Plans Designs

When consumers are required to cover the full cost of their care up front—as is the case with many high-deductible plans—they may not be able to afford to get the care they need. To provide consumers with plan options that have lower cost-sharing, policymakers and marketplace officials should consider establishing “standardized plans.” These are plan designs that all insurers are required to sell in the marketplace that have standardized cost-sharing for covered health services.

By establishing standardized plans with lower upfront cost-sharing for at least some services, a marketplace can ensure that all insurers sell plans with affordable upfront cost-sharing. Washington, D.C., is the latest health insurance marketplace to develop standardized plans and require insurers to offer them, beginning in 2016.

Standardized plans are designs that

• are developed by the marketplace
• have defined or identical cost-sharing (the share of health care costs a consumer is responsible for paying) for covered services
• all insurers in the marketplace are required to sell

Why upfront cost-sharing can be a burden for consumers

In 2014, many of the health plans available in state marketplaces at the most popular silver metal level had deductibles in the thousands of dollars. For consumers with low and moderate incomes, such high deductibles can pose significant barriers to obtaining even routine, office-based health care.

For these consumers, family budgets are already tight. After covering daily living expenses, many don’t have extra money for a doctor’s visit, medication, outpatient surgery, or other types of health care. This can cause families to forgo needed care and face more serious, preventable health problems down the line. For these reasons, it is important that marketplaces offer plan options that have lower levels of cost-sharing up front, at least for primary care and ambulatory services, to ensure that families can treat illnesses early and maintain good health.

Standardized health plans are one way that marketplaces can address the affordability of upfront cost-sharing

Establishing standardized plans with lower upfront cost-sharing for at least some care is one policy that officials should consider to ensure that a state’s marketplace sells plans with more affordable out-of-pocket costs (For others, see our issue brief about designing silver plans). This is an option state policymakers and marketplace officials could establish for state-run marketplaces. The federal government also could establish standardized plans that insurers participating in federally facilitated marketplaces must sell.

Several state-based marketplaces—California, Connecticut, Massachusetts, New York, Oregon, and Vermont—already have developed standardized plans in each metal level that insurers participating in their health insurance marketplaces must sell. As we have, many of these state-developed standardized plans have lower upfront costs for at least office-based care.

Washington, D.C., will require health insurers to sell standardized plans beginning in 2016

Last month, D.C.’s health insurance marketplace, D.C. Health Link, finalized standardized plan designs in each plan metal level that it will require health insurers to sell in 2016. D.C.’s approved plan designs offer additional examples of ways to design plans, particularly at the silver and bronze level, that maintain more affordable out-of-pocket costs for ambulatory care.

Affordable cost-sharing elements in D.C.’s standardized plans

Services exempted from the deductible: Both D.C.’s standardized silver and bronze plans will have significant deductibles ($2, 000 and $4, 500 for an individual, respectively). However, they will exempt coverage of numerous ambulatory and outpatient services from this deductible and charge more manageable copayments for these services.

• D.C.’s silver plan will exempt all office-based care, laboratory tests, imaging, and outpatient rehabilitative and habilitative care from the deductible.
• D.C.’s bronze plan will exempt fewer services from the deductible, but these include critical office-based primary care, mental health care, and specialty care; generic drugs; and urgent care visits.

Separate drug deductible: D.C.’s standardized silver plans will have a separate $250 deductible for prescription drugs. Generic drugs will be exempt from this deductible and will have only a $15 copayment. Other states, like California and Connecticut, have also set separate drug deductibles in their standardized plans.

Offering a separate drug deductible helps those consumers who need more expensive brand-name drugs. By having a separate, smaller drug deductible, these consumers can get help with the cost of their prescriptions without having to first pay off their full medical deductible.

Lower copayments for primary care and generic drugs: In addition to exempting primary care visits from the deductible, D.C.’s plans will also maintain lower copayments for such care.