Marketplace Plans Provide Risk Protection, But Actuarial Values Overstate Realized Coverage For Most Enrollees

Abstract

The Affordable Care Act (ACA) has increased the number of Americans with health insurance. Yet many policy makers and consumers have questioned the value of Marketplace plan coverage because of the generally high levels of cost sharing. We simulated out-of-pocket spending for bronze, silver, or gold Marketplace plans (those having actuarial values of 60 percent, 70 percent, and 80 percent, respectively). We found that for the vast majority of consumers, the proportion of covered spending paid by the plans is likely to be far less than their actuarial values, the metric commonly used to convey plan generosity. Indeed, only when annual health care spending exceeds $16,500 for bronze plans, $19,500 for silver plans, and $21,500 for gold plans do plans in these metal tiers cover the proportion of costs matching their actuarial values. While Marketplace plans substantially reduce consumers' exposure to financial risk relative to being uninsured, the use of actuarial values to communicate plan generosity is likely to be misleading to consumers.

Did Marketplace coverage really offer financial protection? Financial gains from the Affordable Care Act's private insurance policies among the previously uninsured

“…By contrast, consumers in poor health were more likely to save money with coverage than their healthier counterparts and would save more on average by enrolling in the Marketplace. This result is consistent with prior Marketplace research from Maria Polyakova and colleagues, who demonstrate that most enrollees (those with medical costs below $20,000) are covered at far less than the aggregate, advertised, actuarial value (Polyakova et al, 2017).…”

Preventing Financial Strain for Low- and Moderate-Income Adults: a Comparison of Medicaid, Marketplace, and Employer-Sponsored Insurance

“…Our findings are likely driven by several factors. First, Medicaid typically requires no or minimal cost sharing, whereas Marketplace plans often require considerable out-ofpocket payments for care, 15,16,31 particularly for people with incomes above 250% of the FPL, who are ineligible for costsharing subsidies. 9,17 Cost sharing, which has been shown to discourage the use of health care services among Marketplace enrollees in other studies, 32 likely contributes to the greater avoidance of or delays in care, medication non-adherence, worry about medical bills, and out-of-pocket spending that we observed.…”

“…However, previous studies have raised concerns about the affordability of care under such plans. [15][16][17][18][19][20] Medicaid and Marketplace enrollees differ in important ways. Marketplace enrollees typically have more assets and a lower burden of disease than those with Medicaid, suggesting that Medicaid recipients may have a greater need for care and find health care costs more burdensome.…”

Risk Factors for Early Disenrollment From Colorado’s Affordable Care Act Marketplace

“…Bronze, silver, gold, and platinum tier Marketplace plans have average annual AVs of 60%, 70%, 80%, and 90%, respectively. 13 Enrollees pay their portion of health care costs in the form of cost-sharing, copayments, and deductibles. As Colorado is a Medicaid expansion state, plan members with incomes between 138% and 400% Federal Poverty Level (FPL) are eligible for premium subsidies; silver plan members with incomes between 100% and 250% FPL are eligible for meanstested cost-sharing reductions (CSRs) if they purchase silver tier plans.…”