September 15 - 19, 2014
New Data Show Big Differences in Pharmacy Coverage under ACA Exchange Plans and Traditional Employer-Based Coverage
Recently released survey data on 2014 employer health plans by the Kaiser Family Foundation (KFF) and PricewaterhouseCoopers (PwC) provide a first look at same-year comparisons between benefit designs offered in the public Affordable Care Act (ACA) health insurance exchanges (Exchanges), versus the employer-sponsored insurance (ESI) market. The level of coverage offered in Exchanges differs from what is typically offered in the ESI market, and the difference is particularly marked in the area of prescription drug coverage.
Prescription Drug Deductibles
As most of our readers know, in May 2014, with the support of the Robert Wood Johnson Foundation, Breakaway released HIX Compare, a comprehensive dataset which contains benefit design information for all Silver plans in the ACA Exchanges for all 50 states plus the District of Columbia. In connection with the release of HIX Compare, we published an issue brief examining premiums, cost sharing, and benefit designs of Silver plans in the Exchanges. Many Exchange plans subject common health care services, such as prescription drugs, to a plan deductible. Applying the deductible to such services is a benefit design requirement that is not as common in ESI plans. A plan deductible is the total amount an individual must pay before the plan begins to pay benefits. If a deductible applies, individuals are responsible for 100 percent of the costs for services until they satisfy that deductible. This benefit design feature (among many) reflects insurers' efforts to meet the challenge of complying with new ACA requirements while keeping premiums affordable.
The share of Silver Exchange plans (the metal level most enrollees selected in 2014) that subject prescription drugs to a deductible is substantially higher than the share of ESI plans reported by both surveys.
Comparison of Deductible Requirements for Rx by Insurance Plan Market, 2014
Insurance Plan Market
Share Subjecting Rx to Deductible
Share Exempting Rx from Deductible
2014 Silver Exchange
Breakaway HIX Compare
The average individual combined deductible—a plan-level deductible that applies to both pharmacy and medical services—is significantly higher for Silver Exchange plans than for ESI plans. As a result, Exchange plan enrollees may incur substantial out-of-pocket costs before their plans begin to pay prescription drug benefits, unlike most individuals covered under ESI plans.
Average Individual Combined Plan Deductible, 2014
It is unclear whether the trend toward deductible requirements for prescription drugs in Exchange plan benefit designs has migrated to health plans in the employer market. The KFF and PwC surveys differ in their findings on how ESI plans have shifted in this regard from 2013 to 2014.
- KFF: No change and/or slight increase in employer plans exempting prescription drugs from a deductible in 2014:
- HMO: 95 percent (no change from 2013)
- PPO: 93 percent (+2 percent from 2013)
- POS: 89 percent (+2 percent from 2013)
- PwC: Overall decrease in employer plans exempting prescription drugs from a deductible in 2014:
- 66 percent (-8 percent from 2013)
With approximately 8 million enrollees in 2014, the ACA Exchanges currently represent a relatively small portion of the covered population compared to the roughly 149 million individuals covered in the ESI market. However, as some major commercial insurers look to expand their participation in the Exchanges in 2015, and with enrollment projected by the Congressional Budget Office (CBO) to increase to approximately 24 million individuals by 2016, the role of the Exchanges in the insurance system is likely to grow significantly. If the CBO projections are accurate, benefit design features of the new Exchange plans—which have the government's seal of approval as having met ACA requirements—may spill over into benefit designs in ESI plans (including those offered through new private exchange markets). Health care consumers and stakeholders should examine these new 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.
It is already clear that HIX Compare has become a valuable resource to researchers, consumers and other health care stakeholders seeking to better understand the nature of the coverage available under the ACA Exchanges. For the 2015 ACA plan year, Breakaway intends to compile and analyze the same data that was collected in 2014, as it will enable examination of emerging and historical trends in Exchange health coverage through longitudinal data. We also hope to expand HIX Compare to include additional data based on feedback that Breakaway has received from various health care stakeholders following the release of HIX Compare.
Breakaway will release a series of issue briefs that take in-depth looks at the benefit design and cost sharing features of the 2015 ACA Exchange plans.
The Past Week in Health Policy
Federal Rules and Regulations
● The Food and Drug Administration is proposing to reclassify external pacemaker pulse generator (EPPG) from class III into class II. They are also proposing to amend the device identification and reclassify the pacing system analyzers into class II.
● The Food and Drug Administration announced the issuance of an Emergency Use Authorization for an in vitro diagnostic device to detect the Ebola virus.
● The Food and Drug Administration announced the availability of draft guidance for potential applicants titled "ANDA (abbreviated new drug applications) Submissions—Refuse to Receive for Lack of Proper Justification of Impurity Limits."
