Cheaper premiums in ‘copper’ health plans may mean higher costs if you get sick

Michelle Andrews /

Special To The Washington Post

Published Jul 3, 2014 at 12:01AM

If you offer it, will they come? Insurers and some U.S. senators have proposed offering cheaper, skimpier “copper” plans on the health insurance marketplaces to encourage uninsured stragglers to buy. But consumer advocates and some policy experts say that focusing on reducing costs on the front end exposes consumers to unacceptably high out-of-pocket costs if they get sick.

Coverage on the health insurance marketplaces now is divided into five types of plans that require different levels of cost-sharing by consumers. All the plans cover 10 so-called essential health benefits, including hospitalization, drugs and doctor visits. Preventive care is covered without any cost-sharing.

Platinum plans pay 90 percent of medical expenses, on average; gold plans, 80 percent; silver plans, 70 percent; and bronze plans, 60 percent. Premium tax credits are available for people with incomes up to 400 percent of the federal poverty level ($46,680 for an individual in the 2015 plans).

The proposals put forward by America’s Health Insurance Plans, a trade organization and a group of senators led by Mark Begich, D-Alaska, would add a new level of coverage on the marketplaces. The copper plan proposed by Begich and AHIP’s “lower premium catastrophic plan” would pay 50 percent of covered expenses, on average, and be eligible for premium tax credits.

Because the proposed changes would require congressional action and because plans for the 2015 open season are already being set up, the earliest any of these new plans could be implemented would be 2016, Karen Ignagni, president and chief executive of AHIP says.

Some policy experts are skeptical that people will be enticed by another type of high-deductible/low-premium plan. They note that bronze plans weren’t particularly popular sellers last year.

“I don’t think people will necessarily be satisfied with a policy with a cheap premium that doesn’t really pay for much,” says Larry Levitt, senior vice president at the Kaiser Family Foundation. A plan that meets the health law’s coverage requirements but reduces the proportion of medical expenses insurers pay to 50 percent would require a deductible of about $9,000 per person, he says.

Looking ahead, an analysis by Avalere Health of 2015 premium rate proposals in nine states found that insurers are proposing 8 percent rate hikes for silver plans.

“Premiums are coming through somewhat lower than expected,” says Caroline Pearson, a vice president at Avalere Health, a research and consulting firm. “Do we really think there’s a premium affordability problem such that we should shift the benefit design toward that?”

— Michelle Andrews, Special to The Washington Post