Will We Settle For Bronze?

In response to Maine Sen. Olympia Snowe’s request for information about“expected premiums under that proposal for policies that would meet the minimum requirements necessary to avoid paying a penalty for not having insurance," the Congressional Budget Office projected that premiums for Bronze plans purchased individually in 2016 would probably average between $4,500 and $5,000 for single policies and between $12,000 and $12,500 for family policies. The Senate’s Patient Protection and Affordable Care Act would require individuals to purchase at least a minimum coverage, “Bronze” health insurance policy.

The Senate bill would require uninsured individuals to pay a tax penalty of the greater of $750 per year up to a maximum of three times that amount ($2,250) per family or 2% of household income. The House bill would require a penalty of 2.5% of the uninsured’s adjusted income above the filing threshold up to the cost of the average national premium for self-only or family coverage under a basic plan in the Health Insurance Exchange.

“Average premiums for Bronze plans would be lower than average premiums for all plans because the actuarial value of Bronze plans would be 60 percent, compared with an estimated average actuarial value for all individually purchased plans of roughly 72 percent,” CBO wrote Ms. Snowe. .”That lower actuarial value would reduce premiums for Bronze plans directly, because the policy would pay for a smaller share of enrollees’ costs for covered services, and indirectly, because enrollees would use slightly fewer or less-expensive services when faced with the higher cost-sharing requirements included in Bronze plans.”
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In its January 12, Politics and Markets Blog, “Bronze Age Health Care,” the Investors Business Daily, cites the America’s Health Insurance Plans (AHIP, the insurance industry’s lobbying organization) study released in October 2009, that the average policy bought in the individual market in 2009 cost $2,985 for an individual and $6,328 for a family policy. Comparing the AHIP numbers with the CBO estimates for “Bronze” coverage, IBD concludes that “the Bronze Plan’s costs would rise faster than recent trends in private insurance.”

The IBD article continues: “Perhaps the problem is all the benefits that Bronze Plans will have to cover: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment, prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.” And, of course, why would any “reasonable” person need all that coverage?

And, as discussed in previous posts (here, and here) low actuarial value coupled with premium expenses, equal underinsurance, and great financial exposure. How does this fit in with President Obama’s original goal for health care reform to “protect families' financial health through reduced insurance premiums and related costs for individuals and businesses”?