New Health Plans Allow People to Visit Doctors and Fill Prescriptions without Paying a Deductible with Little Impact on Premiums

Washington, D.C. – High deductibles are causing people with health insurance to forgo some care because they can’t afford the out-of-pocket expenses, and discourages others from getting insurance because they believe the coverage they will receive isn’t worth the price of the premium.

But there is a solution at hand. New standardized health insurance plans designed by the federal government for the Healthcare Marketplace (Exchanges) can help make basic outpatient care affordable to consumers with little or no impact on premiums, according to a report released today by Families USA.

“Consumers complain that high deductibles make access to health care so expensive they are often forced to go without it,” said Lydia Mitts, Senior Policy Analyst at Families USA and author of the report. “Our report shows it doesn’t have to be this way. Insurers can offer affordable plans that help consumers get many primary care and other outpatient services before they meet their deductible.”

Standardized plans are plan offerings designed by the governing body of a marketplace that insurers are encouraged or required to sell. The federal standardized silver plan has a patient-centered design that covers numerous outpatient services before the deductible, making it easier for consumers to access that care.

For this study, Families USA contracted with the independent actuarial consulting firm, Milliman Inc. to compare the federal standardized silver plans for the 2017 Exchanges to existing non-standardized silver plans in North Carolina, Pennsylvania, and Virginia, trended to reflect anticipated 2017 benefit levels. All three of the silver plans that were studied cover at least some of the office visits and drugs only after the deductible.

Milliman’s actuarial analysis showed that it is possible to design plans that cover basic outpatient care before the deductible and that have competitive premiums. The analysis showed that, after considering all benefit differences, the average premiums for the federal standardized silver plans would be within plus or minus 5 percent of the three non-standardized silver plans used in this study.

According to the report, the Pennsylvania plan that was used for comparison does not help cover the cost of any doctor visits or medications before the deductible.  The Virginia plan used for comparison did not cover any non-preventive medications until a drug deductible is paid, and the North Carolina comparison plan covered only preventive care, primary care visits and generic drugs, before the deductible was paid. In contrast, the federal standardized silver plans help pay for primary and specialty care and all prescription drugs before the deductible.

In the case of Pennsylvania, the premium for the federal standardized plan was somewhat lower. Compared to the North Carolina and Virginia plans, the federal standardized plan provided better access to office visits and prescription drugs with little impact on premiums.

The simulation used for this study holds utilization constant to examine direct changes in costs. This is discussed further in Milliman’s report.

A teleconference accompanied the release of the report on Wednesday, June 15, that included Sen. Sherrod Brown (D-OH); Peter Lee, executive director for the California Health Exchange; Dr. Mona Vishin Mangat, board chair of Doctors for America; Ron Pollack, executive director of Families USA; and Lydia Mitts, senior policy analyst at Families USA and author of the report as participants.

“Thanks to the Affordable Care Act, hundreds of thousands more Ohioans now have health care coverage, many preventive health screenings are now free and no one can be turned away from coverage because of a preexisting medical condition,” said Senator Sherrod Brown (D-OH). “But too many people – especially people on high deductible plans – are still struggling to afford the care they need. But as today’s report shows, standardized health plans can help bring down costs and give Americans more choice in selecting high-quality, affordable health insurance. Cost should never be a barrier to life-saving care, and patients should not have to postpone treatments or services because they haven’t met their deductible.”

“High deductibles are a serious problem for many patients,” said Doctors for America Chair Dr. Mona Mangat. “Not only do they serve as barriers to care but they can also have long-term negative effects on a patient’s health. Standardized plans would help alleviate the burden that out-of-pocket costs are imposing on far too many families.”

“We call on insurance companies in all marketplaces to offer the standardized silver plans beginning this year,” said Ron Pollack, executive director of Families USA. “Providing more crucial services upfront will not only increase access to care among those presently insured, but it’s also likely to result in more people enrolling in coverage.”

Milliman is among the world’s largest providers of actuarial and related products and services. The firm has consulting practices in healthcare, property & casualty insurance, life insurance and financial services, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information, visit milliman.com and view the entire Milliman report.