While most states have not yet published insurers’ rate filings for the upcoming Affordable Care Act health plans, some fascinating trends can be seen within those filings that have been made public. This is particularly true for out-of-pocket costs, a topic typically overlooked as attention is given to the premiums recorded within the filings. What has emerged to date is an across-the-board increase in out-of-pocket costs for doctor visit costs, deductibles, and coinsurance charges used for more extensive medical services. However, the degree to which these trends persist remains to be seen since most states have not made their insurance plan rate filings public and the plans themselves await approval in most instances.1
HealthPocket examined publicly available rate filings for new Bronze Plans from California, Connecticut, Ohio, Oregon, Rhode Island, Vermont, and Washington. Additional rate filings were investigated but, if the public data did not include information on cost-sharing within the plans,2 the plans were not included within the study. The Bronze Plan was selected as the focus of investigation since it is the entry-level health plan within the Affordable Care Act (a.k.a. Obamacare). The Bronze Plan is required to cover 60% of medical expenses for a standard population of enrollees but the translation of this requirement into actual doctor visit copayments, drug fees, deductibles, and other expenses is left up to the health plan in most cases.3
Doctor visits are one of the most common out-of-pocket costs for health plan enrollees and come in two possible forms: a fixed dollar amount copayment or a coinsurance fee where the enrollee is charged a percentage of the cost of the doctor visit. Since the recession, Americans have been visiting the doctor at an average rate of 3.9 times per year in 2010, down from 4.8 visits per year in 2001.4
Based on a review of 9,727 health plans in the current individual and family health insurance market, copayments were the most common form of cost-sharing for doctor visits and they averaged $28. In comparison, doctor visit copayments average $41 for Bronze Plans within the rate filings,5 an increase of 46% over current levels. The lowest Bronze Plan copayment for a doctor visit was $15 and the highest was $60. High copayment amounts may reduce doctor visits for a portion of the population. A June 2013 survey by HealthPocket found that 41% of respondents nationwide said they would see the doctor less frequently if they were charged a $50 copayment.6 The anticipated reduction in doctor visitation was higher than 41% for women earning between $25,000 and $49,000 as well as for people between ages 35 and 64.
For doctor visits where a coinsurance fee is charged instead of a flat fee copayment, the current national average is 24%. Those Bronze Plans that charge coinsurance average 27%, an increase of 13%. To make these percentages more comprehensible, the cost estimate for a doctor visit in the Boston area by an established patient is $1387 that would result in an out-ofpocket cost of $37.26 for a Bronze Plan with a 27% coinsurance rate. Some plans using coinsurance fees for doctor visits had a rate as high as 50% which would result in $69 for the Boston area example.
Another important aspect of doctor visit costs in the Bronze Plan filings is the degree to which doctor visits may be subject to a deductible where the patient would be responsible for 100% of the costs until the deductible is satisfied. In the current pre-reform market, doctor visit costs are subject to the deductible for 37% of health plans.8 For the new Bronze Plan filings in all 7 states examined, 84% had doctor visits subject to the deductible. However, under California law, the deductible cannot not be applied for the first three doctor visits. Excluding all California plans from the analysis, 81% of plans had doctor visits subject to the deductible.
Deductibles, the upfront amount paid by patients before most medical benefits are covered by the insured, also differ significantly from the current market to the Bronze Plan filings. In the 7 states where HealthPocket had access to rate filings that included plan design information, the average medical deductible in the current individual and family health insurance market was $3,589. In the same states, the Bronze Plans average medical deductible was 26% higher at $4,509.
Health plans typically include a coinsurance rate that applies to more expensive medical services such as X-Rays, surgeries, inpatient hospital stays, etc. The nationwide average for coinsurance charges is 20% of the medical service cost according to research HealthPocket performed in March 2013.9 However, the average coinsurance rate for the Bronze Plans examined in this study was 33%, which is 65% higher that the current national average.10 Within the 33% average, there were instances of Bronze Plans that charged 0% coinsurance after a deductible amount was satisfied.
