Out-of-Pocket Health Costs

USC Annenberg Reporting on Health Webinar

October 29, 2015

Larry Levitt

Senior Vice President, Kaiser Family Foundation

@larry_levitt

Deductible

Copay/Coinsurance

Tier

Out-of-Pocket Maximum

Balance Billing

Metal Tiers (Bronze, Silver, Gold, Platinum)

Summary of Benefits and Coverage (SBC)

Some terms you probably understand, but just to make sure…

A tale of two ACA marketplace plans (Seattle)

Deductibles have been rising in employer plans

$584 $616

$735

$826

$917$991

$1,097$1,135

$1,217

$1,318

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Kaiser-HRET Employer Health Benefits Survey. Average deductible for those with a deductible.

16%

21%*

35%*

40%

46%50% 49%

58%*61%

63%

6%8% 9%

13%*17%

22%*26%

28%32%

39%*

10%12%*

18%*22%*

27%*31%

34%38%

41%

46%

0%

10%

20%

30%

40%

50%

60%

70%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

All Small Firms (3-199 Workers)

All Large Firms (200 or More Workers)

All Firms

* Estimate is statistically different from estimate for the previous year shown (p<.05).

NOTE: These estimates include workers enrolled in HDHP/SO and other plan types. Average general annual health plan deductibles for PPOs, POS plans, and HDHP/SOs are for in-network services.

SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2015.

Percentage of covered workers enrolled in a plan with a general annual deductible of $1,000 or more for single coverage

Cumulative increases in health insurance premiums, general annual deductibles, inflation, and workers’ earnings

9%10%

67%

24%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2010 2011 2012 2013 2014 2015

Overall Inflation

Workers Earnings

Single Coverage Deductibles, all Workers

Single Coverage Premiums

NOTE: Average general annual deductible is among all covered workers. Workers in plans without a general annual deductible for in-network services are assigned a value of zero. SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2015. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 2006-2014; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 2006-2015 (April to April).

Average medical deductible, in plans with combined medical and prescription drug deductibles

$5,328

$2,556

$845

$69

Bronze Silver Gold Platinum

Average subsidized medical deductible in plans with combined medical and prescription drug deductible

$2,556

$2,077

$737

$229

Silver CSR73 CSR87 CSR94

NOTES: CSR73 refers to a reduced cost-sharing plan with an actuarial value of 73%. CSR87 and CSR94 have actuarial values of 87% and 94%, respectively.SOURCE: Kaiser Family Foundation analysis of Marketplace plans in the 37 states with Federally Facilitated or Partnership exchanges in 2015 (including New Mexico, Oregon, and Nevada). Data are from Healthcare.gov Health plan information for individuals and families available here: https://www.healthcare.gov/health-plan-information/

• Lowers the premium by decreasing how much the insurance plan pays for services

• Focuses insurance on high-cost, unpredictable expenses

• Decreases health spending by encouraging patients to obtain fewer services (both care that is valuable and care that is not)

• Provides incentives to obtain appropriate care (depending on the design)

Why cost-sharing in insurance matters

24%

55%

35%

11%

35%

68%

51%

19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

All Households 100% to 250% FPL($23,550 to $58,875)

250% to 400% FPL($58,875 to $94,200)

Over 400% FPL($94,200)

Mid Range Deductible: $1,200 Single/$2400 Family

Higher Range Deductible: $2,500 Single/$5,000 Family

Many households do not have liquid assets to meet health insurance deductiblesAmong all non-elderly, non-poor households with private insurance

SOURCE: Kaiser Family Foundation analysis of 2013 Survey of Consumer Finance (SCF) data. Income ranges are for a family of four.

Typical Scenarios

• Balance billing for care at an out-of-network facility in an emergency

• Out-of-network cost-sharing and balance billing for services received at an in-network facility

New York Law

• In-network cost-sharing and no balance billing for surprise bills

• Surprise bills include situations where a network provider is not available, a non-network doctor provides treatment without the patient’s knowledge/consent, there were unforeseen medical circumstances

• Independent dispute resolution for payment disputes between insurers and providers

Surprise medical bills

10

How the Cadillac plan tax works

• 40% excise tax on plan costs in excess of thresholds begins in 2018

• Thresholds: $10,200 for single, $27,500 for family

• Adjustments for age, gender, high-risk professions, retirees, Taft-Hartley

• Thresholds increase with inflation

• Tax applies to a broad range of health benefit expenses

– Premium (employer and employee share)

– Employer Contribution to HSAs and HRAs

– Payroll deductions for FSAs and HSAs

– Other Pre-Tax health benefits (on-site clinics)

• Assessed against services provider, some chance for simplification

26%30%

42%

2018 2023 2028

Includes premiums, employer contributions to HSA,HRA and FSA contribution

SOURCE: Kaiser Family Foundation analysis

Percent of employers offering health benefits with plans that would exceed Cadillac tax threshold with 5% premium growth