California is first state to announce benefit plans including co-pays, deductibles
Calling today a "game changer for California and a game changer for the nation," Peter Lee, executive director of Covered California, the state's marketplace for health insurance, announced benefit plans that will be featured in the exchange.
He also unveiled its updated website (in English and Spanish) where consumers can access what is sure to be a very popular premium calculator. People with incomes up to 400 percent of poverty are eligible for subsidies from the federal government to help purchase insurance. The calculator gives an estimate of what you will pay after the subsidy.
An estimated 2.6 million Californians are expected to qualify for the subsidy. People who receive Medi-Cal or employer-based health insurance are not eligible and will continue to receive health insurance through their current plans.
California is the first state in the nation to release benefit packages for the public to review. "The most important aspect of these plans is that they’re standardized. ... Consumers will be able to make apples-to-apples comparisons that they haven’t been able to make in the past," Lee said in a press conference.
As called for in the Affordable Care Act, there will be four tiers of coverage: platinum, gold, silver and bronze. The platinum plan will cover 90 percent of health care costs and have the highest premium. The gold plan will cover 80 percent; the silver 70 percent.
The bronze plan will have the lowest premium and cover 60 percent of costs, "meaning a consumer would pay 40 percent out of pocket," said Ken Wood, senior advisor for Covered California. "That’s really a catastrophic plan that’s designed to protect someone from financial collapse if they had a severe illness. … So we are defining benefits across a wide range of richness and design and thus affordability.”
In other words, pay a higher premium and more of your health care costs will be covered.
California goes beyond federal requirements by detailing what deductibles and co-pays consumers may be charged. Platinum and gold plans will have no deductible, and a doctor's office visit will be $25 (platinum) or $45 (gold). From there, silver plans will have $2,000 deductibles, a $45 doctor's office visit co-pay and an additional $500 deductible for medications. (See chart at end of post for more detail on deductibles and co-pays.)
While Wednesday's announcement detailed many aspects of costs, the premium prices are still estimated and will not be finalized until June.
These standardized deductibles and co-pays are rules which apply to plans sold in the exchange. While health insurers may still offer plans of other designs outside the exchange, consumers who qualify for the subsidy must purchase their plan on the exchange.
"The HR department for the rest of us"
Calling these announcements a "bold, big step forward," Anthony Wright, executive director of the advocacy group Health Access said, "Consumers will get good and simple information about what the plan covers, and what it doesn't. It will remove the guesswork so many consumers go through trying to figure out the differences between plans. ... For individuals and families who don't work for large employers with significant purchasing power, Covered California will serve as the HR department for the rest of us."
Consumers can calculate their subsidies, but they should be sure to read the disclaimers -- especially noting that the subsidy is based on the "silver" tier of coverage.
Patrick Johnston, president of the California Association of Health Plans sounded a cautionary note, saying that the standardization of plans may reduce confusion, but might also increase premiums, then pointed to some of the requirements of the Affordable Care Act not addressed in Wednesday's news.
"New taxes, limits on geography-based pricing and age rating restrictions are all part of the Affordable Care Act that will drive up the cost of coverage for millions of consumers and employers," Johnston said. "We will see in the coming months whether the standardized benefit designs adversely impact premiums or not."
The benefit plans also feature out-of-pocket maximums: $6,400 for individuals and $12,800 for a family. In other words, if you get very sick or injured, that is the maximum amount you will have to pay outside of your premium.
“That’s a lot of money, let’s face it," said Ken Wood. "But when people can have hospital bills at $500,000 or $1,000,000, can find they’re in a bankruptcy situation because of that type of tragedy, having their exposure limited to $12,000 is a bit is a breakthrough.”