September 25, 2013 -- A new Avalere analysis of data finds that exchange plans under the Affordable Care Act (ACA) will include high out-of-pocket costs for enrollees before they reach their out-of-pocket maximum. These costs include high deductibles and cost-sharing for medical services and prescription drugs. The findings are based on a study of exchange benefit designs among 22 issuers in 6 states (Colorado, Connecticut, Indiana, Rhode Island, Vermont and Washington) where such information is included in public rate filings[1].
For an individual enrolled in a Silver plan, the average annual deductible before any plan coverage begins is more than twice the average deductible in employer-sponsored coverage. Most exchange plans also rely on coinsurance for non-preferred brand drugs and higher-cost specialty drugs, with average patient contributions around 40 percent of the drug cost. However, there is a ceiling to exchange enrollees’ annual out-of-pocket costs, which is $6,350 for an individual.
Consumers buying individual exchange plans can expect to pay higher out-of-pocket costs in the following areas:
Deductibles
For non-subsidized Silver plans analyzed, the average deductible is $2,550 for individual coverage, ranging from a low of $1,500 to a high of $5,000. By comparison, in 2013, 78 percent of single enrollees in employer-sponsored coverage had a deductible with an average value of $1,135 per year[2]—less than half the average Silver deductible in exchange plans. Bronze exchange plans had even higher deductibles with an overall average of $5,150, ranging from $2,000 to $6,350 among plans analyzed.
“Consumers will need to balance lower monthly premiums against the potential for unpredictable, expensive out-of-pocket costs in plans with higher deductibles,” said Caroline Pearson, vice president of Avalere Health. “Furthermore, there is a risk that patients could forego needed care when faced with high up-front deductibles.”
Drug Coinsurance
Approximately 90 percent of Bronze plans will rely on coinsurance, which is calculated based as a percentage of drug costs rather than fixed dollar co-payments, for higher pharmacy tiers.[3] Based on the rate filings, average coinsurance rates for drugs in Tier 3 and Tier 4 are approximately 40 percent. Interestingly for Silver plans—just like for Bronze plans— average coinsurance is 40 percent for Tier 3 and Tier 4. The biggest difference is that several Silver exchange plans utilize copays (as opposed to coinsurance) for Tiers 3 and 4 in which the averages were $70 for Tier 3 and $270 for Tier 4. By comparison to today’s employer-sponsored market, only 29 percent of those with employer coverage have coinsurance on their highest pharmacy tier.[4]
“It will be very important for consumers to be smart shoppers. Plans that use benefit designs with flat dollar copays rather than coinsurance could significantly reduce out-of-pocket costs for patients who regularly take prescription drugs,” said Matt Eyles, executive vice president of Avalere Health. “Patients need to understand how different health plans will cover the services and medicines that they use most often to determine which plan is best for them or their families.”
Primary Care Visits
Further analysis of exchange benefit designs found that the average cost for a primary care provider (PCP) visit in Silver Plans is a $30 copay, though this copay ranges from $5 to $50 throughout the plans. Several Silver plans are charging coinsurance rates for PCP visits ranging from 10 percent to 20 percent.
Silver
Bronze
Lowest
Highest
Average
Lowest
Highest
Average
Deductible
$1,500
$5,000
$2,550
$2,000
$6,350
$5,150
Pharmacy Coinsurance for Tier 3 & 4
10%
50%
40%
20%
60%
40%
Primary Care Visit
$5
$50
$30
$15
$60
$39
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