Catastrophic plans?

[Greenbeard]

The AP tries to tackle actuarial value. Color me impressed.

During the recent oral arguments some of the justices and the lawyers appearing before them seemed to be under the impression that the law does not allow most consumers to buy low-cost, stripped-down insurance to satisfy its controversial coverage requirement.

In fact, the law provides for a cheaper "bronze" plan that is broadly similar to today's so-called catastrophic coverage policies for individuals, several insurance experts said.

"I think there is confusion," said Paul Keckley, health research chief for Deloitte, a major benefits consultant. "I found myself wondering how much they understood the Affordable Care Act. Several times the questions led me to wonder how much (the justices') clerks had gone back into the law in advance of the arguments."

Monthly premiums for the bronze plan would be lower, and it would cover a much smaller share of medical expenses than a typical employer plan.

"Bronze is a very skinny product," said Keckley.

"I would definitely say that if you listen to the court proceedings it would be easy to come away with the impression that the health care reform law was requiring people to buy Cadillac insurance, which is certainly not the case," said Larry Levitt, head of the Kaiser Family Foundation's Initiative on Health Reform and Private Insurance. The foundation is a nonpartisan information clearinghouse.

The health care law does impose a minimum set of "essential health benefits" for most insurance plans. Those benefits have yet to be specified, but are expected to reflect what a typical small-business plan now offers, with added preventive, mental health and other services.

On the surface, the minimum benefits requirement does seem to mandate comprehensive coverage. But another provision of the law works in the opposite direction, and the two have to be weighed together.

This second provision allows insurance companies to sell policies that have widely different levels of annual deductibles and copayments. A "platinum" plan would cover 90 percent of expected health care expenses, but on the bottom tier a bronze plan only covers 60 percent. Employer plans now cover about 80 percent.

"The minimum that people will be required to buy under the health reform law is clearly a catastrophic plan," said Levitt.

In return for taking on more financial risk, you'll pay lower monthly premiums for a bronze plan, making it easier to budget for. You'll be covered for the same kinds of treatments as everybody else, but your plan won't pay the hospital bill until you've spent a good chunk of your own money out of pocket.

Recalling the three actuarial consulting firm's estimates:

If enjoying a national dialogue on insurance design is cool, consider me Miles Davis.