Could the reduction indicate enrollees are becoming poorer?


July 12—Amid growing concern that increasing out-of-pocket costs are limiting patients’ access to care, the Obama administration revealed that the median deductibles among plans sold on the federally operated insurance marketplace this year declined by more than 5 percent.

The median individual deductible among the 9.6 million individuals in 38 states who bought coverage through the federal marketplace in 2016 was $850, which was down 5.5 percent from $900 in 2015. The deductible calculations included federal cost-sharing subsidies that are available for enrollees who have incomes from 100 percent to 250 percent of the federal poverty level (FPL) and who selected a silver plan. Those subsidies, established by the Affordable Care Act (ACA), can lower copays and deductibles.

But federal officials announcing the reduction tried to downplay the significance of both the median deductible for both subsidized enrollees and the 40 percent who are ineligible for out-of-pocket subsidies and whose deductibles ranged from $1,000 to $6,850.

“That deductible just doesn’t matter for a lot of the care that consumers are getting,” Christen Linke Young, principal deputy director for the Center for Consumer Information and Insurance Oversight at the Centers for Medicare & Medicaid Services (CMS), said in a call with reporters.

Linke Young highlighted the CMS report’s finding that ACA health insurance plans cover the costs of certain key services before enrollees meet their deductible. Not only do all plans cover preventive services such as cancer screenings, immunizations, and well-child visits without cost sharing, but most also cover commonly used health services either without cost sharing or with low copayments, even if a consumer has not met the deductible.

For instance, an average of 1.4 additional non-preventive services are covered by catastrophic plans, while an average of 13.2 additional such services are covered by platinum-level ACA plans.

However, that emphasis on available services runs counter to the findings of some researchers.

For instance, a Families USA report found nearly 30 percent of adults with deductibles of $1,500 or more went without needed medical care because they could not afford it—and the share was nearly 20 percent even when deductibles were less than $1,500.

“Deductibles always influence whether or not someone receives care,” Devon Herrick, PhD, a senior fellow at the National Center for Policy Analysis, said in emailed comments about the report. “Actually, that’s the point of deductibles. For the poorest individuals, $850 is huge. For wealthier individuals, not so much.”

In 2014, 37 percent of those who obtained individual coverage either inside or outside the ACA marketplaces were underinsured, according to a Commonwealth Fund report. The analysis defined underinsured as having one of the following:

  • Annual out-of-pocket costs, excluding premiums, that were at least 10 percent of household income, or at least 5 percent of household income for people earning less than 200 percent of the FPL
  • A deductible that was at least 5 percent of household income

The report’s author noted that subsidies significantly reduce deductibles for people with low incomes who buy marketplace plans. “But those subsidies phase out quickly, leaving families with deductibles that may be high relative to their incomes,” the report noted.

Administration officials said their minimization of the impact of deductibles was supported by the general popularity of available health plans among enrollees. For instance, about two-thirds of people who buy their own health insurance were satisfied with their coverage, according to a survey conducted by the Kaiser Family Foundation after open enrollment closed in January. Three in 10 respondents rated their coverage as “not so good” or “poor,” up from two in 10 in previous years. Six in 10 were satisfied with their plan’s premium and half with their deductible.

Sara R. Collins, PhD, a vice president at the Commonwealth Fund, said in emailed comments that the new CMS report is consistent with what marketplace enrollees have reported in the Commonwealth Fund’s latest ACA tracking survey. Specifically, the cost-sharing reductions have been effective at lowering deductibles for people with incomes less than 250 percent of the FPL to levels similar to those in employer-based plans.

“Still, there is considerable evidence that high deductibles are a driver of underinsurance and reduce people’s access to needed care. We have found this consistently in other surveys,” Collins said.

Possible Significance

Despite the reduced median deductible, the report showed a trend toward higher deductibles for 22 percent of enrollees. For instance, the median enrollment-weighted deductibles among the 21 percent of enrollees in bronze plans increased 10 percent to $6,300 in 2016.

“I believe this is an example of people who don’t qualify for subsidies (who tend to be healthy) dropping out of the market,” Herrick said.

The report noted that 60 percent of 2016 federal marketplace consumers qualified for financial assistance that reduces their deductibles, out-of-pocket maximums, and other cost-sharing obligations. In comparison, 56 percent of 2015 enrollees received cost-sharing reduction payments, according to a year-end report from the Office of the Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services.

Herrick said a trend in which more people receive such income-based subsidies could reflect an increasingly poor enrollment pool, given that those who are poorest receive the most generous cost-sharing subsidies.

“I suspect the decline in average deductibles after cost-sharing subsidies could be an indication that Obamacare is becoming increasingly unaffordable for all but those receiving the most generous subsidies,” Herrick said.

The marketplaces have increasingly struggled to attract enrollees with incomes higher than 250 percent of the FPL, and many analysts have blamed the shortfall on the greater affordability challenge faced by those who are ineligible for full subsidies.

Industry Response

Healthcare providers and payers have become increasingly focused on deductibles for different reasons. For instance, industry observers specifically cited the use of deductibles by traditional Medicaid insurers Centene Corp., Molina Healthcare, and Florida Blue have as helping them achieve rare profitability among insurers that sell ACA marketplace plans.

Meanwhile, many hospitals and health systems have tried an increasing number of ways to minimize the barrier to care that high deductibles can present.

For instance, Ascension is writing off deductibles for a portion of its patient population as a strategy to limit bad debt amid the rise of high-deductible insurance plans, according to published reports.

Many hospitals have seen cost-sharing effects on their patients, with the impact varying widely across the country, Christopher Kerns, executive director of research and insights for the Advisory Board, said in an earlier interview.

“Increasingly we are hearing from CFOs that it is obligations associated with deductibles that they are being challenged with and not pure bad debt or pure self-pay,” Kerns said.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C. office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, July 12, 2016