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Wednesday, May 14, 2014

How to Design Silver Plans with Lower Upfront Cost-Sharing in the Health Insurance Marketplace

Lydia Mitts

Former Associate Director of Affordability Initiatives

As we discussed in our post last week, high deductibles in health insurance plans can create barriers to necessary care for low- and moderate-income consumers and are particularly concerning in silver plans, which are most popular among this group.

Health insurers can create silver plans that have lower upfront cost-sharing than high deductible plans, but analysis suggests that many insurers are not doing so. Our latest brief, “Designing Silver Health Plans with Affordable Out-of-Pocket Costs for Lower- and Moderate- Income Consumers,” features original research that identifies existing silver plans that offer more affordable upfront cost-sharing amounts for consumers. The brief includes 11 examples of existing silver plans from marketplaces around the country that break from the mold of high deductibles and keep upfront cost-sharing for at least routine and minor care more affordable.

Advocates and other stakeholders can take these examples to their marketplaces as models of the type of plans that they would like to see available in their state. And marketplace officials and other policymakers can take these models directly to insurers as examples of the types of plans they would like insurers to offer. Our brief discusses a range of policy and advocacy strategies that policymakers, advocates, and other stakeholders can use to promote these types of silver plan offerings in their marketplaces.

Building silver health plans with lower upfront cost-sharing amounts for consumers

Our research focused on identifying existing silver plans that have more affordable upfront cost-sharing, at least for routine and minor care. We were interested in two types of plan designs:

  • plans with no medical deductible that instead require lower upfront cost-sharing for care, and
  • plans that exempt numerous services from the deductible and charge relatively low copayments for these services instead (meaning the plan helps pay for these services before a consumer meets the deductible).

(Read more about our research and methodology)

We found 11 model silver health plan designs with lower upfront cost-sharing

We found 11 examples of silver health plan designs across the country that keep upfront cost-sharing more affordable compared to a high deductible plan. These include seven silver plan designs in the federally facilitated marketplaces with no medical deductible and more affordable cost-sharing for minor care. We also identified four plan designs among the standardized plan designs that are required in six states’ marketplaces (California, Connecticut, Massachusetts, Oregon, New York, and Vermont) that exempt numerous services from the deductible and charge relatively low copayments for these services.

All 11 of these plan designs are valuable models of silver plans that make at least routine and minor health care much more affordable, especially when compared to high deductible plans. For example, the majority of these featured plan designs charge no more than $30 copayments for primary care offices visits and no more than $25 copayments for generic drugs. Some plans charge as little as $4 for some generic medications. 

(See more comprehensive details about each of these health plans, including a breakdown of the cost-sharing that they charge for a broad range of covered health care services)

How can policymakers and advocates promote similar silver health plan designs in their marketplace?

Policies for promoting health plans with lower upfront cost-sharing

There are many policy strategies that marketplaces and policymakers can use to require or encourage insurers to offer more silver plans with lower upfront cost-sharing like those identified in our brief:

  • Standardized health plan designs or standardized cost-sharing for certain services: Like the states mentioned above, marketplaces can design standardized plans that keep upfront cost-sharing lower and require that all participating insurers offer those standardized plans. Or, marketplaces could set similar requirements on a smaller scale, such as requiring participating plans to help pay for a certain number of primary care visits before consumers meet their deductible. States could even apply this type of requirement more broadly to all health plans sold in their individual health insurance market, both inside and outside of the marketplace.
  • Active purchasing: Some marketplaces have formal authority to negotiate with insurers about how they design the health plans sold in the marketplace, and other states may want to seek this power. Marketplaces with this “active purchasing” power can require that insurers offer plans with more affordable upfront cost-sharing as a condition of selling plans in the marketplace.
  • Informal negotiations with insurers: Marketplaces or state insurance departments can also have informal conversations with insurance companies to encourage them to offer plans with lower upfront cost-sharing.

Advocating at the state level

Regardless of the type of marketplace that a state has, there are useful strategies that advocates and other stakeholders can pursue at the state level to promote policies to require or encourage insurers to offer silver plans with more affordable upfront cost-sharing.

However, the type of marketplace that a state has affects which decision-makers need to be involved to implement these policies at the state level. For example, in state-based marketplaces, state marketplace officials should be key partners for those advocating for more plans with lower upfront cost-sharing, as these officials will likely have authority to implement requirements for participating insurers. In states with federally facilitated marketplaces, state insurance departments and state legislators still have power to create policies for their state’s insurance market that promote plans with lower upfront cost-sharing. Insurance departments and legislators can also be powerful partners in informal negotiations with insurers.

Advocating at the federal level

Advocates and other stakeholders in all states can also benefit from advocating for federal policies that promote health plans with lower upfront cost-sharing. For states that have a federally facilitated marketplace, the Department of Health and Human Services (HHS) is a key marketplace policymaker and can establish policies to promote plan offerings with lower upfront cost-sharing in the marketplace, like establishing required standardized plans. HHS can also establish national standards that health plans in every marketplace must follow to promote more plan offerings with lower upfront cost-sharing (like requiring all plans to cover a set number of primary care visits pre-deductible).

Policymakers should push health insurers to offer plans with lower upfront cost-sharing to make care more affordable

As demonstrated by our research, consumers don’t have to be limited to only silver plan options that have high deductibles. It is possible to design silver plans with lower upfront cost-sharing for at least routine and minor care. Advocates and other stakeholders should urge key policymakers at the state and federal level to require, or at least encourage, insurers to offer plans with lower upfront cost-sharing. This will help ensure that consumers in all marketplaces have access to plans that make necessary routine health care more affordable.

Cost-sharing in marketplace plans: Share your perspective

How are health care consumers faring in your marketplace? How would you make cost-sharing designs more consumer-friendly? Please share your ideas with us on Facebook or on Twitter. You can also email Lydia Mitts at lmitts@familiesusa.org

To learn more about our research on silver plan designs, as well as policy and advocacy strategies for promoting silver plan designs with lower upfront cost-sharing, see our issue brief “How to Design Silver Health Insurance Plans with Affordable Out-of-Pocket Costs for Consumers.”