Healthcare Usage & Choosing the Least Expensive Affordable Care Act Plan
Health insurance has changed and insurance shopping must change with it. The fundamental distinctions among the new Affordable Care Act health plans are actuarial, i.e. the percentage of enrollee medical costs paid by the health plan. Consequently, consumers must carefully consider the out-of-pocket costs under each of the new metal plans alongside monthly premiums in order to pay the least amount of money on healthcare annually.
In order to demonstrate how healthcare usage can change the optimum health plan choice for a consumer, HealthPocket first examined the average premiums for the four different metal plans (i.e. Bronze, Silver, Gold, and Platinum). Combining the premium data with the typical out-of-pocket cost sharing for each metal plan tier, HealthPocket examined how different healthcare usage scenarios changed which metal plan produced the lowest annual healthcare costs.
HealthPocket examined the premium data for on-exchange individual health insurance plans across 34 states. The average monthly premiums for metal plans varied widely across both metal tiers and ages, with the average monthly premium for each metal plan increasing as age increased.
Predictably , premiums increased when moving from a lower-tier metal plan that covered less medical expense to a higher-tier metal plan that covered more medical expense. However, the premiums did not increase proportionately to the increase of medical expenses they covered. Silver plan premiums across age groups were 8% higher than Bronze plan premiums on average. Gold plan premiums were 18% higher on average than Silver plan premiums. Platinum plan premiums were less than 3% higher than Gold Plan Premiums on average.
When examining the metal plans in sequence of lowest to highest actuarial value, the step between silver and gold plans had the largest premium difference between them while the step between the gold and platinum plans had the smallest (see graph below).
With respect to age, the difference between 50 and 60 year old enrollees had the largest premium difference within the same metal plan category.
Average Out-of-Pocket Fees for Each Metal Plan
Entry-level Bronze plans are required to cover only 60% of covered medical expenses for a standard enrollee population, while Silver plans cover 70%, Gold plans 80%, and Platinum plans 90%.1 Given that each metal plan represents a different percentage of medical costs paid by an insurer,2 cost-sharing expenses (i.e. deductibles, copayments, and coinsurance fees) vary among the metal plans with Bronze plans having the largest out-of-pocket costs and Platinum plans having the lowest out-of-pocket costs.
Using Premiums & Healthcare Use to Select a Plan
HealthPocket estimated annual costs for individuals across the four metal plans for two types of medical visit scenarios.4 In the first scenario the individual makes up to twelve visits to their primary care physician that are not subject to deductible. In the second scenario the individual makes four primary care visits that are not subject to deductible, and up to twelve visits to a specialist that are subject to deductible. Both of the scenarios use the premium averages and the cost-sharing averages5 for each metal tier.
For consumers with a modest amount of primary care visits, the entry-level Bronze plan had the lowest annual costs. For example, if a 30-year-old individual visited a primary care physician no more than seven times per year then Bronze plans averaged the lowest annual combination of premiums and out-of-pocket costs.6 If the same individual visited a primary care physician between eight and twelve times, then Silver plans averaged the least expensive combination of premiums and out-of-pocket costs.
In the above scenario, each metal effectively covered a higher percentage of doctor visit costs than its actuarial value would dictate: 70% for Bronze plans, 86% for Silver plans, 89% for Gold plans, and 93% for Platinum plans.7
If the 30 year-old individual visited a specialist between four and twelve times a year and their primary care physician four times, then the total annual costs would be lowest with the Platinum plans.
For 60 year-olds, bronze plans averaged the least expensive choice for up to 12 primary care visits per year.8 However if the same individual visited a specialist between nine and twelve times and their primary care physician four times, then the estimates showed that total annual costs would be lowest with the Platinum plan.
