ASPE RESEARCH BRIEF PREMIUM AFFORDABILITY, COMPETITION, AND CHOICE IN THE HEALTH INSURANCE MARKETPLACE, 2014
Amy Burke, Arpit Misra, Steven Sheingold
is the establishment of the Health Insurance Marketplace ("Marketplace") where consumers can purchase health insurance plans in a competitive market. Consumers may be eligible for financial assistance to offset the cost of premiums, if their income meets certain requirements. 2 As an initial step to understanding how the Marketplace is working in its first year of operation, and in looking forward to future years, we provide an overview of health insurance plan premiums available in the
... ace and the important role of the advanced premium tax credit ("tax credit") in helping families afford coverage. We analyze data on the change in the premium cost associated with the tax credit for Marketplace plan selections that were made through the Federally-facilitated Marketplace (FFM) during the initial open enrollment period. Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation http://aspe.hhs.gov ASPE Research Brief Page 2 Also, we examine over 19,000 Marketplace plans 4 4 A Marketplace plan is a qualified health plan (QHP) that has been certified to be offered in a Marketplace. A health insurance issuer may offer multiple Marketplace plans. For example, a silver plan and a bronze plan from one health insurance issuer would be counted as two Marketplace plans. Catastrophic plans were not counted toward this total. This analysis also excludes Virginia plans that required coverage of bariatric surgery as these were extreme price outliers. for 2014, within the four metal levels (bronze, silver, gold, and platinum) 5 5 The Affordable Care Act requires that Marketplace plans must be one of four tiers, or "metal levels," based on actuarial value (AV) (Catastrophic plans are exempt from this requirement). Section 1302(d)(2)(A) of the Affordable Care Act stipulates that AV be calculated based on the provision of essential health benefits (EHB) to a standard population. The statute groups the plans into four tiers: bronze, with an AV of 60 percent; silver, with an AV of 70 percent; gold, with an AV of 80 percent; and platinum, with an AV of 90 percent. The final rule implementing the calculation of AV establishes that a de minimis variation of +/-2 percentage points of AV is allowed for each tier. for each of the 501 rating areas across 50 states and the District of Columbia. 6 6 Plan and premium data were taken from the following publicly available sources: Healthcare.gov, state rate filings (where available), and State-based Marketplace websites. Our analysis shows how differences in plan and market characteristics are associated with differences in premiums across the nation. Research Brief Highlights Marketplace Plan Choices and the Impact of Advanced Premium Tax Credits on Premiums: Individuals who selected plans in the FFM with tax credits 7 7 Represents individuals who have selected a Marketplace plan with a non-zero tax credit. have a post-tax credit premium that is 76 percent less than the full premium, on average, as a result of the tax credit-reducing their premium from $346 to $82 per month. 69 percent of individuals selecting plans with tax credits in the FFM have premiums of $100 or less after tax credits-nearly half (46 percent) have premiums of $50 or less after tax credits. Individuals choosing silver plans in the FFM tended to select lower premium plans-65 percent chose the lowest or second-lowest cost silver plan. Overview of the 2014 Health Insurance Marketplace and the Association Between Competition, Other Market Factors, and Variation in Premiums: Most individuals had a wide range of health plan choices. Eighty-two percent of people eligible to purchase a qualified health plan live in rating areas with 3 to 11 issuers in the Marketplace; 96 percent live in rating areas with 2 to 11 issuers in the Marketplace. Competition, as measured by the number of issuers in a rating area, is associated with more affordable benchmark plans (the second-lowest cost silver plan) for individuals and reduced costs for the federal government. An additional issuer in a rating area is associated with a 4 percent lower benchmark premium. Areas with a greater number of issuers also tend to offer a wider range of choices among plan types (e.g. PPOs, HMOs, CO-OP) to better meet consumers' preferences and financial needs.