her premiums were going up nearly $700 a month.
So what lucky "Bette" is having her switchboard light up this morning? Well, last November Ms. McMorris-Rodgers gave us a bit while discussing the problems with the Affordable Care Act:
It’s about Bette Grenier, who can’t afford the increased payments and is currently uninsured because of Obamacare.
Hmm. Her Joe the Plumber moment is imminent! There is a Bette Grenier in Spokane who heads a roofing contractor firm with ten employees. And if (IF!!!) this is her little-used Facebook page, she is no fan of Hillary, so maybe she is no fan of Barack.
In any case, a small business owner might well have been in the market for private insurance and may well be looking at higher premiums under Obamacare. There were apparently 290,000 cancellations in Washington State and the state did not pick up onObama 's suggestion that they extend non-compliant plans for another year.
Paul Krugman is deeply interested in this, presumably as long as we can show the Congresswoman to be lying or misinformed:
I’d be interested, by the way, to know the details about the constituent described in the official GOP response, who supposedly faced a $700 a month rise in premiums. What kind of plan did she have? Did that number include subsidies? The ACA is supposed to keep health costs to 8 percent of income, so the only way you could get numbers like that is if the individual (a) had a really bare-bones policy offering hardly any protection and (b) has an income well over $100,000.
As to "an income well over $100,000", I am surprised that such an authority would fail to grasp that for unmarried individuals the subsidies disappear at $46,000. That said, a Silver Plan in Washington for a single mom age 58 (per WhitePages.com) and no kids with no subsidy would be $6,226 per year, which at $519/month is less than the $700/month premium hike we are examining.
So let's give her a hubby and take the income up to $94,300, where subsidies end (still less than $100,000, BTW, but presumably Prof. Krugman has deeper thoughts distracting him).
Now two 58 year olds with two kids are asked to pay $15,556 for a Silver Plan with an annual out-of-pocket maximum of $12,700. Yikes!
And speaking from personal experience, my wife and kids had their non-compliant but quite comprehensive Connecticut plan cancelled for non-compliance (no mental health coverage, which drove us crazy...); a comparable replacement Gold Plan was $600/month more, without subsidies. So personally, I score this anecdote as a "definitely maybe".
It will be interesting to see where the facts lead us. Trust but verify.
SHOW ME THE CLIFFS: Not to get all gloomy and pedantic but the passage from Prof. Krugman excerpted above displays a shocking ignorance of the economics of the ACA subsidies.
As already noted above, subsidies depend on marital status and the number of kids. The claim that they only disappear if "the individual" has "has an income well over $100,000" is only true if "the individual" is also married and has three or more eligible kids.
Per this chart from ObamaCareFacts.com, a single person with no kids loses their eligibility for subsidies at $46,000. And that implies a dramatic subsidy cliff - as the site illustrates, a family of four that is a dollar below the eligibility line ($94,200) can gain $3,550 in subsidies. Earn another dollar, and all of those subsidies disappear. Oops! Not that anyone will finagle their taxes as a consequence. Hmm, Pikkety and Saez will report on declining middle-class reported income, Obama (and Krugman!) will rail about rising inequality - it's a win-win!
But Krugman has embedded a second major misunderstanding:
The ACA is supposed to keep health costs to 8 percent of income...
"Health costs"? Come again? The subsidies are meant to keep premiums at (or near) 8 percent of income. Wait'll he gets a lod of the deductibles and co-pays!
The ObamaCareFacts site refers people to the Kaiser-Permanente subsidy calculator, so here we go: a family of four (non-smokers, national average, mom and dad are forty) earning $55,125 (taken from ObamaCareFacts site as 250% of Federal Poverty Line although Kaiser disputes that):
The premium, pre-subsidy: $9,700. Subsidies of $5,569 per year bring the premium cost down to $4,130 per year. That is 7.5% of $55,125. So far, so good.
However! The fine print, which I recall was initially obfuscated by the ObamaCare website, includes this, on deductibles and co-pays:
Your out-of-pocket maximum for a Silver plan (not including the premium) can be no more than $10,400. Whether you reach this maximum level will depend on the amount of health care services you use. Currently, about one in four people use no health care services in any given year.
If the family does spend $10,400 and hit the out-of-pocket cap I am pretty sure that will represent more than 8% of total income. Hey, insurance is complicated to buy.
Interestingly, Prof. Krugman recently lectured Bret Stephens of the WSJ on an appropriate corrections policy. Let's reprise that here:
Instead, he points to an online post he put out admitting, with a minimum of grace, that using nominal incomes was wrong.
Sorry, but that’s not what I — or, if I may speak for my employer, The New York Times — calls a correction.
What, after all, is the purpose of a correction? If you’ve misinformed your readers, the first order of business is to stop misinforming them; the second, so far as possible, to let those who already got the misinformation know that they were misinformed. So you fix the error in the online version of the article, including an acknowledgement of the error; and you put another acknowledgement of the error in a prominent place, so that those who read it the first time are alerted. In the case of Times columnists, this means an embarrassing but necessary statement at the end of your next column.
I have confidence that Prof. Krugman, with grace and alacrity, will correct these gross misrepresentations about the economics of the ACA subsidies. The impression he is currently promoting is that the subsidy phase-outs only hit the well-off and that total health care costs for a subsidized family are well-contained. Wrong and wrong again.
FROM THE CHAT WITH BETTE: We learn this about her health insurance options:
But the “nearly $700 per month” increase in her premium that McMorris Rodgers cited in Tuesday night’s GOP response to the State of the Union address was based on the priciest option, a $1,200-a-month replacement plan that was pitched by Asuris Northwest to Grenier and her husband, Don.
The carrier also offered a less expensive, $1,052-per-month option in lieu of their soon-to-be-discontinued catastrophic coverage plan.
She said she contacted the congresswoman late last year to complain after getting a letter from Asuris Northwest advising that her $552-a-month policy no longer would be offered. She sent the congresswoman’s office a copy of the letter, which included the rate quotes for the suggested replacement policies.
Although the couple’s catastrophic plan had a $10,000 deductible, it included four doctor visits per year at no additional out-of-pocket cost, she said.
The replacement policies offer lower deductibles and broader coverage, she said, but they didn’t include the doctor visits at no extra charge.
No mention of kids, who might well be past the age of 26. As to the notion that her old plan was "catastrophic" with a $10,000 deductible, how would she characterize the Silver plan noted above with a maximum out-of-pocket of $10,400?
But down to cases! Per the Kaiser site, two adults with no subsidy in Washington are looking at a Silver plan costing $12,453 per year. The annual out-of-pocket cap (excluding the premium) is $12,700, so this does not strike me as a lot less catastrophic than their old plan (although we lack information about their old co-pay rate, but they do have the four "free" doctor visits.)
So the old plan was $552/mo; the new one is $1,038/mo. Quelle difference! That is $486/mo., and quite close to the "$1,052-per-month option" mentioned in the story. I have no doubt a Gold Plan costs more, but I doubt the deductibles are comparable.
Since Ms. Grenier did send her Congresslady a letter indicating the cost of her old plan as well as price offers for various replacement alternatives, I would say the heat, if any, is on Ms. McMorris-Rodgers. That said "nearly $500 per month" would have been as useful a sound-bite and essentially accurate.
And Prof. Krugman's objections included this:
We don’t know the particulars here, but many if not most stories of rate shock turn out to involve people who didn’t actually apply for a policy, and therefore never found out what it would really cost.
That seems to be answered. We eagerly await his corrections, clarifications and amplifications. I certainly hope that in the course of noting Ms. McMorris-Rodgers exaggerations he corrects his own over-enthusiams. (My breath is unheld).