Insurers are pushing the administration to approve a new catastrophic plan option, which the top industry trade group argued Wednesday would provide lower coverage for a lower cost.
America’s Health Insurance Plans is pressing the federal government to allow health insurers to provide a lower level of coverage for customers who don’t want or need a costly, inclusive health care plan.
“We know that affordability, stability, and accessibility are top of mind for consumers when it comes to their health care,” AHIP chief Karen Igagni said in a statement. “These solutions demonstrate health plans’ ongoing efforts to advance these key priorities, and we intend to work with all stakeholders to provide consumers with greater peace of mind in the new marketplace.”
Obamacare exchanges currently offer four levels of health care plans: platinum, gold, silver and bronze, which cover a decreasing amount, respectively, of a customer’s health care costs. The most popular plans in the exchanges nationwide have been the silver-rated health plans, which offer the second-lowest premiums on average and slightly lower out-of-pocket costs than the bronze plans, which offer the cheapest premiums.
Catastrophic plans would offer significantly lower premiums for customers who don’t expect to use health care services often. The plans provide coverage in the case of high-cost situations like serious accidents or illnesses. The administration allows only those under 30 or with designated “hardship exemptions” to purchase a catastrophic plans, but AHIP wants to offer the option to the whole population.
While it runs counter to much of the Obama administration’s rhetoric on “junk” health insurance plans that don’t offer enough coverage, the federal government has already drastically widened the eligibility standards for catastrophic coverage. After Obamacare regulations canceled millions of health insurance plans, national outcry sparked the administration to allow those whose insurance was canceled and did not feel they had an affordable replacement option to purchase catastrophic coverage as well. (RELATED: Obama now offering individual mandate exemption)
“Such a plan would offer consumers the option of coverage that has lower monthly premiums but still provides the comfort of knowing that their costs will be limited in the event of a serious illness or injury,” AHIP argued.
An option for a lower-cost plan could also help any Americans that don’t want or don’t qualify for Medicaid coverage but also can’t afford the costly health insurance plans currently offered on Obamacare exchanges. Adding catastrophic plans to the exchange levels would also open the coverage to premium subsidies.
Opponents argue that some consumers will choose the plans and be hurt by the high deductibles and out of pocket costs.
During the first enrollment period, 125,585 Obamacare exchange customers bought catastrophic plans. Almost all the customers — 83 percent — were young adults, who are eligible for the plans, rather than hardship exemptions. Opening up catastrophic coverage to healthier and younger individuals would likely be a financial boon for the insurance industry.
“We know some young and healthy people who don’t qualify for Medicaid may not find the current options on the Exchange affordable,” said AHIP spokesman Brendan Buck. “Providing this lower-premium option could bring people who would otherwise go without coverage into the market. This increases coverage, but would also help stabilize premiums for everyone.”