For consumers who rarely use a doctor, the entry-level Bronze plan is a compelling choice since it has the lowest average premium of the new Affordable Care Act plans.9 Assuming doctor visits are not subject to the deductible, the Bronze plan remains a financially attractive choice through seven primary care visits for a 30 year-old and twelve primary care visits for a 60 year old. However, when healthcare use increases or incorporates specialist visits, the average premiums and out-of-pocket costs for Bronze plans do not remain the least expensive option. For example, among 30 year-olds, four visits to a primary care physician combined with four visits to a specialist made Platinum plans the lowest cost option.
While the averages in this report provide directional guidance on health plan selection, consumers must investigate the actual premiums and cost-sharing of the plans available in their region since both premiums and cost-sharing can vary among plans sharing the same metal tier.
Out-of-pocket costs for 2014 Affordable Care Act health plans were based on the Qualified Health Plan (QHP) Landscape files for 34 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 34 states covered by the landscape file. Plans that lacked cost-sharing data were not included within the study. Catastrophic plans, dental plans, and small business plans were not included within the scope of this study. The Qualified Health Plan (QHP) Landscape files were downloaded by HealthPocket from the Centers for Medicare & Medicaid Services data.healthcare.gov website on December 2, 2013 and December 10, 2013. Data analysis assumes the accuracy of the government data utilized.
All plans investigated in this study belong to the individual & family insurance market. Medicare, Medicaid, short-term health insurance, and group 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 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 54% of Bronze plans studied. Copayments were used for primary care visits in 73% of Silver plans studied, 80% of Gold plans studied, and 85% of Platinum plans studied. Some plans had both copayment and coinsurance. Coinsurance fees were used for specialist visits in 58% of Bronze plans studied. Copayments were used for specialist visits in 61% of Silver plans studied, 71% of Gold plans studied, and 86% of Platinum plans studied. Some plans had both copayment and coinsurance.
In the estimates there is no copayment or coinsurance fee before deductible for specialist visits. Moreover the deductible, copayment and coinsurance fees are included in the maximum out-of-pocket costs. The primary care visits are established patient visits lasting 15 minutes since the 13-16 minute range contains the median average time that primary care physicians spent with patients.10 In the scenarios used in this report, primary care visits are assumed not to be subject to the health plan deductible.
The specialist visits in the estimates are established patient visits lasting 25 minutes.
The cost estimates used the following retail costs from FairHealthConsumer.org for the 02144 zip code:
Primary care visit: $224.01, CPT code 99213 (Established patient office or other outpatient, visit typically 15 minutes)
Specialist visits: $340.06, CPT code 99214 (Established patient office or other outpatient, visit typically 25 minutes)
CPT code 99214 applies to various 25-minute established patient office visits including primary care, orthopedics, and obstetrics and 99213 applies to various 15-minute established patient visits.
Out-of-pocket costs assume covered medical services delivered by in-network healthcare providers.
Recent Research Articles
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 email@example.com.
Feedback and questions are welcome but, given the volume of email, personal responses may not be feasible.
Kev Coleman on Google+
1 Metal plans may operate within a 2% tolerance. For example, a Bronze plan’s actual value may range from 58% to 62% of medical costs for a typical enrollee population.
2 The actuarial value of a metal plan represents the percentage of covered medical services delivered by in-network health care providers that are paid for by the health plan for a typical enrollee population. An enrollee’s particular usage of healthcare services may result in a higher or lower portion of the medical costs being paid by the health plan for that enrollee.
3 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/
4 Since marketplace plans cover charges for preventative care visits such as shots and screenings, the cost estimates consider only scenarios with non- preventative care visits.
5 For primary care and specialist visit cost-sharing each metal plan used the average of the more prevalent form of cost-sharing between copayment and coinsurance.
6 This scenario assumes the primary care visits are not subject to the deductible.
7 See Methodology section regarding cost estimates for primary care visits.
8 This scenario also assumes the primary care visits are not subject to the deductible.
9 This statement is based on average premiums. Depending on the region of the country and the level of plan competition, there could be instances where a￼higher tier metal plan from one insurance company could be less expensive than a Bronze plan from a different insurance company.
10 See the Medscape Physician Compensation Report: 2011 at http://www.medscape.com/features/slideshow/compensation/2011/