State-based and federally facilitated exchanges are required by the Patient Protection and Affordable Care Act
to provide advanced premium tax credits and cost-sharing reductions to low-income plan enrollees.
However, a study out this week from consultancy Avalere Health
found that insurers' latitude in meeting these requirements may not make these cost-sharing plans any more affordable.
Cost-sharing reduction plans are available to people earning between 100% and 250% of the federal poverty level, which is $11,670—$29,175 for an individual or $23,850—$59,625 for a family of four. A 2012 survey showed that this demographic includes nearly 16 million uninsured individuals
The cost-sharing setup allows these individuals and families to buy plans that pay for a higher percentage of healthcare costs than a normal plan would cover. For example, a traditional silver plan—the most popular during the first enrollment period ended March 31—pays 70% of covered costs. But cost-sharing silver plans pay more at either 73%, 87% or 94% of covered costs.
Yet even though the cost-sharing versions must lower maximum out-of-pocket caps—and they have, to about 20% lower than what the ACA requires—there is flexibility in how insurers reduce costs across a range of benefits.
“Many people assume that the lowest-income exchange enrollees will have reduced cost-sharing across all services, but the reality is quite different,” Caroline Pearson, vice president at Avalere, said in a statement. “While all plans must have reduced out-of-pocket limits for individuals earning less than 250% of poverty, how consumers will reach those limits differ significantly.”
In examining standard and cost-sharing silver plans across 34 states, Avalere discovered that, while there seems to be a trend in reducing medical deductibles, very high coinsurance still exists for purchasing brand-name drugs, for example.
Enrollees with the lowest income (100% to 150% of the federal poverty line) who qualify for the highest level of financial assistance (a 94% cost-sharing reduction plan) could end up spending as much out of pocket for a subsidized silver plan as they would for a standard silver plan.
For example, Avalere reports, among 94% cost-sharing reduction plans, the average deductible is $217, the average coinsurance for a brand-name specialty drug is 23%, and the average maximum out-of-pocket limit is $1,107. Someone making $970 a month—100% of the federal poverty level—might not be able to afford the full out-of-pocket cost for a single drug or service, the authors warn. And even if they do, they will have spent 9.5% of their yearly earnings on out-of-pocket medical expenses.
Another recent report from Breakaway Health, prepared for the trade group Pharmaceutical Research and Manufacturers of America, showed that specialty drug copays average $80 for employer-sponsored plans, but are nearly twice that at $159 for silver plans. And that isn't necessarily reduced in the case of this cost-sharing mechanism.
In other words, the authors of the Avalere analysis write, “consumers who qualify for financial assistance could pay the same cost-sharing for a prescription drug as higher income consumers who do not qualify for such assistance.” And for an individual with an average of $670 in liquid assets—the amount reported by a Kaiser Family Foundation study for a person in that 100% to 250% federal poverty level range—that could still mean difficulty in affording drugs or services, even under a cost-sharing plan.
“(It's) a concern for us from the patient standpoint, obviously, because you're disincentivizing patients, particularly patients with chronic diseases, to continue to manage their chronic disease in exchange for what was a political imperative, which was a low premium, as low as possible,” John Castellani, president and CEO of Pharmaceutical Research and Manufacturers of America, told Kaiser Health News this month
. “Yet their out-of-pocket expenses are potentially so high that we have to be concerned about whether or not people will be able to afford to continue to get their medicines.”
Meanwhile, the insurance industry has pointed fingers at the pharmaceutical industry for the drug affordability challenge.
In February, America's Health Insurance Plans released a brief exploring trends in the specialty drug market
, calling the “skyrocketing cost” of the $263 billion industry a “critical concern for policymakers and payers.”
New data analyzed by the Kaiser Family Foundation
suggests that the individual, or non-group, insurance market included as many as 15 million people with coverage in effect by March of this year. That represents a net increase of about 29%, or 3 million to 3.5 million new enrollees, between the end of 2013 and the end of March.
However, the estimate may be too low, the study's authors report, in part because of later filing deadlines for some insurers and the data's likely exclusion of enrollees who signed up after the middle of February. “With the surge in enrollment that occurred through the marketplaces at the end of open enrollment (with plan effective dates in April and May), the number of new enrollees in 2014 could conceivably double when these later enrollment data become available,” the authors wrote.
But another issue that will need more examination is whether this surge of new enrollees didn't just sign up for coverage, but if they also paid their premiums in order for coverage to officially take effect.
Despite falling sharply during the insurance open enrollment period that began last October, the uninsured rate for U.S. adults seems to have plateaued. The percentage of adults without insurance coverage in the U.S. declined from 17.1% in the last quarter of 2013 to a new low of 13.4% that held steady in April and May, according to a Gallup poll published Thursday
. The greatest drop in the uninsured rate came among blacks and Hispanics, although Hispanics still have the highest rate of uninsured adults among subgroups at 33.1%. And young adults, also a main target of outreach efforts, remained uninsured at high rates, with 23.9% of the 26-34 age group going without coverage. Follow Rachel Landen on Twitter: @MHrlanden