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Deductibles in Individual Market in 2014 Could Be 'Substantial,' Study Says

By Jane Norman, CQ HealthBeat Associate Editor

April 14, 2011 -- The deductibles for the minimum health insurance coverage that some people will be required to buy under the health care law could be "substantial," says an analysis released by the Kaiser Family Foundation.

While the study notes that deductibles are also high now in the individual market, the forecast of a fairly steep cost for coverage for the newly insured may create questions about how easy it will be to get some Americans to abide by the law's individual mandate. People earning below 400 percent of the federal poverty level will be eligible for subsidies, though the highest earners in that group could still face some pretty substantial cost-sharing, the study predicts.

The report warns that there also could be big differences in the financial details of the plans that meet the law's requirements. That could make it more difficult for consumers to compare plans. And the study says one question could be whether people will perceive themselves as "better off under reform than the status quo."

Deductibles are estimated in the study—which is pegged to 2014, the first year of the individual mandate—to be at least $2,750 for the least comprehensive single plan in the individual and small group market. That's along with a 30 percent coinsurance requirement once the deductible is met. Family deductibles would be higher—at least $5,500.

But the projections also ranged up to $6,350 for a deductible with no coinsurance. Researchers who did the study sought estimates from three actuarial and benefits consulting firms.

The estimates are for the so-called "bronze plan," which the study notes is particularly central to the structure of the law because it's the minimum coverage that people who get insurance through the individual and small group markets could buy in order to meet the law's requirements.

All three estimates "suggest that the bronze plan would require that patients meet a substantial up front deductible," the Kaiser study says. They would also be high enough that the plans could be paired with a Health Savings Account, which is permitted under the law (PL 111-148, PL 111-152).

For people with modest incomes that are not small enough to meet qualifications for the biggest subsidies, "cost sharing could be substantial," the study says. For example, for families with incomes between 200 and 250 percent of poverty, which is $44,700 to $55,875 for a family of four, the estimated per-person deductible ranges from $1,750 to $3,200, the study said.

Kaiser asked three firms to provide estimates using common assumptions: Actuarial Research Corporation, Aon Hewitt and Towers Watson. They examined the costs for consumers on the four tiers of coverage created in the law: bronze, which is 60 percent actuarial value; silver, 70 percent; gold, 80 percent; and platinum, 90 percent. Actuarial values measure the generosity of a plan for a standard population. Not included in the analysis was a catastrophic plan limited to people under 30 and certain other individuals for whom coverage would be a hardship.

Premiums were estimated to rise 7 percent a year between now and 2014 by the firms. And the estimates assumed coverage of a broad range of services typical of employer group plans as well as no cost sharing for preventive care. The Department of Health and Human Services has not yet determined what benefits must be included in the plans.

Most people will be required to buy insurance that's at least at the bronze level or pay a penalty. Cost-sharing in plans with the same actuarial value can vary, with one plan having a higher deductible than another combined with a lower coinsurance requirement, the study noted. Or a plan may cover some physician visits before an enrollee meets the deductible, offsetting that with a higher deductible or coinsurance percentage, the study said.

The study also pointed out that while the deductibles seem high, deductibles today in the individual market are steep as well. A 2010 Kaiser study found that the average deductible in the individual market for single coverage in 2009 was $2,498, and those deductibles are expected to increase.


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