Thursday, May 14, 2015
Non-Group Health Insurance: Many Insured Americans with High
Out-of-Pocket Costs Forgo Needed Health Care
Our study examined adults who bought private health insurance in the
non-group market in 2014
* Just over one-quarter (25.2 percent) of adults who were insured for a
year went without needed medical care because they could not afford it
* Adults with lower to middle incomes were the most likely to forgo
needed medical care
* Adults with high deductibles were more likely to forgo needed medical
* In 2014, half (50.6 percent) of adults had high deductibles of $1,500
or more, and 30 percent had exceedingly high deductibles of $3,000 or more
Why are people still struggling with out-of-pocket costs?
1. Premium tax credits are tied to silver plans, which often have
cost-sharing that is too high for many consumers to be able to afford
2. Only a portion of the lower-income consumers who are eligible for
subsidies to reduce cost- sharing in silver plans receive substantial
help to also reduce their deductibles
3. Insurers are choosing to design silver plans with upfront
cost-sharing that is too high for lower- and middle-income consumers to
* Health insurers should offer more plans at the silver level that have
low or no cost-sharing for primary care, other outpatient services, and
* Policymakers at the state and federal levels should require health
insurers to sell silver plans with lower cost-sharing for primary care,
other outpatient services, and prescription drugs.
* At the federal level, Congress should: Provide cost-sharing reduction
subsidies to middle-income consumers (above 250% FPL) and increase the
generosity of this help.
* At the state level, lawmakers can also strengthen financial assistance.
Designing Silver Health Plans with Affordable Out-of-Pocket Costs for
Lower- and Moderate-Income Consumers
Silver plans have an actuarial value of 70 percent, meaning that they
are required to cover 70 percent of people's health care costs (on
Insurers have some flexibility in how they design plans to meet the
actuarial value requirements for silver plans. However, analyses of
current marketplace plans suggests that the majority of silver plans
have high deductibles.
When we say that silver plans must meet an actuarial value of 70
percent, we mean that a silver plan's cost-sharing must be designed so
that the plan pays for, on average, 70 percent of people's medical
expenses in a year. Consumers are expected to pay 30 percent of the cost
of care out of pocket (on average) through deductibles, copayments, and
Because silver plans must stay within the bounds of a 70 percent
actuarial value, they can never completely protect consumers from having
to pay higher out-of-pocket costs if they need expensive care.
Insurers must make trade-offs when deciding how to distribute the
cost-sharing in their silver plans to meet the required 70 percent
actuarial value. Silver plans that set higher deductibles are able to
charge relatively lower copayments for care received after a consumer
meets the deductible. On the other hand, silver plans that set low
deductibles, or that exempt coverage for certain services from the
deductible and instead charge copayments for those exempted services,
may have to charge relatively higher copayments or co- insurance for
other health care services.
Actuarial value considers only the costs of covered services that are
delivered by in-network health care providers. A plan's actuarial value
does not consider out-of-pocket costs that consumers must pay if they
need services that are not included in the plan's covered benefits or if
they receive care out of network.
Trade-Offs in Plan Design
The featured plan designs show that, because silver plans must meet
specific actuarial value requirements, the plans are limited in how low
they can keep cost- sharing overall. This is evident in the trade-offs
that these plan designs make: Since the plans keep cost-sharing for some
services more affordable, the plans must charge relatively higher
cost-sharing for other services.
Many of the plan designs with affordable cost-sharing for routine and
minor care charge higher cost-sharing for more expensive services, such
as inpatient and emergency care, outpatient surgeries, imaging, and
When silver plans have relatively affordable cost-sharing, consumers
with greater health care needs will likely still face high out-
of-pocket costs. For example, consumers who need expensive medications
or more complex care (such as surgery) will still have to pay high
out-of-pocket costs in many of these plans until they reach their
out-of- pocket spending limit.
Potentially Problematic Cost-Sharing Designs
* Three-Tiered Provider Networks
* Four-Tiered Drug Formularies
* Potentially Discriminatory Cost-Sharing for Select Treatments
The findings of our analysis prove that it is possible to design silver
plans that don't have high deductibles and that do have more affordable
copayments, at least for routine care and care for minor health
problems. Putting policies in place that require or encourage insurers
to offer these types of plans in the marketplace will help make sure
that lower- and moderate-income consumers can afford routine care.
By design, silver plans cannot necessarily shield consumers who need
expensive care from high out- of-pocket costs. That is why, over the
longer term, efforts to get marketplaces to offer more diverse silver
plans must be part of a larger initiative to identify and implement
state and federal solutions that will prevent lower- and moderate-income
consumers from being underinsured. Examples of such solutions include
policies to ensure that this population receiving greater financial
assistance to help them afford more comprehensive coverage, or policies
to expand cost-sharing assistance to more moderate-income consumers.
Comment by Don McCanne
Today Families USA released their report that confirms, once again, that
many adults insured with high-deductible health plans are likely to
forgo needed medical care, especially if they have lower to middle
incomes. So what are their recommendations?
In order to remove financial barriers to care, they recommend that more
plans offered at the silver level - the benchmark plans - have lower or
no cost-sharing for primary care, other outpatient services, and
prescription drugs. This has the advantage of increasing access to
primary care services, which most agree would significantly improve the
performance of our health care system.
The problem is that the barely affordable silver plans must have an
actuarial value of 70 percent (the patient pays 30 percent of health
care costs, up to a given maximum). Higher deductibles are used in most
of these plans in order to meet this actuarial value. But in a report
that Families USA released last year, they explain that if the
deductibles and copayments were reduced to more affordable levels, then
the required 30 percent of out-of-pocket costs must be shifted to more
So this scheme would help the majority who simply need primary care
services, but it would make care less affordable, even catastrophic, for
those who have greater health care needs. As long as our benchmark plans
are set at an actuarial value of 70 percent, this trade-off cannot be
Families USA also suggests the obvious. We should increase federal
and/or state subsidies for both the purchase of plans and for cost
sharing for low and middle income individuals and families.
But if you are going to make care affordable for everyone, why continue
with this highly inefficient, administratively complex system that
wastes so many of our health care dollars. Surely by now Families USA
should acknowledge that our dysfunctional system should be replaced by a
much more efficient single payer national health program - an improved
Medicare for all. We've experimented extensively with their preferred
model, and it didn't work.
at 3:38 PM