Dive Brief:
- Given the mechanics of the ACA, many of the 7 million Americans who enrolled in health plans through an exchange will face higher coverage expenses next year unless they switch plans.
- Consumers who stay with the same plan may have to absorb a significant amount of the increase, as the federal subsidy is indexed to the lowest cost "benchmark plan" in that marketplace. If their plan isn't a benchmark plan, they absorb any increase over what the government pays.
- For example, a 40-year-old Miami resident making $20,000 per year who signed up last year with the benchmark plan in her area, the "Coventry $10 Copay," was required to pay $86 month while the government covered $184 a month. This year, she would have to pay 40% more, as her Coventry premium shot up year-over-year and the government contribution was capped at $191.
Dive Insight:
Though it's inconvenient for consumers, the benchmarking approach is designed to create incentives that would force health plans to compete and keep premiums low. It's too soon to tell how successful this approach has been from a financial standpoint, though preliminary data suggests that competition is pushing down the price of the benchmarks.
What no one has calculated yet is what it costs the healthcare system to force enrollees to switch plans every year—something that's not guaranteed to happen, but seems likely. (After all, like rents and other services contracted for annually, vendors' costs go up during the course of the year.) Given that plans are already offering narrow networks, it seems all but certain that consumers will have to switch doctors and hospitals when they switch health plans. And particularly for those who are already sick, the switching can't be good for their coordination of care in overall health.
All told, putting downward pressure on premium prices is good, but if a side effect of this approach is to destroy coordination of care and in all likelihood, lower health outcomes, a different approach must be found.