Health Insurance

Many Obamacare customers paid lower out-of-pocket costs this year

Andrew Harrer | Bloomberg | Getty Images

Many Obamacare customers are facing lower out-of-pocket health costs this year compared to 2015, federal health officials revealed Tuesday, as they continued pitching coverage sold on government health marketplaces as an affordable option for consumers.

The Obama administration said median deductibles for insurance plans fell from $900 last year, to $850 annually this year, a 5.5 percent decrease.

Officials also said that plans sold on that federally operated marketplace, which serves 38 states, typically cover seven or more common health services without requiring that consumers meet their deductible limits first — meaning that many people are not having to spend much, if anything, out of pocket for their typical medical needs.

A deductible is the amount a patient must personally spend for health services or medications before they are covered by their insurance plans for these costs.

The administration's report comes as health officials are increasingly trying to paint an attractive picture of Obamacare plans for the currently uninsured in advance of November's start of open enrollment for coverage effective in 2017. In the past month or so, it has become clear that monthly premium prices for 2017 plans are likely to rise more sharply than they have in past years.

About 11.1 million people are currently enrolled in Obamacare plans nationally this year.

A common criticism of those plans is that they often have higher deductibles than the coverage received by people with insurance through their employers.

One of the health officials said that the first three years of Obamacare enrollment have featured "a lot of discussion around deductibles ... largely driven by anecdotal stories" that customers were facing such high out-of-pocket burdens that they avoided getting care.

The official, Christen Linke Young, said Tuesday's report addresses the "two key misconceptions," that such out-of-pocket costs are too high for many customers, and that their plans don't cover many services without requiring deductible contributions.

The report noted that one-third of customers have deductibles of less than or equal to $250.

And more than half of the customers have deductibles of less than $1,000, according to the report.

"The majority of our consumers are in plans that are far lower [in terms of deductibles] than many folks might think," said Linke Young, principal deputy director of the Center for Consumer Information and Insurance Oversight at the federal Centers for Medicare and Medicaid Services.

Those lower actual deductibles reflect the fact that although more than half of the plans sold on have a listed deductible of $3,000 or more, nearly 60 percent of Obamacare customers qualify for financial aid that reduces the amount of money they are responsible for paying out of pocket, which includes deductibles, copayments and coinsurance. That aid is available to people who earn less than 250 percent of the federal poverty level, or about $60,000 for a family.

That assistance comes on top of the financial tax credits that reduce monthly premiums for about 85 percent of Obamacare customers. Officials have noted that those tax credits, or subsidies, insulate most customers from the effect of annual premium price increases as long as they shop around among plans.

Source: Centers for Medicare and Medicaid Services

And in cases of people with higher Obamacare deductibles, Linke Young said, the deductible level often isn't "relevant," because the services people are often using are typically covered at no out-of-pocket cost.

On average, the report said, plans cover seven services before the deductible, and about one-third of customers of that exchange have policies that cover at least 10 services before the deductible.

Those services, which can include generic and other types of drugs, primary care doctor and specialist visits, specialist visits, and mental health outpatient treatment, are on top of the suite of preventative services that all health insurance plans must cover under the Affordable Care Act.

"This report shows that marketplace plans are providing consumers with real financial protections and access to important health services," said CEO Kevin Counihan.

But even as Counihan and Linke Young pointed out the improvement in the deductible burden for many customers, the report revealed that the median deductible for customers in the most popular kinds of coverage who do not get financial help is a steep $3,000 annually.

And even with financial aid, people can face deductibles that would require them to pay as much as $2,500 annually if they opted for the most popular plans, known as "silver plans."

Those plans cover about 70 percent of their customers' health costs, and have a higher monthly premium than the cheapest Obamacare options, bronze plans, but their deductibles are routinely lower than bronze plans. To qualify for federal aid to lower their out-of-pocket costs, people whose household income is below 250 percent of the poverty level must enroll in silver plans.

For those who don't qualify for the help, or who chose other than a silver plan, the deductibles can be much higher than the lower medians highlighted in the report.

About 15 percent of customers have deductibles of between $1,001 and $3,000, according to the report. Another 12 percent have deductibles in the range of $3,000 to $5,000. And 17 percent of customers have deductibles that are more than $5,000.