HHS embraces high deductibles

It's funny how a trend impinges on your consciousness: you think something is new, then it gradually dawns that it's been going on for some time. Such is the case (for me) with an emerging mode of compensating for the unaffordability of healthcare at U.S. prices.

On Tuesday CMS, apparently stung by news accounts of ACA marketplace customers whose plan deductibles were so high they found care inaccessible, put up a blog post touting many plans' provisions of some services that are covered before the deductible is reached:

On Thursday, I took a look at the benefit structure provided by Centene's Ambetter, an insurer that has "cornered the silver market" in several large cities, including Miami, Chicago and Seattle. Ambetter plans feature high deductibles and a relatively broad array of services offered beneath the deductible:

Now, this morning, via Timothy Jost at Health Affairs, I come across HHS's proposed standardized benefit plans for 2017 (optional for insurers but to be highlighted in marketplace offerings). It too features high deductibles -- $3,500 for silver unenhanced by Cost Sharing Reduction -- while stressing benefits offered before the deductible is reached:

The proposed rule would create six standard option plans—a bronze, a gold, a standard silver, and three silver plan options — at the 73 percent, 87 percent, and 94 percent actuarial-value levels — available for individuals eligible for cost sharing reduction payments. The plans would have

• standard deductibles (ranging from $6,650 for the bronze plan to $3,500 for the standard silver to $250 for the 94 percent silver cost-sharing variation),

• four-tier drug formularies,

• only one in-network provider tier,

• deductible-free services (for the silver level plan including urgent care, primary care visits, specialist visits, generic drugs, and some preferred brand drugs),

• and a preference for copayments over coinsurance.

Insurers would not be required to offer standardized plans and could offer non-standardized plans (as long as they met meaningful difference standards), but standardized plans would be displayed in a manner that would make them easy for consumers to find.

For people without significant financial resources, this strikes me as a band-aid approach -- it provides some benefit until you have a significant illness or accident. It underscores the basic unaffordability of health care at U.S. prices -- for individuals, insurers and the federal government.  I suspect that until we're driven to impose some form of uniform payment schedule for medical services, underinsurance will become increasingly pervasive.

Update: The similarity between CMS' post emphasizing current below-the-deductible services and HHS's standardized benefit sketch is not coincidental. The HHS rule makes explicit that a) the proposed standardized design is based on what's most popular now, and b) that it follows the same features that the CMS post spotlights. From the proposed rule (p. 202):

The cheapest silver plans are the most popular -- in large part because over 80% of silver buyers access Cost Sharing Reduction, which insulates them from high deductibles in silver plans unenhanced by CSR.  More broadly, I would ask: is the cheapest/most popular design necessarily optimal?

Update, 11/25: Richard Mayhew scopes out how donut hole coverage affects plan holders at four levels of usage.