More than half of Americans with individual market health insurance coverage in 2010 were enrolled in so-called "tin" plans, which provide less coverage than the lowest "bronze"-level plans in the Affordable Care Act, and therefore would not be able to be offered in the health insurance exchanges that are being created under the law, according to a Commonwealth Fund. The analysis suggests that once the state-based exchanges — set up to make it easier for individuals and small businesses to shop for health insurance — go into effect in 2014, many of these Americans will be able to purchase plans that offer better coverage. In addition, many will be eligible for premium subsidies that will help offset the cost of the plans.
Compared with people enrolled in individual market plans, a majority of those enrolled in employer group plans have far more comprehensive coverage with less cost-sharing. Most group plans had an actuarial value of 80% to 89%, qualifying them as "gold" plans to be sold in the exchanges, compared with an actuarial value of below 60% for the "tin" plans, according to the study.
"People who buy individual coverage often get low value for plans that do not offer essential benefits, such as maternity care," says lead author Jon Gabel, a senior fellow for the social science research organization NORC at the University of Chicago. "This study suggests that by the year 2014 these Americans will be able to buy much better plans that offer more financial protection."
Under the Patient Protection and Affordable Care Act, insurance plans sold through the exchange will have to meet certain basic standards. Non-grandfathered health plans in the individual and small-group markets, those that were not in existence when PPACA was passed in 2010, will also have to meet these requirements. Platinum plans cover on average 90% or more of health expenses, while bronze plans must cover a minimum of 60%. More than half of the plans currently offered on the individual market cover less than 60% of expenses and wouldn't qualify for the exchanges.
PPACA also requires health plans offered in the exchanges and the individual and small-group markets to cap annual out-of-pocket expenses at $6,050 for individuals and $12,100 for a family. Families with low and moderate incomes will qualify for even lower out-of-pocket spending caps. Under health reform, insurers can also no longer deny coverage to people with pre-existing conditions, or set premiums based on how healthy they are.
The researchers also looked at group health insurance offered through employers in 2010, finding that more than 60% of Americans with group insurance had plans that fell into the "gold" or "platinum" category as defined by the health reform law. Most people in group plans had better coverage and were more likely to be protected from high out-of-pocket medical expenses than those with individual health insurance. For example, the average household with an employer-based group health plan spent about $1,765 annually on out-of-pocket medical expenses, compared with $4,127 for those with individual coverage.
High-coverage group health plans mostly offered generous benefits and protection against catastrophically high medical bills, the authors found. But even these plans did not offer complete protection for the top 1% of spenders — people in poor health. The top spenders in group plans paid on average $7,513 in out-of-pocket medical expenses on a yearly basis.
"This study shows that millions of Americans currently have coverage that does not accord them access to timely care and potentially leaves them exposed to catastrophic medical bills," says Commonwealth Fund Vice President Sara Collins. "The provisions of the Affordable Care Act will not only extend new coverage to millions of uninsured Americans, but vastly improve the coverage of many who are insured but poorly protected by their health plans."
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