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What's Wrong With Health Insurance Policies That Cover Less?

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Insurance companies and a group of senators headed by Alaska Democrat Mark Begich think they have  a great idea for getting more young people to sign up for health insurance. They'd like the state insurance exchanges to offer a new kind of plan—a copper policy to join the platinum, gold, silver and bronze coverage shoppers can currently purchase.

Before you buy into the meme that more choice is a good thing, it's important to examine what exactly this newcomer would cover and who it might benefit. Insurers like the idea because it would make premiums lower and possibly more attractive to young buyers. Besides getting more sales on the books, the carriers would presumably get healthier lives to balance risk pools that now include lots of older, sicker people who bought exchange policies during the first open enrollment.

As for Begich, he's in a tough re-election race this year against a field of Republicans, one of which, Lt. Governor Treadwell, has said, "I believe we should come back to the idea of individual responsibility in healthcare." The policies currently sold in the exchanges already provide for lots of personal responsibility, and the copper policy would offer the chance for even more.

The two cheapest models, the silver and bronze, leave their owners with high out-of-pocket expenses before the policy pays benefits. About two-thirds of the people who've signed up on Healthcare.gov have bought the silver plans designed to cover 70 percent of a person's medical bills. Thousands have also taken bronze policies, which cover just 60 percent. Platinum policies cover 90 percent and gold 80 percent, affording much more protection, but they can be pricey. Silver plans come with government help to pay for some of the out-of-pocket costs. Bronze plans don't. And who knows if the copper variety would. Without it, though, policyholders may have trouble paying for their care.

The attraction of a health plan that makes people pay half of their medical bills rests on the assumption that premiums could be pushed lower even without the federal subsidy. A health insurance navigator I met in Denver in March at the end of open enrollment told me that a $149 monthly premium for a policy sold on the Colorado exchange was even too costly for many families. She said families view health insurance as an expendable budget item when money is tight.

So, will a cheapie copper policy entice these families to sign up? "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, a senior vice president at the Kaiser Family Foundation.

Levitt estimates that copper plans would require a deductible of about $9,000 per person. A two-person family that bought one of these plans would face an out-of-pocket cost of $18,000, subject, of course, to the maximum cap the Affordable Care Act sets. This year, out-of-pocket maximums are $6,350 for individual policies and $13,700 for family plans.

Families who have signed up for policies are already beginning to find out how those high-deductible policies now sold on the exchanges really work. Marilyn, the woman I wrote about last week, told me her husband and daughter had signed up for a high deductible bronze plan with a deductible that equaled the $6,350 out-of-pocket maximum. They got a low premium and gambled no one would get sick.

Unfortunately, her husband did. He was hospitalized for kidney stones and now the family owes some $6,000 in medical bills. This year, they want to buy a new plan with a smaller deductible and are willing to pay somewhat higher premiums to get one. If more families find themselves in the same pickle, it's not likely they'll rush to buy a copper policy.

Affordability means a lot more than just being able to pay the monthly premium, a point that's been confused in the sales job for Obamacare and by its opponents. It's the cost of the care you need that really counts. And that means understanding how the deductibles, coinsurance, co-pays, and breadth of the provider networks could affect you and your family.

Many of those who signed up for Obamacare in the weeks near the deadline, when testimonials were flying around beckoning consumers to sign up for cheap premiums, paid scant attention to what affordability really means. It's hard to believe a copper policy will make the task of sorting all this out any easier and could well offer those who buy one a false sense of security.

More Blog Posts by Trudy Lieberman

author bio

Trudy Lieberman, a journalist for more than 40 years, is an adjunct associate professor of public health at Hunter College in New York City. She had a long career at Consumer Reports specializing in insurance, health care, health care financing and long-term care. She is a longtime contributor to the Columbia Journalism Review and blogs for its website, CJR.org, about media coverage of health care, Social Security and retirement. As a William Ziff Fellow at the Center for Advancing Health, she contributes regularly to the Prepared Patient Blog. Follow her on twitter @Trudy_Lieberman.


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Health Insurance   Medicare/Medicaid   Trudy Lieberman   Health Care Cost   Pay for your Health Care   Inside Healthcare  


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