High deductible plans in the ACA
May 17, 2012 5 Comments
Yesterday I speculated about what form a health reform deal between Progressives and Conservatives might look take (Universal catastrophic coverage implemented via Medicare).
Like many of the complaints about the ACA, the idea that everyone is forced to purchase the same plan is untrue–it does not mandate a one size fits all policy. Below are actuarial estimates produced by 3 insurance companies commissioned by Kaiser Family Foundation of what various insurance options to be sold in ACA exchanges would look like.
The Actuarial value column shows the percentage of total costs to be borne by a person (there are a series of assumptions made to produce these estimates, that are meant to be illustrative) covered by the mandated benefit package; Plan A, 60% corresponds with the so-called Bronze level package that represents the minimum coverage that persons would have to purchase in 2014 to generally comply with the ACA. You can see that there are other levels of coverage stated in actuarial value terms, 70%, up to 94% that people could choose. Obviously, a higher actuarial value means higher premiums and less out of pocket exposure during the period of insurance, and under the ACA the premium subsidy amount provided to individuals and families varies by income.
Also of note are the different ways to attain the same actuarial value and corresponding out of pocket maximum. Sticking with the Bronze plan (row A) in the Table, Actuarial Research Corporation designed a plan with a deductible of $6,350 and no coinsurance, while Aon Hewitt achieved the same actuarial value with a deductible of $4,350 and coinsurance of 20%. It is true that all of the plans cover the same benefit package.
- The ACA allows catastrophic plans (the max out of pocket allowed in 2014 will be $5950 for individuals, $11,900 for families). I suggested larger deductibles/maximums, but personally I would trade a higher catastrophic deductible/out of pocket max for universal coverage.
- It is unclear to me how the price charged for care while someone is in their deductible will be set? Presumably that will be an aspect of the plan offered on an exchange in the ACA, but this is an important question, especially for catastrophic plans, and I realize that I am unsure. Under my suggestion, Medicare payment rates could be used.
- There are different mixes of premiums, deductibles, and coinsurance through which to achieve the same actuarial value. Adding the premium side to this adds more complexity and choices, but you can generally achieve the same premium-side actuarial outcome by a set deductible/out of pocket maximum and income based premium subsidy, or you could modify the deductible/out of pocket maximum by income, probably implemented via a maximum amount of income that could be spent on health care.
- You have to set a benefit package in some way if you claim to be interested in people making informed choices. Under my suggestion, everything covered by CMS would count toward spending through the catastrophic deductible, and would be covered by Medicare once the maximum out of pocket amount was reached.