Cheaper health plans off the exchanges urged
Some plans outside exchanges don’t incorporate a surcharge
For those who make too much money to qualify for health insurance subsidies on the individual market, there may be no Goldilocks moment when they shop for a plan. No choice is just right.
A policy with an affordable premium may come with a deductible that’s too high. If the copayments for physician visits are reasonable, the plan may not include their preferred doctors.
These consumers need better options, and in early August federal officials offered a strategy to help bring down costs for them.
The guidance is from the Centers for Medicare & Medicaid Services, which oversees the insurance marketplaces set up by the Affordable Care Act. CMS is encouraging states to allow the sale of plans outside of those exchanges that don’t incorporate a surcharge insurers started tacking on last year.
Many insurers added the premium surcharges last fall to plans sold on the individual market. It was a response to the Trump administration’s announcement that it would no longer pay the companies for the “cost-sharing reduction” subsidies required under the health law. The subsidies help cover deductibles and other out-of-pocket costs for lower-income consumers who buy marketplace plans.
Insurers typically added the cost to silver-level plans because those are the type of plans that consumers have to buy in order to receive the cost-sharing subsidies. “Silver loading,” as it’s called, added an estimated 10 percent to the cost
of those plans, according to the Congressional Budget Office.
People who qualified for federal premium subsidies — those with incomes up to 400 percent of the federal poverty level (about $48,000 for one person or $100,000 for a family of four) — were shielded from the surcharge because their subsidies increased to cover the cost.
But people with higher incomes faced higher premiums. The new guidance is geared to help them.
“It encourages states to encourage silver loading only on the exchange,” said Aviva Aron-Dine, vice president for health policy at the Center on Budget and Policy Priorities.
But some analysts say they’re unsure if the new federal policy will make a difference since states have already implemented similar strategies.
Many states moved last fall to limit silver loading to plans sold on the exchanges, while allowing or, in the case of California, requiring, very similar plans to be sold off the exchanges without the extra premium charge.
Yet CMS’ endorsement of the strategy removes doubts states may have had, said David Anderson, a research associate at Duke University’s Margolis Center for Health Policy who has tracked the issue.
Eighty-three percent of people who bought a plan during the open-enrollment period for 2018 qualified for premium tax credits. The average monthly premium per subsidized enrollee was $639; after accounting for premium tax credits, however, enrollees owed just $89 on average. That amount was 16 percent lower than the monthly premium the year before.
For people who don’t qualify for premium tax credits, the picture is very different. The average monthly premium for 2018 was $522. That total was 28 percent higher than the previous year’s total of $407, according to an analysis by the Center on Budget and Policy Priorities of CMS enrollment data.
In general, federal rules require that insurers charge the same rates for identical qualified health plans that are sold on and off the exchanges. The CMS guidance suggests that the unloaded plans could be tweaked slightly in terms of cost sharing or other variables so that they are not identical to those on the marketplaces.