Most Americans are avoiding the lowest-priced health plans on the Obamacare insurance exchanges, taking advantage of government subsidies to seek more protection against high treatment costs.
Only 19 percent of enrollees chose the coverage with the cheapest premiums, called bronze, while 7 percent picked the most expensive, the U.S. Health and Human Services Department said in a report. Mid-level silver plans drew 62 percent. The lower the plan level, the higher the out-of-pocket costs.
That’s good news for insurers who were concerned that too many people would pick the cheapest premiums, then discover they couldn’t pay the plans’ higher deductibles for medical care, said Michael Mahoney of GoHealth LLC, a private online platform that helps people enroll. The popularity of the silver plans shows consumers are selecting the best package of financial assistance offered through the government exchanges.
“The silver plan’s cost-sharing subsidy makes them a great option,” said Carrie McLean, director of customer care at eHealth Inc., an online insurer.
The Patient Protection and Affordable Care Act, known as Obamacare, requires individuals to carry insurance or pay a penalty as it seeks to cover many of the nation’s estimated 48 million uninsured. Those who don’t receive coverage through their workplace or a government program can select a plan using the new exchanges that opened for business Oct. 1.
Based on income, two subsidies are available to help pay the cost: one that covers premiums and another that reduces deductibles and co-payments. While premium assistance applies to every tier, the cost-sharing aid applies only to silver plans.
Greater Risk
Bronze plans cover only 60 percent of costs, making consumers liable for maximum deductibles of $6,000 a person in medical care.
“It’s too risky to take on that exposure if you don’t have that kind of money,” Karen Pollitz, senior fellow at the Kaiser Family Foundation, said in a telephone interview.
For a family on a silver plan with an income at 150 percent of the federal poverty level, the cost-sharing assistance reduces a $12,700 annual out-of-pocket maximum to $4,500, and for an individual, from $6,350 to $2,250, Mahoney said.