Under Health Care Act, Millions Eligible for Free Policies 11/4/13
Millions of people could qualify for federal subsidies that will pay the
entire monthly cost of some health care plans being offered in the online
marketplaces set up under President Obama’s health care law, a surprising
figure that has not garnered much attention, in part because the
zero-premium plans come with serious trade-offs.
Three independent estimates by Wall Street analysts and a consulting firm
say up to seven million people could qualify for the plans, but federal
officials and insurers are reluctant to push them too hard because they
are concerned about encouraging people to sign up for something that might
ultimately not fit their needs.
The bulk of these plans are so-called bronze policies, the least expensive
available. They require people to pay the most in out-of-pocket costs, for
doctor visits and other benefits like hospital stays.
Supporters of the Affordable Care Act say that the availability of
free-premium plans — as well as inexpensive policies that cover more —
shows that it is achieving its goal of making health insurance widely
available. A large number of those who qualify have incomes that fall just
above the threshold for Medicaid, the government program for the poor,
according to an analysis by the consulting firm McKinsey and Company.
The latest analysis was conducted by McKinsey’s Center for U.S. Health
System Reform, whose independent research has been cited by the federal
government and others.
“The whole point of the law was not only to cover the uninsured, but so
people didn’t have to make choices between food or drugs, or going to the
doctor or dentist,” said Karen Davis, a health policy expert at the Johns
Hopkins Bloomberg School of Public Health. “It’s what it is designed to
do.”
Many insurers tried to price their least expensive plans so they would
become free or nearly free with the addition of subsidies that are set
based on a person’s income and the cost of a midlevel, or silver, plan.
Independence Blue Cross in Philadelphia has four plans that are free to
some customers. But the company, along with other insurers, has been
careful not to publicize its free coverage for fear of alienating
customers who will need to pay more.
“We’re not advertising zero dollar,” said Brian Lobley, a senior vice
president at Independence Blue Cross. But the company is promoting monthly
premiums in the $20 to $30 range, he said.
The Obama administration has also stressed affordability over coverage
with no monthly charge, frequently saying that the cost of coverage will
be less than a monthly cellphone bill for many consumers. Officials at the
Department of Health and Human Services would not comment on the McKinsey
analysis, saying in a statement that the goal of the health law was to
provide a range of options for people with differing needs and budgets.
The analysis found that five million to six million people who are
uninsured will qualify for subsidies that will be greater than the cost of
the cheapest bronze or silver plan. A million more people with individual
insurance could also be eligible, according to McKinsey, although
estimates of the size of the market for private individual insurance vary
widely. None of the people in the analysis qualify for Medicaid.
The availability of zero-premium plans may make the deal especially
enticing to the healthy young people the marketplace needs to succeed,
said Mark V. Pauly, a professor of health care management at the
University of Pennsylvania’s Wharton School. “This is such a good deal
that you’d have to believe you were immortal not to really pick it up,” he
said.
Although they vary in their design, bronze plans generally cover about 60
percent of a person’s medical costs. All plans, including bronze, must
cover standard benefits like prescription drugs, maternity care and mental
health treatment.
The availability of the zero-premium plans varies across the country.
McKinsey found that about 40 percent of the uninsured in Missouri will be
able to select a no-cost bronze plan, for example, compared with 2 percent
of the uninsured in New Jersey.
It is impossible to know who will actually sign up, and whether they will
choose a zero-premium plan.
For many people, paying slightly more for a silver plan may be a much
better option, experts said. Ninety percent of those who will have the
option of buying the no-cost plans make less than 250 percent of the
federal poverty level, which is $28,725 for an individual, and $58,875 for
a family of four. People earning below those thresholds are eligible for
the most generous assistance, but only if they choose a silver plan.
About a million of those who will qualify for free coverage will be able
to buy a silver plan for no monthly cost. McKinsey, which is releasing a
report about the new insurance marketplaces, estimates that the cost of
silver plans for the people who qualify for a zero-premium bronze plan
will range from $40 to $50 a month.
“They may be getting zero premiums, but they’re also leaving a lot of
money on the table if they don’t enroll in a silver-level plan,” said
Sabrina Corlette, a professor at Georgetown University’s Health Policy
Institute.
All plans, including bronze policies, limit annual out-of-pocket costs to
$6,350 for individuals and $12,700 for families. But insurers and
advocates said out-of-pocket costs — even those under that limit — can be
daunting to people with low incomes.
For Mark and Elisabeth Horst, both artists in Albuquerque, the risks of
signing up for a bronze plan were outweighed by the prospect of getting it
free. The Horsts, who make $24,000 a year between them, qualified for $612
in monthly subsidies, but the cost of a bronze plan was $581 a month.
“We’re in good health,” Mr. Horst said.
Besides, he said, they can always switch to a better plan next year. “At
this point, it’s a little bit of a gamble.”
Not everyone selects the cheapest option. Dante Olivia Smith, a lighting
designer from Manhattan, learned that federal subsidies would allow her to
buy a bronze plan for $24 a month.
“It was astounding,” she said. “I almost started crying, and called my mom.”
In the end, however, she went with a silver plan for $91 a month that
included dental and vision coverage. Ms. Smith, who is 30, said she opted
for the more comprehensive plan because of her work, which requires her to
climb ladders and use power tools.
“If I had a different job, for 24 dollars a month I would have been like
‘Woo-hoo!' ” she said. “But the reality is, I know what my risks are in my
life.” Its estimate, based on an analysis of premiums for plans offered in
the marketplaces in all 50 states and the District of Columbia, is in line
with two other estimates, by Credit Suisse and Morgan Stanley.
The McKinsey researchers also found that about half of the people eligible
for zero-premium plans were under 39 and uninsured. The Obama
administration has been emphasizing the affordability of its plans for
young people, a critical group because their participation in the
marketplaces will help keep overall premiums low.
It is impossible to know who will actually sign up, and whether they will
choose a zero-premium plan.
For many people, paying slightly more for a silver plan may be a much
better option, experts said. Ninety percent of those who will have the
option of buying the no-cost plans make less than 250 percent of the
federal poverty level, which is $28,725 for an individual, and $58,875 for
a family of four. People earning below those thresholds are eligible for
the most generous assistance,
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