ACA Trade-Off: Low Premium, High Deductible

WASHINGTON (AP) — You might be pleased with the low monthly premium for one of the new health insurance plans under President Barack Obama's overhaul, but the added expense of copayments and deductibles could burn a hole in your wallet.

An independent analysis released Wednesday, on the heels of an administration report emphasizing affordable premiums, is helping to fill out the bottom line for consumers.

The annual deductible for a mid-range "silver" plan averaged $2,550 in a sample of six states studied by Avalere Health, or more than twice the typical deductible in employer plans. A deductible is the amount consumers must pay each year before their plan starts picking up the bills.

Americans looking for a health plan in new state insurance markets that open next week will face a trade-off familiar to purchasers of automobile coverage: to keep your premiums manageable, you agree to pay a bigger chunk of the repair bill if you get in a crash. Except that unlike an auto accident, serious illness is often not a self-contained event.

Avalere also found that the new plans will require patients to pay a hefty share of the cost — 40 percent on average — for certain pricey drugs, like the newer specialty medications used to treat intractable chronic diseases such as rheumatoid arthritis and multiple sclerosis. On the other hand, preventive care will be free of charge to the patient.

"Consumers will need to balance lower monthly premiums against the potential for unpredictable, expensive out-of-pocket costs in plans with higher deductibles," said Caroline Pearson, a vice president of the private market analysis firm. "There is a risk that patients could forgo needed care when faced with high up-front deductibles."

Responding to the Avalere study, the Obama administration acknowledged the new plans aren't as generous as employer coverage, but said they nonetheless represent a big improvement over currently available individual policies, which can have gaps in coverage and even larger out-of-pocket costs.

Also on Wednesday, the administration unveiled premiums and plan choices for 36 states where the federal government is taking the lead to cover uninsured residents. Insurance markets that go live Oct. 1 will offer subsidized private coverage to people who do not have health insurance on the job, including the uninsured and those who currently buy their own policies.

Before new tax credits that work like a discount for most consumers, premiums for a mid-range "silver" benchmark plan will average $328 a month nationally for an individual, the administration report found. Beneath that average are wide differences for individuals, depending on where they live, how much they make, and other factors.

Health and Human Services Secretary Kathleen Sebelius said the average consumer will be able to choose among more than 50 plan options.

"For millions of Americans, these new options will finally make health insurance work within their budgets," Sebelius told reporters in a preview call Tuesday. The markets — called "exchanges" in some states — are the only place where consumers will be able to get a tax credit for health insurance.

HHS estimated that about 95 percent of consumers will have two or more insurers to choose from. And the administration says premiums will generally be lower than what congressional budget experts estimated when the legislation was being debated. About one-fourth of the insurers participating are new to the individual coverage market, a sign that could be good for competition.

But averages can be misleading. When it comes to the new health care law, individuals can get dramatically different results based on their particular circumstances.

Where you live, the plan you pick, family size, age, tax credits based on your income, and even tobacco use will all impact the bottom line. All those variables could make the system hard to navigate.

For example, the average individual premium for a benchmark policy known as the "second-lowest-cost silver plan" ranges from a low of $192 in Minnesota to a high of $516 in Wyoming. That's the sticker price, before tax credits.

In the three states with the highest uninsured population, the benchmark plan will average $373 in California, $305 in Texas, and $328 in Florida. Differences between states can be due to the number of insurers competing and other factors.

"One surprise is Texas," said Larry Levitt of the Kaiser Family Foundation. "That is a state that has put up roadblocks to implementation, but the premiums there are below average."

The second-lowest-cost silver plan is important because tax credits are keyed to its cost in local areas.

But consumers don't have to take silver. They can pick from four levels of coverage, from bronze to platinum. All the plans cover the same benefits and cap annual out-of-pocket expenses at $6,350 for an individual, $12,700 for families.

The big difference is cost sharing through annual deductibles and copayments. Bronze covers 60 percent of expected costs; silver, 70 percent, on up to platinum at 90 percent. Bronze plans have the lowest premiums and the highest cost sharing.

As the Avalere study showed, premiums aren't the only factor consumers should weigh.

The flurry of new reports comes as the White House swings into full campaign mode to promote the benefits of the Affordable Care Act to a skeptical public. Congressional Republicans, meanwhile, refuse to abandon their quest to derail "Obamacare" and are flirting with a government shutdown to force the issue.

Starting Jan. 1, virtually all Americans will be required to carry health insurance or face fines. At the same time, the health care law will prohibit insurance companies from turning away people in poor health, or charging them more.