The Affordable Care Act mandates that all Bronze Plans as well as other metal plans include a cap on annual out-of-pocket costs for enrollees. The vast majority of plans in the individual and family health insurance market have annual limit for out-of-pocket costs but, unlike Affordable Care Act plans, it is not mandatory nor is maximum amount defined. The maximum amount a Bronze Plan can allow for enrollees in 2014 will be $6,350 and the plans examined averaged $6,324 for this limit.11 A February HealthPocket study on out-of-pocket limits within the current individual and family health insurance market found the average to be $6,019.12 The enforcement of maximum out-of-pocket limits will be uneven in the first year of the Bronze Plans’ release since some new health plans do not have to comply with the limit until 2015.13
Given the fact that many of the plans examined in this study are pending approval and many more Bronze Plans have not been made public, “conclusions” seem premature at this juncture. Rather, some preliminary observations can be made. The early trend for Bronze Plans are higher out-of-pocket costs than the current plans they are replacing in the individual and family health insurance market. Depending on an analyst’s political leanings, the phrase “pocket shock” may be used with respect to the Bronze Plans’ cost sharing but the reality is more ambiguous. Health plan benefits under the Affordable Care Act are expanded to a larger mandatory level14 and provide insurance cost-sharing under some circumstances where previously the medical expense was completely out-of-pocket. Additionally, a portion of the population enrolled in these plans would qualify for reduced out-of-pocket expenses due to government subsidies based on income.
For those consumers without subsidies, a higher exposure to out-of-pocket costs may encourage more shopping among healthcare providers in the interests of lower expenses or may encourage decreased utilization for services where the out-of-pocket expenses are perceived as too expensive.15
What remains to be seen is whether these plans will be approved in their present form and how consumers will react to them. Ideally, consumers will view premiums and out-of-pocket costs together rather than in isolation from one another. Consumers dissatisfied with the Bronze Plans’ level of cost-sharing have the option of other metal plans (Silver, Gold, and Platinum) with less expensive cost sharing but face more expensive premiums for these plans. However, industry experts expect a higher use of “narrow networks” within the new Affordable Care Act plans which will increase the possibility of even higher out-of-pocket costs in those instances where care is pursued from healthcare providers out-of-network.
The Affordable Care Act itself does not define the cost-sharing within qualified health plans. Instead it defines an “actuarial value” for the new plan types that, in turn, guide health plans regarding the overall percentage of medical costs the plan should pay for a standard population. The actuarial value requirement grants insurers significant latitude in terms of how they design the cost-sharing. For those states where regulations do not dictate out-of-pocket charges, HealthPocket has seen significant variation in deductibles, copayments, and other cost-sharing fees.
Below are the results of HealthPocket’s June 2013 survey regarding the effect of fees on doctor visit frequency.
Cost-sharing on existing health plans can be reviewed within the Plan Details pages linked from HealthPocket’s health insurance comparison tool.
Data in this study regarding Bronze Plans was derived from qualified health plan rate filings within the individual and family health insurance market for the calendar year beginning January 1, 2014. Rate filings were gathered from the following states: California, Connecticut, Ohio, Oregon, Rhode Island, Vermont, and Washington.
Rate filings must be approved by the state department of insurance and, as such, may be rejected or may require alteration before final approval is given to the health plan. Disapproved or withdrawn filings were not included in the study. When discrepancies existed within the filings, plan attributes entered as inputs within the actuarial calculations were given privilege.
Some areas, such as Colorado and Washington D.C. released plan names or premiums for health plans but did not provide information on deductibles, outof-pocket maximums, coinsurance rates, or doctor visit charges.
Methodology assumes in-network delivery of covered medical services and no reduction in cost-sharing due to income-based government subsidies.
Data on primary care visit cost-sharing for currently available health plans was collected on June 11, 2013 from 9,727 health plans within the Individual & Family health insurance market. Cost-sharing for primary care visits within the current market and the Affordable Care Act market assume the use of an innetwork healthcare provider.
