Most Current Individual Insurance Plans Are Not Exchange-Worthy

More than half of the individual health insurance policies in effect in 2010 fell below the minimum threshold that individual policies will have to meet starting in 2014, according to a study published by the journal Health Affairs.

Under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), many people who currently cannot get insurance coverage will be able to purchase it through insurance Exchanges established in each state. Insurance companies that want to offer individual policies through the Exchanges, however, must meet minimum standards regarding both coverage and cost.

For example, insurance plans offered through Exchanges must include coverage for 10 “essential health benefits,” including ambulatory services; emergency services; hospitalization; maternity and newborn services; mental health and substance use disorder treatments, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services (those that provide medically necessary therapies to children with developmental disabilities and similar conditions) and devices; laboratory services; preventive and wellness services, including chronic disease management; and pediatric services including vision and oral care.

In addition, under PPACA, insurance companies can offer four different types of plans with different levels of cost sharing involved. A platinum plan would cover 90 percent or more of medical bills; a gold plan would pay 80 to 89 percent; a silver plan, 70 to 79 percent; and a bronze plan, 60 to 69 percent.

The Health Affairs researchers concluded that most group plans on the market today fall into the “gold” range, while more than half of the individual plans offered today would not even qualify for “bronze” plan status.

More specifically, in 2010, more than 60 percent of people enrolled in a group health plan (usually through an employer) were enrolled in either a gold or platinum plan. Twenty-eight percent were in the silver tier, and 6 percent were in the bronze tier. In contrast, 51 percent of people enrolled in an individual plan had coverage that wouldn’t even qualify for bronze status. About 33 percent were in a bronze plan, 14 percent in a silver plan, and 2 percent in a gold plan. No one in the individual insurance market surveyed by Health Affairs had a platinum plan.

Health Affairs concluded that “Families with coverage through the exchanges are likely to have less financial protection than employees with employer-based coverage enjoy today.” Insurance companies offering individual plans starting with the 2014 plan year will have to alter their benefits packages, or they will not be able to participate in the Exchanges.