Today, the Department of Health and Human Services (HHS) issued an analysis of Affordable Care Act (ACA) exchange plan deductibles. Because the analysis presents data in a misleading way, it draws inaccurate conclusions about the current status of the ACA. This short post provides readers with key missing pieces.

Average Exchange Deductible Exceeds $2,000

Although it is more common to present the average than the median in statistical analysis, showing both is often done to describe the data being presented. HHS’ analysis relied exclusively on the median plan deductible ($850) and did not include the weighted average plan deductible. Using HHS’ incomplete data, which likely biases the average down because HHS’ table reports an unrealistic $0 deductible for over a third of enrollees, I calculated the weighted average exchange plan deductible at $2,090. The weighted average plan deductible is nearly 150% higher than the median value reported by HHS.

Low Median Deductible Results from Skewed Risk Pool

The reason that the median deductible is so low is that most exchange plan enrollees are beneficiaries of the cost-sharing reduction (CSR) program. Under the CSR program, HHS makes monthly payments to enrollees’ insurance companies for insurers to reduce plan deductibles and other cost sharing amounts. The CSR payments typically reduce plan deductibles to $500 or less for single coverage for people with income below 200% of the federal poverty level (FPL), about $24,000 for a single person. If the risk pool was more balanced, a smaller percentage of enrollees would be receiving CSR payments and the median deductible would be higher. The high deductibles, which equal roughly $3,000 for silver coverage and $6,300 for bronze coverage, are one reason that exchange plans are largely unattractive to people in the middle class.

As I have discussed before, far fewer people with income above 200% of the FPL are enrolling in exchange plans than the government and private sector health experts expected when the law passed. In fact, in January 2015, the Urban Institute projected that only about a third of exchange plan enrollees would have income below 200% of the FPL. As a result of exchange plans being unattractive to generally healthy people with income above 200% of the FPL, nearly two-thirds of all exchange enrollees have had income below 200% of the FPL in 2014, 2015, and 2016.

The dearth of relatively healthy people with income above 200% of the FPL buying coverage has produced serious problems in the individual insurance market. Only 8 of the 23 health care cooperatives initiated with ACA funding are still operating, insurers are exiting exchanges, and insurers that remain are significantly increasing premiums.

The Payments Responsible for the Low Deductibles are Likely Illegal

Just last week, the Energy and Commerce and Ways and Means Committees released a report on the administration’s failure to comply with congressional investigators looking into these potentially illegal payments. On July 11, the New York Times reported that “Obama administration officials last week were unable to cite legal authority for the spending during a House hearing and could not identify any specific appropriations.”

Conclusion

HHS concludes its analysis with hyperbole: “[The ACA] has given every American the peace of mind that their health coverage will be there when they need it.” Last year, Gallup released a poll that 42% of Americans named cost or access as the most urgent health problem. According to a Kaiser survey, more 2016 ACA plan enrollees rate the coverage as providing “poor” or “only fair” value than rate it as providing ”excellent” or “good” value. Moreover, in an article entitled ‘Many Say High Deductibles Make Their Health Law Insurance All but Useless,’ the New York Times detailed stories of numerous people who dropped their plans because they provided so little benefit relative to the cost. If HHS was concerned about addressing the problems with the ACA, it would probably help if they first dealt with reality instead of political spin.