Survey analysis was based on a nationwide poll of 918 adults from June 7, 2013 through June 9, 2013. Respondents were asked “Would a $50 copayment affect how often you visit a doctor?” and could select one of the following answers: “No, I'd see the doctor at the same frequency,” “Yes, I'd see the doctor LESS frequently,” and “Yes, I'd see the doctor MORE frequently.” The order of these options was randomized across respondents. The survey was displayed within a network of over 100 different news web sites and other content sites. Demographic inferencing and methodology to acquire survey respondents who approximate national statistics on age, gender, income, and region was performed by technology administered by Google. Race, education, and health insurance status were not examined. Margin of error across the responses is estimated at +3.3%/-3.3%.
This survey analysis was completed by Kev Coleman, Head of Research & Data at HealthPocket.com, and David Briere (see the Contributing Author section on HealthPocket’s “About Our Research” web page). 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.
1 Plans contained in rate filings are not guaranteed approval and may need to be modified before approval is granted. However, states such as California have defined cost-sharing requirements for qualified health plans sold in the state.
2 At the time of publication, publicly available rate filing documents in Maryland are illustrative of this issue.
3 California has established cost-sharing designs for health plans sold in the state. No California plans deviating from the standard design were approved at the time of study composition. Moreover, no data was found on Bronze Plans using the HSA parameters published by Covered California, California’s health insurance exchange. See the ADDITIONAL NOTES section in this study for added commentary on Bronze Plans’ actuarial value requirements.
4 Brett O’Hara and Kyle Caswell. "Health Status, Health Insurance, and Medical Services Utilization: 2010" United States Census Bureau. (October 2012). p.2. https://www.census.gov/prod/2012pubs/p70-133.pdf
5 Bronze plans copayments were first averaged at the state level and then averaged across states. In the case of California and Oregon, the states’ doctor visit costs defined in the standardized health plan design was used.
6 Survey conducted from June 7, 2013 to June 9, 2013. 918 respondents resembling the age, gender, and regional distribution of the United States were asked “Would a $50 copayment affect how often you visit a doctor?” See METHODOLOGY section for more information on the survey.
7 Cost estimate assumes a 10 minute visit by an established patient to a doctor within zip code 02144. Estimate provided by FAIR Health (FairHealthConsumer.org) for CPT code 99212. Estimate obtained from web site on June 12, 2013.
8 Based on a June 11, 2013 review of 9,727 health plans in the current individual and family health insurance market.
9 The average quoted pertained to the individual and family health insurance market. Kev Coleman. “Today's High Coinsurance Health Plans: Poor Protection Against Medical Expenses & Will Not Survive Obamacare” HealthPocket.com. (March 25, 2013). /healthcare-research/infostat/high-coinsurance-health-plans-poor-protection-against-medical-expenses/
10 Bronze plans coinsurance rates were first averaged at the state level and then averaged across states. In the case of Oregon, the coinsurance rates defined in the standardized health plan design was used. For California, the standard Bronze Plan design was used given that no plan data was available for instances of the HSA Bronze variant.
11 Some plans submitted maximum annual out-of-pocket cost limits of $6,400 since the $6,350 annual limit had not been finalized. Adjusting down the $6,400 submittals to the maximum allowed amount $6,350 results in an average of $6,308.
12 Kev Coleman. “1 in 3 Health Plans’ Out-of-Pocket Costs Fail ACA Standards” HealthPocket.com. (February 27, 2013). /healthcare-research/infostat/1-3-health-plans-out-of-pocket-costs-fail-aca-standards/
13 Some new Affordable Care Act health plans will not have to comply with the maximum out-of-pocket limit requirement until 2015 due to multiple benefit administrators within a single plan managing major medical costs versus other costs such as prescription drug benefits. Michelle Andrews. "Federal Rule Allows Higher Out-Of-Pocket Spending For One Year" Kaiser Health News. (June 11, 2013). http://www.kaiserhealthnews.org/Features/Insuring-Your-Health/2013/061113-Michelle-Andrews-out-of-pocket-costs.aspx
14 Kev Coleman. "Almost No Existing Health Plans Meet New ACA Essential Health Benefit Standards" HealthPocket.com. (March 7, 2013). /healthcare-research/infostat/few-existing-health-plans-meet-new-aca-essential-health-benefit-standards/
15 On this subject, review the results of the HealthPocket survey on doctor visit charges in the “ADDITIONAL NOTES” section of this study.
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