July 14 - 18, 2014
The BreakPoint: What the New ACA Exchange Plans May Mean for Employer Health Benefits
With 8 million current enrollees in 2014, and enrollment projected to grow up to 13 million in 2015 and 24 million by 2016, the new Affordable Care Act (ACA) health insurance exchange (Exchange) plans are poised to exert some influence over benefit designs in private markets in coming years. Compared to employer-sponsored insurance (ESI), Exchange plans are more likely to subject common health care services and prescription drugs to a plan deductible and require higher consumer cost sharing. These benefit design features reflect insurers' efforts to meet the challenge of complying with the new ACA benefit requirements while keeping premiums affordable.
The Deductible Requirement
A plan-level deductible is the total amount an individual must pay before the plan begins to pay benefits. Most ESI plans do not subject common services, such as prescription drugs (Rx) and primary care physician (PCP) visits, to a deductible. In contrast, under Exchange plans in 2014:
● Rx: 63 percent of Silver plans subject some or all Rx to a deductible (see last week's BreakPoint for more information ).
● PCP: 32 percent of Silver plans subject PCP to a deductible.
If a deductible applies, individuals are responsible for 100 percent of the costs for services until they satisfy that deductible. The average individual combined deductible for Silver and Bronze Exchange plans (without cost sharing reductions) is $2,267 and $4,986, respectively,—significantly higher than in ESI, where the average was $1,135 in 2013.* As a result, many Exchange plan enrollees will likely incur substantial out-of-pocket costs before their plans begin to pay benefits, unlike individuals that currently have ESI. In Bronze plans, deductibles are typically close to the out-of-pocket spending cap, so many enrollees will not pay much cost sharing after meeting the deductible before the plan fully covers benefits.
*KFF/HRET averages reflect benefits for the average covered worker with employer coverage.
Higher Consumer Cost Sharing
Exchange plans tend to require higher cost sharing for common services relative to ESI. For Rx, average cost sharing for each Rx tier in Silver and Bronze Exchange plans exceed the averages for ESI in 2013. In addition, coinsurance (as opposed to a fixed copay) is more common in Exchange plan designs than in ESI.
*Cost-sharing patterns may differ if service is subject to a deductible
The same trend holds true for physician visits—Exchange plans, on average, require higher consumer cost sharing than ESI in 2013.
One example of how these trends intersect to distinguish Exchange plans from ESI is in specialty Rx tiers, where Exchange plans typically impose deductible requirements and higher cost sharing.
As enrollment and insurer participation in the government-approved Exchange plans continues to grow, we may see features of the new Exchange plans spill over into other commercial insurance markets. Health care consumers and stakeholders should examine these plan benefit designs carefully, as more individuals who currently have ESI coverage may find themselves shopping for coverage in the Exchanges or covered by ESI plans that increasingly look like Exchange plans.
The Past Week in Health Policy
● Representatives Greg Walden (R-OR) and Tom Price (R-GA) introduced the Securing Access Via Excellence (SAVE) Medicare Home Health Act, which would repeal payment cuts to Medicare home health providers.
Key Developments, News, and Research
Affordable Care Act
● A Kaiser Family Foundation survey found that 28,000 enrollment ‘assisters’ helped about 10.6 million Americans apply for health coverage during the ACA’s first open enrollment period.
● The bipartisan Center for Health and Economy released a report on ACA market enrollment, costs, and potential future effects.
● A collaborative report from the Robert Wood Johnson Foundation and athenahealth shows that providers have yet to see an increase in new patient volume under the ACA.
● Urban Institute’s Health Reform Monitoring Survey reveals that less than 50 percent of the nation’s population lives in states that haven’t expanded Medicaid, but more than 60 percent of the nation’s uninsured live in those states.
● A CBO report finds that federal spending on health care has slowed sharply, in part due to the implementation of the ACA, however these changes are not sufficient to resolve the nation’s long-term debt.
● The House took steps toward launching a lawsuit charging President Obama with failing to carry out his constitutional duty to enforce the health law.
● HHS announced that it will provide $100 million to give technical support to states trying to reform Medicaid delivery systems and reduce costs.
● According to a GAO report eight states spent at least $10,500 per Medicaid recipient in 2008, while most were in the $6,000-$8,999 range. The report also finds that Medicaid spending was at $267 billion in FY 2013, which is expected to double by FY 2024
Next Week in Health Policy
July 21 - 25, 2014
Alliance for Health Reform Briefing
"Network Adequacy: Balancing Cost, Access and Quality"
Monday July 21, 2014, 12:15 PM
902 Senate Hart Office Building
Behavioral Health IT Coalition Briefing
"Behavioral Health Information Technology: A tool to save money and improve care quality"
Tuesday July 22, 2014, 12:00 PM
188 Russell Senate Office Building
"Quality Improvement to Mental Health Care"
Wednesday July 23, 2014, 1:00 PM
National Academy of Sciences, Keck Center, 500 Fifth Street NW, Room 101, Washington, D.C.
The National Committee for Quality Assurance Briefing
"Transforming Primary Care: What Medicare Beneficiaries Want and Need from Patient-Centered Medical Homes to Improve Health and Lower Costs"
Friday July 25, 2014, 9:00 AM
One Constitution Avenue, NE, Washington, DC 20002
There are currently no D.C. area health care-related hearings scheduled.
Energy and Commerce Committee
"21st Century Cures Roundtable on Personalized Medicine"
Wednesday, July 23, 2014, 10:00 AM
2123 Rayburn House Office Building
Ways and Means Committee
"Future of Medicare Advantage Health Plans"
Thursday, July 24, 2014, 10:00 AM
1100 Longworth House Office Building