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.”