High-deductible plans look terrible, until you look at what they replaced

At first glance, the high-deductible health plans that have allowed many Californians to receive insurance for the first time over the past two years look terrible. Known as “bronze” plans, you could easily argue they look little better than having no insurance at all. There’s a $5,000 deductible before benefits kick in. Should you have the misfortune to meet that requirement, still more out-of-pocket payments follow after that. You’re on the hook for co-pays and co-insurance — to the tune of $60 for every doctor visit and 30 percent of a hospital stay.

About a quarter of the 1.6 million people who signed up for insurance through Covered California, the state’s two-year-old health insurance exchange, chose high deductible bronze plans. Other than Minimum plans—only offered for people under age 30 — bronze is the cheapest after silver, gold and platinum, all of which offer lower deductibles and lower co-pays than bronze, but often carry substantially higher premium costs.

When they signed up, many people likely took the table presented on the Covered California site at face value. Regardless of insurer, all bronze plans are basically the same: The table lists a $5,000 deductible for singles and $10,000 deductible for families. It lists co-pays of $60 for a primary care visit and $120 for urgent care. Unless they read the fine print at the bottom, it’s likely many people assumed that until they met the deductible, they would be forced to pay out-of-pocket for all doctor visits.

It’s not a bad assumption because that’s how it used to be. Before the Affordable Care Act (ACA) laid out strict regulations for insurance carriers, most high deductible plans really were little better than no insurance at all, said Dylan Roby, an assistant professor and researcher at the UCLA Center for Health Policy Research. But now it’s different.

“There’s a lot of regulation that provides protection that wasn’t there before the exchange,” Roby said.

 Before the ACA, high deductibles really meant high deductibles. You couldn’t access care without paying out of pocket. Studies such as those by the Commonwealth Fund — highlighted last year by the New York Times — showed the cost burden hits the poor especially hard. Before Obamacare, high deductibles proved to be high barriers to care. They also offered little protection from bankruptcy. Insurers imposed annual and lifetime limits on care, which meant that if a patient met the deductible, but then crossed over an annual or lifetime limit because of a high cost disease or accident, insurers could — and often would — discontinue the policy.

But the new iteration of high deductible plans offered under Covered California’s “bronze” banner, while far from ideal, are far better than high deductible plans of old, according to Roby. Policyholders are entitled to three doctor visits a year, at the price of a $60 co-pay per visit. And they’re also eligible for free cancer screenings and cholesterol tests.

Not everyone sees the bronze plans in such positive terms. Gerald Kominski, director of UCLA's Center for Health Policy Research and Roby’s colleague, recently told Reporting on Health that the plans offer few meaningful benefits outside of emergencies.

“I feel like the bronze plans are not such a good deal for people, that maybe we should have started with the silver as the lowest level, not bronze,” Kominski said. “The reality is that the vast majority of Californians don’t spend $5,000 a year for health care. You have to be hospitalized, and your chances of being hospitalized are on average about 6 percent — it’s not that high.”

True, the plans offer limited access to care. There are still co-pays and co-insurance, but it is better than nothing at all. The ACA also imposed bankruptcy protection. There’s a $6,250 annual cap on payments for a single person and $12,500 for families. In addition, insurers can no longer impose annual or lifetime limits for the amount of care received. They can’t cancel a policy because a patient is sick and requires high cost care.     

Roby points out that “silver” plans are also better than they might appear if you’re just glancing at the paperwork. Many silver plans come with a $2,000 deductible, still a lot for people struggling to make ends meet. But that deductible is deceptive, said Roby. It only applies to higher cost care, such as hospital stays and non-generic brand drugs. Otherwise, policyholders can go to a doctor for the price of a $45 co-pay.

But there is a price to pay, said Roby. To control costs, insurers are limiting where you can go for care. They’re no longer contracting with the more expensive — and at times more desirable — hospitals and physician networks. If you go to an out-of-network doctor, you’re likely to end up with an expensive bill to pay. The narrow networks mean some people lost access to doctors they had seen for years, and others are struggling to find primary care providers who will treat them.

“There are always going to be some winners and losers, especially when you consider who was in the old market,” Roby said. “But if you think about the general population and the consumer protections they have that keep them from going bankrupt, a lot more people benefit.”

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Photo by Rian Castillo via Flickr.