Shoppers buying health insurance from traditional sources have shown a greater affinity for pricier gold and platinum plans than have consumers seeking tax credits through federal and state venues, a report shows.
Midpriced silver plans drew the largest share of customers both on and off the federal and state exchanges established by the Affordable Care Act. Those plans proved less popular, however, among shoppers bypassing government marketplaces and opting to pay for their coverage without the help of tax credits, according to a recent report by The Commonwealth Fund, a private foundation that researches health care issues and awards grants.
The more expensive gold and platinum plans — which offer more generous benefits and cover a greater share of beneficiaries’ medical costs — also appeal to people who have health problems or a family member with a medical condition, the report noted.
“It doesn’t surprise me that the people who are buying off the exchange are purchasing the richer plans,” said Loretta Camp, an independent insurance agent at Davidson Camp Insurance Services in San Antonio. “In many instances, those are the people who need to use them the most. … They would just as soon pay a higher premium to complete their out-of-pocket (expenses) sooner.”
For consumers who use their health insurance frequently, the more expensive gold and platinum plans can offer a better value.
“If a client is ill or they’ve got a family member who has a prolonged illness or has some medical problems, that’s where we really dig in and put a pencil to the gold and platinum plans that are available,” said independent insurance agent Justin Holland, founder and owner of Texas State Financial & Health, a San Antonio firm. “They know that they’ll meet their out-of-pocket maximum very quickly.”
Both Camp and Holland are members of the San Antonio Association of Health Underwriters, a group of licensed independent health insurance agents, brokers and benefits consultants.
Platinum plans — which provide the greatest protection available to consumers but cost more to purchase — generally cover 90 percent of the average person’s medical costs. Gold plans cover around 80 percent of those costs, on average.
Silver plans cover around 70 percent of the average person’s medical costs. Bronze plans — the least expensive tier of health insurance — cover 60 percent.
Insurers offered more expensive plans with broader provider networks outside of the exchanges, the Commonwealth Fund report found.
“Narrow networks are less appealing … to people with more complex health problems who tend to prefer a wider choice of specialists,” the report stated. “Therefore, people with pre-existing conditions could be more likely to shop for plans off the exchanges.”
Government-run exchanges remain the only places where people can apply for tax credits to reduce their health insurance premiums. The subsidies generally are not available to anyone earning more than four times the federal poverty level.
Some consumers, however, decline to shop on the federal and state venues for various reasons. Some make too much money to qualify for tax credits. Others don’t agree with the Affordable Care Act or don’t want to accept subsidies. Others loathe the idea of sharing their personal information with the government.
“We definitely have people that go outside of the exchange,” Camp said Monday. “We have a lot of people that have a need for an individual plan — either they’re no longer affiliated with someone that offers a group plan, or they find it is more cost-effective to do it on their own or they’re a small business.
“We have at least an equal number of people who buy off the exchange as buy on the exchange.”
The Commonwealth Fund report released Aug. 18 showed that 570 insurers nationwide had projected in their filings with the federal government that more than 11 million people would buy health insurance this year on the government-run exchanges, while a smaller number of customers — nearly 3 million people — would buy health plans outside of the federal and state marketplaces.
The insurers’ exchange projections appear to have been on target. A total of 10.2 million Americans bought health plans through federal and state exchanges during open enrollment and paid their required premiums as of March 31, the Centers for Medicare & Medicaid Services said in June. An additional 943,934 Americans selected plans through the government-run exchanges during a special enrollment period as of June 30, but it is unknown how many paid their premiums.
Whether carriers’ projected sales outside of the exchanges ended up being accurate isn’t known. There is no source that aggregates how many people buy health insurance outside of the federal and state marketplaces.
Insurers predicted in their federal filings that more than one-third of consumers shopping outside of the exchanges would buy the pricier gold or platinum health plans this year, the Commonwealth Fund report found. Insurers projected 12 percent of those customers would buy platinum plans, while 22 percent would buy gold plans.
On the federal- and state-run exchanges, insurers projected a smaller share of shoppers — just 18 percent — would buy gold or platinum plans.
Insurers anticipated mid-priced silver plans would prove most popular both on and off the government exchanges. But they predicted only 37 percent of consumers buying health insurance outside of those exchanges would select silver plans, compared to 58 percent of customers shopping in government-run markets.
Holland said the reason for silver plans’ popularity on the exchanges is simple. Lower-income consumers who also qualify for the cost-sharing reduction benefit — which limits how much they pay out-of-pocket for deductibles, copays and other expenses — are required to select silver plans to receive that discount.
Matthew Mora, an independent insurance broker at Benefit Source Solutions in San Antonio, said the consumer preferences cited in the Commonwealth Fund report appear to be accurate.
Mora said his affluent clients tend to gravitate toward health insurance plans that will pose the least worries if used. “In other words, as low deductible as possible, as low out-of-pocket as possible,” he said.
But he cautioned that buying an expensive insurance policy isn’t always the best option for those with the most purchasing power.
Such consumers might be better off putting $10,000 in a health savings account at a credit union or bank and buying a high-deductible health plan with lower monthly premiums, Mora said. The funds in the health savings account can then be used as a form of self-insurance, he said.
It’s possible that well-off consumers buying the pricier health insurance plans “are educating themselves to a certain extent and really spending too much money per month on a policy that they really may not need,” said Mora, also a member of the local health underwriters association.
Date: August 24, 2015