Exchange product benefit design: Consumer responsibility and value consciousness
Over the past several months, we have closely examined the new individual exchange market landscape from several perspectives: which carriers are offering what products at what price points, the composition of hospital networks attached to these products, and how consumers are responding to the initial exchange product offerings. In this Intelligence Brief, we examine the benefit designs (e.g., deductibles, maximum out-of-pocket (MOOP) requirements, co-pays, and co-insurance) of the new exchange products and their potential impact on consumers, carriers, and providers.
We have based our research and findings on an analysis of the benefit designs used in all 19,484 exchange products across bronze, silver, gold, and platinum metal tiers offered across the 501 exchange rating areas in 50 states and the District of Columbia. We derived our comparisons with the 2013 individual market from an analysis of over 31,000 products offered during that year in 495 of those rating areas1. Some of our data (i.e., co-pay design for urgent care, out-patient, and prescription drug) was obtainable only from the state-run exchanges and thus is based on 2,068 bronze- and silver-tier products. (See the Appendix for more detail on our methodology.) Most of our data reflects national averages, and may vary significantly from those found in individual rating areas. However, at points in the brief, when noted, we do delve into market-specific data.
There are five key observations from our analyses:
- Average level of coverage of individual exchange products is higher than in 2013, as required by actuarial value (AV) and Essential Health Benefits (EHB)
- Exchange product benefit designs reveal considerable cost-sharing (e.g., through deductibles, co-pays, MOOPs) with enrollees, and this may make them value-conscious consumers
- Product designs differ significantly even within the same tier, and the selection of an economically optimal vs. non-optimal product can have a significant impact on total out-of-pocket obligations across income groups; premium differences alone account for only part of this potential economic impact
- By utilizing levers making consumers financially responsible, carriers are encouraging them to select lower cost types of service
- Deductible levels for various provider services may lead to realized reimbursements lower than negotiated; some reimbursement realization will be enhanced by cost- sharing subsidies available to lower-income (250 percent federal poverty level (FPL)) silver product enrollees
- Our source for 2013 data was eHealth; no carriers in Maine or Rhode Island participated in e-health in 2013.