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Thursday, December 10, 2015

CMS Marketplace Rules Could Improve Health Insurance Choices in 2017

Lydia Mitts

Associate Director of Affordability Initiatives


A year from now, consumers shopping for insurance on HealthCare.gov in federally facilitated marketplaces may be happy with some new plan choices and better protections for 2017. That's because, earlier this month, the federal government released new proposed requirements for plans sold on the health insurance marketplaces. The new requirements include network adequacy standards in the federally facilitated marketplaces and an expanded role for navigators in all states.

This blog focuses on one notable feature of the proposal: The government is encouraging insurers in the federally facilitated marketplaces to sell “standardized plan” designs that cover more health care services before consumers meet their deductibles. 

This is great news for consumers. Families USA supports the proposal and wants the government and insurers to go further to ensure that these plans will be available to all consumers living in states with federally facilitated marketplaces. The proposed standardized plan designs can be found in its proposed rule for 2017, and the public can comment on the proposal through December 21.

What is a “standardized plan”?

Standardized plans are designs that

  • Are developed by the marketplace
  • Have defined cost-sharing (the share of health care costs a consumer is responsible for paying) for covered services

Some state-based marketplaces—California, Connecticut, the District of Columbia, Massachusetts, New York, Oregon, and Vermont—have designed standardized plans that all insurers in the state marketplace are required to sell.

The federal government is encouraging insurers to sell standardized plans through its marketplace

Under the federal proposal, insurers selling through HealthCare.gov (federally facilitated marketplaces) next year would be encouraged--but not required--to sell standardized plans that were designed by the federal government with defined cost-sharing for many services. Insurers will be encouraged to offer standardized plans at the bronze, silver, and gold metal levels. These plans have standardized cost-sharing for most types of care covered by plans.

At the silver level, for example, the standard plan has a $3,500 deductible (the deductible will be lower for people who qualify for extra help paying costs). But even before they meet the deductible, people will receive immediate help paying for a number of services. Throughout the year, whether or not they have satisfied a deductible, consumers with the standardized plan:

  • Will only be responsible for copayments when they need primary care visits, specialty care visits, urgent care, outpatient mental health visits, and most prescription drugs
  • Will only pay co-insurance when they need specialty drugs 

The deductible will apply only when people use other services, such as inpatient hospital care. For instance, say a hospital visit is the first service someone needs during the year. People in a standard plan will be responsible for the first $3,500 (the amount of the deductible) and then for 20 percent of the remaining charges. (Deductibles will be less for people eligible for extra help with cost-sharing.) 

As is the case now, when a person reaches the out-of-pocket maximum (that is, when a person has paid $7,150 in medical expenses in 2017), the plan will cover everything else for the year. For the detailed standards at each metal level and for the plans providing extra help with costs, see page 75543 of the proposed rule.

Standardized plans help consumers shop for health coverage and afford care

Standardized plans can help consumers in two ways. 

  1. Simplifying the task of comparing plans and shopping for coverage: Rather than sorting through a number of plans that each have different cost-sharing, consumers might go to HealthCare.gov and ask for a comparison of each insurance company’s standardized plan. Then, they can compare plans based on whether the providers they want are in-network, which insurer has the best premium price, and which insurer gives them high-quality service. 
     
  2. Addressing consumers’ concerns about affordability of health care: As proposed, these standardized plans address a major consumer problem--frustration with high deductibles. Some do not enroll in health insurance at all because they do not want to pay premiums without getting more services covered immediately. Survey research from the Commonwealth Fund, Families USA, and the Urban Institute shows that consumers with high-deductible plans often forego services due to the cost. The new, standardized plan designs will help ensure that consumers can immediately afford much-needed care before they reach their deductibles.

Families USA wants the federal government to require health insurers to provide standardized plans

The federal government proposes to make it easy for consumers to see the standard plans on HealthCare.gov. This could give a marketing advantage to health insurers that offer standardized plans. 

We think this is a good step, but Families USA wants the federal government to do even more: All insurers that sell plans on the federal marketplace should be required to offer at least one standardized plan in each metal tier. 

The proposed standards could do more to lower the share of health costs that consumers in the federal marketplace pay

Families USA applauds the proposed rules for taking a first step toward standardization and for making some care more affordable for consumers. We will also be looking at the details of how much consumers in the standard plans will pay in cost-sharing for each service type. This chart will help us compare the federal proposal with the standardized plans that are now required in several state-based marketplaces. 

For instance, looking at the list of services, we see that people will still need to meet their deductible before getting laboratory services. This is a common type of service people may need when getting outpatient care.  We want to ensure that the cost of tests does not prevent people from getting recommended blood tests as follow up to a doctor visit.

While standardization will greatly help consumers and is cause for praise, we also recognize that more needs to be done over time to improve the generosity of plans and of cost-sharing assistance. Some of that can only be done by Congress.

We encourage consumer advocates and enrollment assisters to review the standards and comment on any changes they feel are needed. The public is welcome to comment on the proposed rules until 5 p.m. on December 21.

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