Proposed Exchange Benefit Designs Could Reduce Out-of-Pocket Costs

New proposed plan designs would give first-dollar coverage for all prescription drugs in the silver and gold plans.

Coverage for certain services and medications could increase, while out-of-pocket costs could decrease from the federal government’s proposed 2017 benefit designs, according to analysis by Avalere Health.

The new proposed plan designs would be optional and give first-dollar coverage for physician visits, as well as all prescription drugs in the silver and gold plans.

First-dollar coverage is when patients have to pay cost sharing immediately (copayment and coinsurance), as opposed to paying the full cost of health care once they meet their deductible.

Although first-dollar coverage can reduce the overall cost sharing for consumers, it can lead to higher utilization and, in turn, increased premiums.

“Standardized benefit designs might increase access to care for certain services and drugs by providing first-dollar coverage,” said Senior Vice President of Avalere Caroline Pearson. “In particular, first-dollar coverage may be appealing to some healthier consumers who are paying a monthly premium but never meet their deductible and therefore are not seeing the value of their insurance.”

These standardized benefits have been opposed by health plans because it can cause the reduction of geographic variance, put a limit on consumer choice, and restrict plans from evolving benefit designs over a period of time, according to Avalere.

“Introducing standardized benefit designs into the federal exchange builds on the existing approach of many states,” said Vice President of Avalere, Elizabeth Carpenter. “While standard benefits limit flexibility for plans and could increase costs, the structure may appeal to some consumers by making it easier to compare plans and choose insurance.”

In order to perform the analysis, Avalere took the average cost sharing for benefit designs by state in order to compare HealthCare.gov averages against standardized benefit designs.

Currently, 8 state based exchanges — CA, CT, DC, DE, MA, NY, OR, and VT – use standardized plan designs for most products sold in 2016.

In the metal tier health care plans, the silver level exchange plan has the highest enrollment. It features high deductibles that averaged $2899 in 2016. Consumers have to spend nearly $3000, along with their premiums, before the plan begins to share in the cost of care.

In 2016, 34% of plans covered primary care visits without consumers having to pay a deductible. Specialist visits and prescription drugs will normally apply to the deductible as well.

Sixty-four percent of silver plans cover specialist visits once they have met their deductible, while 74% of plans cover specialty drugs after the deductible was met.