The new crop of health-insurance plans offered through the federal marketplace has lower premiums and deductibles than last year's, but customers will be reaching into their pockets more often, according to the Robert Wood Johnson Foundation.
It comes down to coinsurance, the term for healthcare costs that are shared between the customer and the insurer.
The report indicates that of the newly offered “silver” plans, 42 percent use coinsurance, compared with only one of the seven plans that were first offered last year and are being offered again.
This trend reflects a broader change in health insurance, in which a rising share of out-of-pocket costs are paid through coinsurance.
Marketplace plans are offered in four levels, depending on the share of costs that consumers must pay out of pocket. The plans with the highest monthly premiums, known as platinum plans, cover 90 percent of costs; while gold plans cover 80 percent; silver plans cover 70 percent; and bronze plans cover 60 percent but have the lowest premiums. The foundation focused on silver plans, which are the most popular and are used to determine the subsidies that lower- and middle-income consumers receive to offset their premiums.
While the use of coinsurance is rising, the new plans actually reduce consumers’ exposure to other forms of cost sharing, including deductibles.
The difference between coinsurance and a deductible is fairly straightforward. A deductible is the amount that a policyholder must pay before the insurance kicks in. Once the deductible has been satisfied, the coinsurance represents the percentage of the cost of service for which a policyholder is responsible.
Consider a consumer who has a policy with a $1,000 deductible and a 50 percent coinsurance rate. If the policyholder has an operation that costs $2,000, he or she would be responsible for $1,000 (to satisfy the deductible) and $500 (coinsurance amount).
Of the silver plans offered in 2014, 85 percent required consumers to pay a deductible to cover emergency-room visits before the plan covered costs. In 2015, only 53 percent require a deductible for ER visits.
“The big picture is that the newer plans tend to have lower premiums and they tend to have lower deductibles,” said Katherine Hempstead, the author of the analysis and director of the foundation’s work on health insurance coverage.
The effect of these changes on consumers will vary. Those who use less healthcare will benefit from newly offered plans with lower premiums, while those who require more services will pay more if they switch to a lower-premium plan. Those who don’t switch plans can expect to pay higher premiums, with the seven plans that remain essentially unchanged requiring a monthly increase of $24 for a single 30-year-old consumer, an increase of 7.6 percent.
“They should think about their own utilization and what health services they would typically use,” said Hempstead, former director of the Center for Health Statistics in the New Jersey Department of Health and Senior Services. But she added that the desire for lower premiums must be balanced against the benefits of lower out-of-pocket costs.
Hempstead noted that the lowest-premium plans drew the most consumers in 2014. It’s not yet clear whether the possibility of lower premiums led consumers this year to switch their plans.
“Probably, people who didn’t use their plans at all are more likely to have switched,” Hempstead said.
But Hempstead noted that it can be challenging for consumers to weigh all of the different factors that distinguish plans.
“It’s hard to believe that the average consumer is really, really able to kind-of sort through this stuff,” she said.
In the long run, how premiums change affects whether consumers change plans could be determined by a proposed federal rule change, which would automatically switch consumers in lower-premium plans if their own plans see a significant premium increase. Hempstead said there were pros and cons to the proposal, since it would “keep carriers’ feet to the fire” to prevent excessive increases, but could result in consumers having plans that don’t fit their needs.
“There’s no one perfect way to do it,” Hempstead said.
The rise in the use of coinsurance both in New Jersey and nationally may also have significant long-term effects on healthcare. Under coinsurance, consumers pay a fixed percentage of some healthcare costs, so it creates an incentive for them to seek doctors, hospitals, and other providers that charge less for services.
While provider charges have traditionally not been clear -- and frequently unavailable -- to consumers, there is growing pressure for increased transparency.
“There’s been a trend towards coinsurance nationally, and I think that actually puts a lot of pressure on providers,” Hempstead said.
She added that the move away from deductibles by some insurers for services like emergency-room visits might be the result of a decision by hospitals to ensure that they receive payments for their services. When they send a bill to a consumer to cover a deductible, there’s always a risk that the person will be unable or unwilling to pay.
While the federal government has released some new marketplace enrollment statistics, it’s not yet clear how the number of enrollees has changed. Through September 30, there werecovered by individual or family plans, an increase of 115,623 from the at the end of 2013, before the marketplace launched.
The increase in Medicaid eligibility enabled by the Affordable Care Act has been even more dramatic. In 2014, New Jersey FamilyCare -- the primary state Medicaid program -- increased the number of residents it covered by 396,457, fromto .
The marketplace, which launched last year, has become the central way for individuals and families to purchase insurance, and is one of the primary means that the Affordable Care Act uses to increase access to insurance.