● Takao Takahashi, M.D., Ph.D., University of Texas Southwestern Medical Center and Makoto Suzuki, M.D., University of Texas Southwestern Medical Center were found to have engaged in research misconduct in research supported by National Cancer Institute and National Institutes of Health.
● The Sunscreen Innovation Act, introduced by Sen. Jack Reed (D-RI), which would establish a process for the review and approval of over-the-counter sunscreen passed the Senate.
● The Tribal General Welfare Exclusion Act of 2014, introduced by Rep. Devin Nunes (R-CA), which would amend the Internal Revenue Code to exclude the general Indian welfare benefit from gross income passed the house.
● Sen. Cory Booker (D-NJ) introduced a bill to provide for a study by the Institute of Medicine on health disparities and to direct the Secretary of Health and Human Services to develop guidelines on reducing health disparities.
● Rep. Louise McIntosh Slaughter (D-NY) introduced a bill to amend the Employee Retirement Income Security Act of 1974 and the National Labor Relations Act to protect the health benefits of retirees.
● The Designer Anabolic Steroid Control Act of 2014, introduced by Rep. Joe Pitts (R-PA), passed the house. The act would amend the Controlled Substances Act to place stronger regulations on anabolic steroids.
● The Emergency Medical Services for Children Reauthorization Act of 2014, introduced by Sen. Robert Casey (D-PA), passed the House.
● Rep. Renee Ellmers (R-NC) introduced a bill to continue allow the use of a 3-month quarter electronic health record (EHR) reporting period for providers to demonstrate meaningful use under the Medicare and Medicaid EHR incentive payment programs.
● Sen. Kirsten Gillibrand (R-NY) introduced the Family Asthma Act to amend the Public Health Service act to conduct research on asthma.
Key Developments, News, and Research
Affordable Care Act
● 115,000 people will lose their coverage under the Affordable Care Act because they failed to prove that they were citizens or legal immigrants of the U.S.
● Most Affordable Care Act consumers will be able to automatically renew their coverage, however consumers should go back to the marketplace and report changes in income or family size, which could affect the amount of their subsidies.
● CMS is aware of different schemes that states use to dodge Medicaid costs and recently the Office of the Inspector General has recommended that Congress and CMS implement policies that link Medicaid payments to the actual cost of service.
● The CDC released a health insurance survey on Tuesday, which found that the percentage of uninsured adults under 65 dipped to 18.4 percent from 20.4 percent last year.
● The GAO reports that weaknesses within Healthcare.gov continue to put users' sensitive personal information at risk.
● Maryland will attempt to stagger when people may access their new health insurance exchange website when it launces in November.
● CMS Administrator Marilyn Tavenner announced that 7.3 million people who picked health plans through the new insurance exchanges had paid premiums and retained their plans through mid-August of this year.
● Gilead strikes a deal with poorer countries to sell the hepatitis c drug Sovaldi at a much lower price than is paid in the U.S.
● On Tuesday, President Barack Obama labeled the Ebola outbreak a "potential threat to global security" and called on Congress to appropriate $88 million to assist the international response to the outbreak.
● Some cancer experts see a trend in over-diagnosis as a result of the increased capacity for early-detection.
● The American Medical Association is calling for a massive overhaul of electronic medical record systems to make usability and high-quality patient care a higher priority.
● New York's attorney general has filed a suit against Forest Laboratories claiming that the company is forcing patients with Alzheimer's disease to switch to a new version of a widely used drug.
● California children enrolled in Medi-Cal will now regain access to an expensive form of autism therapy. California is now the first state to comply with new federal guidelines issued in July.
● A panel appointed by the Institute of Medicine is calling for an overhaul of end-of-life care at every level.
● Los Angeles officials have announced a plan to divert mentally ill low-level offenders into mental health treatment and out of the criminal justice system.
● On Thursday, President Obama directed federal agencies to make stronger efforts to address the issue of antibiotic resistance.
Next Week in Health Policy
September 15 - 19, 2014
Brookings Merkin Initiative on Payment Reform and Clinical Leadership
"MEDTalk: Pediatric Asthma and Transforming Care for the Most Vulnerable"
Wednesday, September 24, 2014 10:30 a.m.
1775 Massachusetts Ave., NW
Defense Department; Office of the Secretary of Defense- Health Affairs/TRICARE Management Activity
"Uniform Formulary Beneficiary Advisory Panel"
Thursday, September 25, 2014 9:00 a.m.
Naval Heritage Center Theater, 701 Pennsylvania Avenue NW, Washington, D.C.
There are currently no D.C. area health care-related hearings scheduled.
There are currently no D.C. area health care-related hearings scheduled.