Earlier this week, David Espo of The Associated Press broke the news that an unlikely alliance of Democrats and Republicans in Congress had quietly repealed a significant provision of the Affordable Care Act. But, oddly, the AP piece downplayed its own scoop, calling the rule in question “relatively minor,” and focusing instead on decoding what’s happening within the Republican caucus. It was a clear example of how politics often trumps policy in DC reporting.
The AP piece that revealed as part of the latest “doc fix,” the perennial legislation needed to maintain Medicare payments to doctors, lawmakers had eliminated the cap on deductible for insurance policies sold to employees of small businesses. Before the change, the law had limited deductibles to $4,000 for family policies and $2,000 for individual coverage in small-group plans offered through the new exchanges. The administration had already waived these caps through 2015, and the “legislation means they will never go into effect,” the AP reported.
You can see why this might be considered a small change. There’s already no deductible cap for individual and large-group plans, and the cap that was in place for small-group plans was never implemented. The AP says outright that the substance of the move is “relatively minor,” and focuses instead on the congressional politics: This was a rare case of the House GOP actually trying to change the law, a “one-of-a-kind departure from dozens of high-decibel attempts to repeal or dismember it.” There’s also some intrigue, in that it’s not clear how many Republicans in Congress actually knew what was being approved. “No member of the House GOP leadership has publicly hailed the fix,” Espo wrote, noting the legislation was passed “by a highly unusual voice vote without debate.”
The politics is interesting stuff. But by focusing so much on that angle, the AP undersold the substance of the repeal. This move is part of The Great Cost Shift, one of the major healthcare stories of our era—which may be so familiar now that we don’t even recognize it as a big story. The repeal of deductible caps means employees of small businesses will see higher deductibles, subject to the out-of-pocket maximums—currently $12,700 per family and $6,350 for individuals. (Those amounts rise each year.) Many bronze and silver individual policies sold in the state exchanges have deductibles that equal the out-of-pocket maximums, and it’s likely that will now be the case for policies small employers will offer their workers.
The business lobby likes this change, because higher deductibles should hold down premium costs for employers. Insurers like it, because lower premiums can make it easier for them to grab market share. (Here’s a USA Today op-ed from Janet Trautwein, head of a trade association for brokers and agents, arguing for repeal of the deductitble cap last summer.) And some health wonks like it, because they think consumers should be paying more directly for the cost of their care, perhaps through health savings accounts.
Who might not like it? Some consumers, as they discover that, increasingly, the plans on offer don’t meet their understanding of what “health insurance” provides. High premiums are a barrier to access, but high deductibles and other out-of-pocket costs can be barriers to coverage, too. Just before Obamacare open enrollment ended, I interviewed a navigator in Denver who was helping people enroll. She said that sometimes after she explains the out-of-pocket costs, “They say, ‘You are expecting me to pay the premium every month and once I go to the doctor I have to pay $5,000 before there’s coverage?’” Then they walk away.
The success or failure of health reform hinges on whether people who have signed up for coverage believe they are getting value for their premiums. If they have policies with high deductibles—in the $10,000 to $12,000 range for families and the $5,000 to $6,000 for individuals—will they think insurance is valuable enough to keep paying the premium? The change uncovered by the AP means another set of consumers is going to be facing that calculation. The scoop shows the importance of keeping tabs on employers and their lobbying campaigns, as they try to repeal more sections of the law—and of explaining why various provisions of the law were included in the first place.