The Affordable Care Act contains a stipulation that caps the deductibles on small group health plans. For individual enrollees, the maximum deductible was limited to $2,000 while for families the maximum deductible was limited to $4,000. However, in February 2013 the Department of Health and Human Services indicated that these deductible limits must be "applied so as to not affect the actuarial value of any health plan.”1 In order to maintain the appropriate percentage of out-of-pocket costs for enrollees, small group health insurance plans used by businesses and other organizations were permitted to exceed the deductible caps but only under the condition of necessity.
Using government data on the 2014 small business health plans, HealthPocket analyzed the average out-of-pocket costs for each metal tier and then determined what percentage of plans, if any, exceeded the original deductible limit for the small group market. Currently, small group health plans may be purchased through independent state exchanges or brokers and insurance companies but not the federal exchange due to technical issues.2
Prior to reviewing out-of-pocket costs, it is important to review briefly the basic differences among the new Affordable Care Act health plans. The Affordable Care Act created four new categories of health plans: bronze, silver, gold, and platinum. Together these are known as the metal plans. The bronze health plan has the highest out-of-pocket costs for enrollees with an expectation that it would have the lowest monthly premiums. On the other end of the range, the platinum plan has the lowest out-of-pocket costs with the highest premium expectation. The percentage of medical expenses covered by each plan for a typical enrollee population is as follows: bronze plan - 60%, silver plan - 70%, gold plan - 80%, and the platinum plan - 90%. In comparison, 24% of people that enrolled in pre-reform group plans had plans with actuarial value at least 90%, 41% had plans with actuarial value 80%-89%, 28% had plans with actuarial value 70%-79%, 6% had plans with actuarial value 60%-69%, and 0.5% had plans with actuarial value less than 60%.3
The average out-of-pocket costs below for the different metal plans were based on government data for 2014 Small Business Health Options (SHOP) marketplace containing qualified health plans sold on exchanges in 32 states.4
The average individual and family deductibles for Bronze and Silver plans exceeded both the $2,000 individual and $4,000 family deductible caps. In fact, nearly all Bronze plans exceeded the deductible caps for both individual and family enrollees while no Platinum plans exceeded the deductible caps.
For individual enrollees in SHOP marketplace plans, HealthPocket found:
For family enrollees in SHOP marketplace plans, HealthPocket found:
Despite the average deductible amounts, some health plans examined in the SHOP marketplace did have deductibles of $0. As was the case for the individual and family marketplace, the $0 deductible health plans were most prevalent among Platinum plans and statistically absent among Bronze plans. However the percentages of $0 deductible plans in the Silver, Gold, and Platinum tiers were substantially lower in the SHOP marketplace than in the individual and family marketplace.5
For both individual and family enrollees in the SHOP marketplace, HealthPocket found:
Strictly enforcing the deductible caps for small group health plans could have substantially narrowed the inventory of health plans in the Small Business Health Options marketplace. For the Bronze tier in particular, fewer than 4% of 2014 plans would have satisfied the Affordable Care Act deductible caps for individual as well as family enrollees.
The ability to waive the deductible cap based on actuarial value necessity calls into questions the ongoing value of the deductible cap. Below is a comparison of the average deductibles in the 2014 small group market with the deductible cap versus the 2014 individual market where no cap exists.
Deductible Amounts Apply to an Individual Enrollee Scenario
If the HHS disallows the deductible cap waivers in future regulations, then almost all qualified Bronze plans would have to decrease their deductibles to satisfy the limits. Decreased deductibles could, in turn, require increases in other categories of enrollee cost-sharing such as copayments in order for the plans to maintain their actuarial values.
Several legislators in the House of Representatives have already started action to remove the deductible caps for employer-sponsored health plans. In August Representative Tom Reed [R-NY-23] introduced H.R. 2995, the Unnecessary Cap Act of 2013, which would eliminate the deductible caps for plans in the SHOP marketplace.7 The bill is currently referred for discussion to the House Committee on Energy and Commerce and has five House cosponsors.
Out-of-pocket cost calculations for 2014 Affordable Care Act small business health plans were based on Qualified Health Plan (QHP) Landscape data for 32 federally-facilitated marketplaces, state-partnership marketplaces, and state-based marketplaces using the federal application system. Bronze, Silver, Gold, and Platinum health plan data was used, covering multiple rating regions within the 32 states covered by the landscape file. Plans that lacked cost-sharing data were not included within the study. Catastrophic plans and dental plans were not included within the scope of this study. The Small Business Health Options (SHOP) Qualified Health Plan (QHP) Landscape files were downloaded by HealthPocket from the Centers for Medicare & Medicaid Services data.healthcare.gov website on December 28, 2013. Data analysis assumes the accuracy of the government data utilized.
All plans investigated in this study belong to the SHOP insurance market. Medicare, Medicaid, and short-term health insurance plans were not analyzed as part of this study. Industry standard rounding methods were utilized. No weighting by health plan enrollment was performed.
For primary care and specialist visit cost-sharing averages in the SHOP marketplace, each metal plan used the average of the more prevalent form of cost-sharing between copayment and coinsurance. Coinsurance fees were used for primary care visits in 62% of Bronze plans studied. Copayments were used for primary care visits in 58% of Silver plans studied, 75% of Gold plans studied, and 95% of Platinum plans studied. Some plans had both copayment and coinsurance. Coinsurance fees were used for specialist visits in 65% of Bronze plans studied. Copayments were used for specialist visits in 55% of Silver plans studied, 74% of Gold plans studied, and 95% of Platinum plans studied. Some plans had both copayment and coinsurance.
This analysis was written by Jesse Geneson, data researcher at HealthPocket, and Kev Coleman, Head of Research & Data at HealthPocket. Correspondence regarding this study can be directed to Mr. Coleman at firstname.lastname@example.org.
Feedback and questions are welcome but, given the volume of email, personal responses may not be feasible.
1 The deductible cap waiver condition appeared under Section 156.130 of the HHS regulations from February 25, 2013. http://www.gpo.gov/fdsys/pkg/FR-2013-02-25/pdf/2013-04084.pdf. Actuarial value, in this context, refers to the percentage of healthcare costs paid by the plan versus the enrollees. Bronze plans pay 60% of healthcare costs for covered services, silver plans 70%, gold plans 80%, and platinum plans pay 90%.
2 Timothy Jost. “Implementing Health Reform: The Delay Of SHOP Exchange Online Enrollment” Health Affairs (November 28, 2013).
3 The data on group plan enrollment by actuarial values appeared in the following study: J. R. Gabel, R. Lore, R. D. McDevitt et al., “More Than Half of Individual Health Plans Offer Coverage That Falls Short of What Can Be Sold Through Exchanges as of 2014,” Health Affairs Web First, May 23, 2012. http://www.commonwealthfund.org/~/media/Files/Publications/In%20the%20Literature/2012/May/1602_Gabel_individual_hlt_plans_fall_short_exchanges_HA_05_23_2012_ITL.pdf
4 When a cost-sharing category (e.g. specialist visit) had plans with a copayment or a coinsurance fee, the most prevalent cost-sharing form was used for the average.
5 Percentages of Bronze, Silver, Gold, and Platinum plans with $0 deductibles for enrollees in the individual and family marketplace were calculated in the following study: Kev Coleman & Jesse Geneson. “Deductibles, Out-Of-Pocket Costs, and the Affordable Care Act.” HealthPocket.com (December 12, 2013). /healthcare-research/infostat/2014-obamacare-deductible-out-of-pocket-costs
7 Current information on H.R. 2995 may be found at http://www.govtrack.us/congress/bills/113/hr2995