Some Post PPACA Deductibles Could Be High

By ALLISON BELL

Published 4/28/2011 

Consumers who buy the minimum required level of health coverage in an Affordable Care Act health care environment could be responsible for handling thousands of dollars of medical costs out of pocket.

Analaysts at the Henry J. Kaiser Family Foundation, Menlo Park, Calif., come to that conclusion in a report prepared using actuarial analyses from Actuarial Research Corp., Columbia, Md.; the Aon Hewitt of Aon Corp., Chicago (NYSE:AON); and Towers Watson & Company, New York (NYSE:TW).

The analysts looked at the deductibles and out-of-pocket spending limits consumers might see if they buy individual health coverage through the new health insurance exchanges that are supposed to come online in 2014.

Many Republicans and some Democrats are trying to block implementation of part or all of the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act of 2010 (PPACA).

If PPACA takes effect as written and works as supporters have hoped, consumers will be able to use subsidies to buy coverage through the exchanges, which are supposed to help match individual consumers and small employer groups with health insurers.

PPACA requires exchanges to offer coverage with 4 levels of actuarial value -- bronze, silver, gold, and platinum.

The bronze-level plans are supposed to cost the least and cover the smallest share o enrollees’ expenses, and the platinum-level plans are supposed to cost the most and offer the richest level of benefits.

When the Congressional Budget Office (CBO) was considering PPACA, it did not provide estimates of exchange plan deductibles or analyses of out-of-pocket cost totals, the Kaiser analysts say.

The analysts commissioned the 3 separate deductible and out-of-pocket cost forecasts to deal with variations in estimation techniques and assumptions.

The firms found, for example, that an individual who owned a bronze-level plan could end up facing a deductible of anywhere from $2,750 to $6,350 and a coinsurance rate for bills between the deductible amount and the out-of-pocket cost limit ranging from 0% to 30%.

The bronze-level plan would cover only 60% of expenses before the out-of-pocket cost limit kicked in.

“The variation – which exists in spite of agreement up front among the firms on a common set of major assumptions – is primarily due to differences in the assumed distribution of health expenses across the population, as well as how patients are believed to respond to varying levels of cost-sharing in their use of services,” the Kaiser analysts write.

The variation in the estimates suggests that exchange plans could vary widely, despite efforts of the PPACA drafters to promote standardization of coverage terms, the analysts say.