What Obamacare Doesn’t Cover

Dec 11 2013 @ 1:27pm

Steinglass unsurprised that many Obamacare plans have high out-of-pocket costs:

Obamacare’s design all but guaranteed limited choice and high out-of-pocket expenses. The insurance sold on the exchanges must comply with many rules: plans must cover a long list of “essential health benefits”, must not charge more to sick patients and must have a set “actuarial value”. (An actuarial value of 60% means that, for an average person, the health plan will cover 60% of health costs. The patient will have to cover the rest from his own pocket.) Obamacare plans are classified as bronze (60% actuarial value), silver (70%) or platinum (90%). These standards make it easier to compare one plan with another. But they also give insurers relatively little room to differentiate their products. To compete on sticker price, they have to cut costs. They typically do this by restricting choice and bumping up deductibles and co-payments.

Cohn worries about these costs:

The trend towards higher out-of-pocket expenses is nothing new. As the Kaiser Family Foundation’s Larry Levitt pointed on Monday, via his Twitter account, it’s been happening even in employer plans, although the amounts are typically lower. And people always have the option of getting policies with lower out-of-pocket expenses. Those policies, which typically fall into the “gold” and “platinum” categories, will cost more in premiums. That’s the fundamental trade-off here: You can pay more upfront, in premiums, or risk paying more later, in out-of-pocket expenses. Of course, that’s difficult for many people at low incomes, even with subsidies, which is why lawmakers should bolster the law’s subsidies and tighten those out-of-pocket limits even more.

What are the chances of that happening anytime soon? Pretty slim. Partly that’s because bolstering the law’s protections would require money, which would require either raising taxes or pushing harder on the health care industry—both defensible, but both difficult politically. The other is that most conservatives don’t actually have a problem with insurance that leaves people exposed to such high medical bills. In fact, this has been one of the most aggravating parts of the Obamacare debate: Conservatives frequently criticize Obamacare because, they say, it forces people to buy more insurance than they want. The minimum requirements, they say, should be lower. But, as the new Avalere analysis should remind everybody, the standards are already weak. How much more threadbare could the minimalist plans be?