Creating a new coverage tier offering fewer benefits than the current metal tiers available through the Patient Protection and Affordable Care Act individual and small group exchanges would lower federal spending and slightly increase marketplace enrollment, according to an analysis by healthcare business advisory company Avalere Health.
The Council for Affordable Health Coverage — a coalition of patient groups, provider organizations, employers and payers — asked Avalere to evaluate the impact of a new tier of plans in the PPACA marketplaces. Currently, consumers purchasing coverage through the exchanges can select health plans from four tiers (bronze, silver, gold and platinum), each representing a different level of benefits and cost sharing. Bronze plans cover 60 percent of costs, silver plans cover 70 percent, gold plans cover 80 percent, and platinum plans cover 90 percent. Additionally, unless a plan meets the definition of catastrophic coverage, the PPACA requires all health insurance policies to cover a minimum of 60 percent of enrollees' costs. This restriction applies to both employers offering insurance and the individual health insurance market.
The new, theoretical copper plans would cover (or have an actuarial value of) 50 percent and change the minimum threshold for affordable coverage. Here are four key findings from Avalere's analysis of the economic impact of a lower metal tier.
1. If the copper plans were made available to consumers and small businesses starting in plan year 2016, the new tier would reduce the federal deficit by an estimated $300 million between fiscal years 2015 and 2024. That decrease would stem from a net $5.8 billion drop in the amount the federal government would pay out in premium subsidies.
2. At approximately $4,600 annually, the premium for the average copper plan would be nearly 18 percent lower than the premium for an average bronze plan in 2016, which could persuade more people to buy coverage through the marketplace, according to the analysis. Additionally, approximately 50 percent of existing individual marketplace enrollees in bronze plans would likely shift to the newer, lower-cost tier.
3. The average 2016 federal premium subsidy for people with incomes from 100 to 400 percent of the federal poverty level would also be about 1 percent lower than under current circumstances, if copper level plans were added to the exchanges and lowered the overall cost of coverage in the individual marketplace.
4. The Society of Actuaries has estimated about 3 percent of people with employer-sponsored insurance will lose their coverage under the PPACA. An estimated 84 percent of those who lose coverage from their employers will then turn to the individual marketplace. Some employers will likely drop coverage because of the increased expenses of covering at least 60 percent of workers' healthcare costs, according to the analysis. However, if the minimum threshold for affordable coverage is lowered to 50 percent, roughly 4 percent of the people who would otherwise lose their coverage and turn to the individual marketplaces would not lose their employer-sponsored insurance in 2016.