More than 2 Million Exchange Enrollees Forgo Cost-Sharing Assistance

By Elizabeth Carpenter
Avalere, August 19, 2015

A new Avalere analysis finds that more than 2 million exchange enrollees eligible for cost-sharing reductions (CSRs) are not receiving the subsidies because they have selected a non-qualifying plan. In addition to the more publicized tax credits that lower consumers’ monthly premiums, exchange enrollees with incomes between 100 and 250 percent ($11,770 – $29,425) of the federal poverty level are eligible for CSRs. Exchange consumers must enroll in a plan on the silver metal level to access CSRs.

Specifically, the analysis finds that of the 8.1 million individuals enrolled in exchanges in 2015 who earn incomes that make them eligible for CSRs to reduce out-of-pocket costs, only 5.9 million are actually receiving them. This leaves 2.2 million consumers who may be paying more out-of-pocket than intended under the Affordable Care Act (ACA) because they have selected a plan that does not qualify.

“Consumers are picking plans on exchanges based on premiums, rather than out-of-pocket costs,” said Dan Mendelson, CEO at Avalere.

The difference between the number of exchange enrollees eligible for CSRs and those enrolled may be a result of consumers’ focus on premiums. For example, some CSR-eligible consumers are likely enrolling in lower-premium bronze plans, rather than the required silver plans. Meanwhile, other consumers may not be aware that CSRs are available and the benefits they offer.

The Congressional Budget Office (CBO) estimates that consumers will continue to forgo CSRs in the future. Indeed, the CBO projects 3 million individuals  who are eligible for CSRs will forgo subsidies by signing up for a bronze plan in the years after 2015.

http://avalere.com/expertise/managed-care/insights/more-than-2-million-e…

One of the more prominent problems with our dysfunctional system of financing health care is that the first decision faced by health care “consumers” is how much they are willing to pay towards the insurance premium, whether paying in full or sharing the cost with an employer or public program. People who are relatively healthy and do not expect to need much health care and whose incomes are limited will tend to select a plan with a lower premium regardless of the plan benefits.

A prime example is found in this report from Avalere. More than 2 million people who would be eligible for cost-sharing reductions if they selected qualifying silver level plans instead select bronze plans with their lower premiums, disqualifying them for the cost-sharing reductions. If they either have or should develop significant medical conditions, they are much worse off financially by having selected a bronze plan.

Another example of selecting plans based on the premiums has been the increase in the prevalence of high-deductible plans, selected because of their lower premiums. Once again, those who develop significant problems are worse off financially with high-deductible plans.

Shopping for cheaper premiums does not exist in a single payer system since the entire system is financed through equitable taxes rather than being financed on an individual basis, and there is no need to shop for plan benefits since everyone receives the same comprehensive benefits.

Instead of having a system wherein individuals are cornered into selecting a plan that is not in their best interests, everyone could participate in a system that is efficient, equitable, comprehensive and affordable for all – a single payer national health program.