Jon R. Gabel, Ryan Lore, Roland D. McDevitt, Jeremy D. Pickreign, Heidi Whitmore, Michael Slover, M.S., and Ethan Levy-Forsythe
More than half of Americans who have health coverage through the individual insurance market are in plans that would not meet the standards for "essential benefits" set by the Affordable Care Act. Most people enrolled in employer group plans, however, have more comprehensive coverage with less cost-sharing.
Although Under the Affordable Care Act, beginning in 2014 individuals and small employers will be able to enroll in health coverage through state-based insurance exchanges, which will act as marketplaces where people can comparison-shop for health plans. All plans sold in the exchanges must offer a set of essential health benefits, which includes ambulatory and emergency care, maternity care, and other comprehensive health care services. In addition, the law sets up four tiers of cost-sharing based on actuarial value—a measure of the financial protection afforded by a plan, expressed as the estimated percentage of medical bills that it will pay. For instance, if a plan has an actuarial value of 75 percent, the insurer pays three-fourths of the bills and the insured person pay one-fourth out-of-pocket in deductibles, copayments, or other cost-sharing, on average, for a standardized population.
Under the Affordable Care Act, the exchanges will sell plans with the following actuarial values: platinum (90% or greater), gold (80%–89%), silver (70%–79%), and bronze (60%–69%). This Commonwealth Fund–supported paper, published in Health Affairs, uses data supplied by health plans to determine the financial protection they provided in 2010 in the individual and small- and large-group markets, and then compares that protection against the new 2014 standards.
The majority of Americans with individual insurance coverage today are enrolled in plans with actuarial values too low to qualify for the new insurance exchanges, say the authors. Under the Affordable Care Act, all insurance policies sold through the exchanges and the individual and small-group markets in 2014 will have to offer consumers plans with minimum financial protections and benefits. "Together with a ban on medical underwriting, the individual market of the future will sharply contrast with the market of past decades," they conclude.
The authors used data from the Kaiser Family Foundation/Health Research and Educational Trust 2010 Employer Health Benefit Survey, data from plans in the individual market in 2010 in five states (California, Florida, Michigan, Pennsylvania, and Utah), and the Thomson–Reuters Marketscan 2008 medical claims database to analyze individual and employer-based group plans on the market in 2010.
More than half of Americans who had individual-market health insurance coverage in 2010 were enrolled in plans that would not meet the Affordable Care Act’s minimum benefit standards for the new insurance exchanges.