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Out-of-pocket costs higher in public health exchange coverage

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Public health insurance exchange enrollees typically spend more on out-of-pocket health costs than people with insurance through their employer, a report released Thursday shows.

Still, researchers said exchange plans provide more protection against future increases in cost-sharing than employer-based health plans do.

Out-of-pocket costs for people enrolled in the public health exchanges without access to government cost sharing reduction subsidies grew “moderately” in 2015, according to “Changes in Cost-Sharing for Health Plans Sold in the ACA's Insurance Marketplaces, 2015 to 2016,” published by The Commonwealth Fund and researchers at the University of Chicago.

Cost sharing reduction subsidies lower the amount individuals have to pay out-of-pocket for deductibles, coinsurance, and copayments based on income. About 40% of exchange enrollees overall do not qualify for these reductions, according to the report.

“Increases in cost-sharing, although substantial in some instances, were not of the magnitude depicted in the media,” according to report.

Individuals enrolled in silver or bronze public exchange plans — the two most popular exchange coverage options — without access to cost-sharing reductions pay more in copays, deductibles and out-of-pocket limits than employer-sponsored health coverage enrollees. Cost-sharing for gold exchange plans fell more in line with employer-sponsored health plans, the study showed.

Cost-sharing increases across the exchange plans was mixed: From 2015 to 2016, out-of-pocket limits for exchange plans on average grew by 7.1%, general annual deductibles increased 10.3% and copays for brand name drugs not in a plan's list of preferred prescriptions jumped by 13.6%, according to the study.

Copays for brand-name drugs under exchange plans rose 4.7%; copays for specialty doctor visits grew 4.9%; and primary care visit copays rose 0.4%, the study showed.

Copays for generic drugs decreased by 3.2%, however.

Among the 2016 exchange plans with deductibles, the average deductible ranges from $484 for platinum plans to $5,724 for bronze plans, the second-most popular exchange plan. The average deductible for silver plans — the most popular exchange plan — was $3,100 in 2016 and $1,257 for gold plans.

To compare, employer-based health plans had an average deductible of $1,318 in 2015, according to the Kaiser Family Foundation.

Additionally, the average copayment for primary care visits in 2016 is $43.04 for bronze plans and $30.97 for silver plans, the report shows. Copays for employer-based plans, on the other hand, are $24 on average, similar to the $22.38 copay for gold exchange plans.

Part of the rise in cost-sharing in public exchange plans may be due to health insurers offering more bronze and silver plans, which shift more of the cost burden to the individual, according to the report.

Cost-sharing subsidies are pegged to silver plans, “so it's not surprising that there are more silver plans available because that's where more people are enrolling” to get that assistance, said Sara Collins, vice president for health care coverage and access at The Commonwealth Fund.

The rising cost of drugs is also a factor in the increased cost-sharing, she said.

Prescription drug spending increased 5.2% in 2015, driven largely by a 17.8% increase in specialty drug spending, according to Express Scripts Holding Co., the nation's largest pharmacy benefits manager.

Researchers stated in the report that as medical costs rise, individuals enrolled in exchange plans “are likely to be protected from rising out-of-pocket costs” than people with health insurance through their employer.

That's because cost-sharing for exchange plans is tied to a constant actuarial value. For example, silver exchange plans cover approximately 70% of out-of-pocket costs for an enrollee.

Employer-based health plans, however, do not have that requirement. Still, it's possible that employer health plans and exchange plans will level out over time.

“Everything depends on the overall rate of cost growth in general and health care, and how insurers approach that,” Ms. Collins said. “Will they approach it through higher deductibles or are they looking at different ways — narrow networks and different arrangements (value-based) with providers?”