By Sean Miskell

As insurers selling on the Affordable Care Act’s (ACA) Marketplaces begin to file their 2017 rates with the Department of Health and Human Services (HHS), concerns over proposed increases will once again emerge. But a report released by the HHS Assistant Secretary for Planning and Evaluation (ASPE) demonstrates that behind the headlines about rate hikes, consumers are likely to see much more modest premiums after they have shopped around for the best deal and after subsidies are taken into account. Nonetheless, additional research released this week reminds us of more longstanding trends towards higher out-of-pocket costs that pose challenges for consumers, even as state and federal Marketplaces work to address these challenges.

Premiums, Shopping, and Subsidies

Data suggesting that those seeking coverage through the ACA’s Marketplaces have higher medical costs than those who had coverage prior to the ACA has once again fostered concerns about premium increases for Marketplace coverage. Of course, none of this is news, as the need to provide a path to coverage for those who were previously locked out of health insurance was the main rationale for the ACA’s market reforms. Still, increasing premiums certainly pose a challenge for consumers and policymakers alike. But this week’s ASPE report demonstrates that proposed rate increases are only part of the story.

ASPE’s data reminds us that the Marketplaces are structured to facilitate shopping around for the best value. In its analysis of the 38 states operating on the federal Marketplace platform, 43 percent of returning customers shopped around and selected a different plan.

In addition, consumers can also qualify for subsidies through the Marketplace, and 85 percent of those with Marketplace plans received premium tax credits to offset the cost of coverage. ASPE reports that when subsidies are accounted for, the average monthly net premium increased by four percent between 2015 and 2016. Since the average net monthly premium after subsidies was $102 in 2015, this represents an average monthly increase of $4, for an average monthly premium of $106 in 2016.

More than Premiums: Rising Out-of Pocket Costs Threaten the Value of Coverage

But while ASPE’s research provides a more complete view of the way in which consumers experience Marketplace coverage, additional research released this week reminds us that premiums are not the whole story. In addition to premiums, consumers face additional out-of-pocket costs in the form of copays and deductibles. Recently released research from the Kaiser Family Foundation underscores the challenges that consumers face in affording their coverage even after the ACA’s market reforms. According to 2014 survey data, one third (33 percent) of those with Marketplace coverage reported having trouble paying for their premiums, compared with 17 percent of those with employer-sponsored coverage.

Kaiser’s survey data suggests that this difficulty in affording coverage stems from the interaction of premium costs with other expenses, some directly related to health care while others are the result of more general economic pressures on families with low and moderate incomes. For example, 49 percent of those reporting difficulty paying their premiums had dependent children in the home, compared with only 16 percent for those that did not report issues with their premium. Kaiser also finds that those with difficulty paying their premium were generally more likely to report facing financial challenges in other aspects of their lives.

Additional out-of pocket costs besides premiums also posed challenges for consumers. Kaiser reported that 36 percent of Marketplace consumers report dissatisfaction with their deductible. More generally, adults that reported trouble paying their premiums were more likely to use services (and thus more likely to face charges associated with their deductible). Further, as a result of these out-of-pocket charges, 38 percent of adults with difficulty paying their premium reported unmet need for care. This demonstrates that affordability challenges threaten access to core services, even for those with insurance.

Concerns about affordability are not a new phenomenon limited to the Marketplace. Rather, rising out-of-pocket costs have been a trend in the private insurance market. For example, a recent study of employer-sponsored coverage based on the Peterson-Kaiser Health System Tracker found that between 2004 and 2014, average payments by enrollees towards deductibles rose 256 percent, from $99 to $353. This led deductibles to go from representing a quarter of cost-sharing payments in 2004 to almost half in 2014. Buttressing these findings, the Commonwealth Fund recently reported that when total out-of-pocket costs are taken into account, including premiums, deductibles, and other cost sharing, a quarter of all adults with private insurance had unaffordable coverage.

Tools to Help Inform Consumer Choices

While these trends suggest that out-of-pocket costs will continue to be an issue for consumers looking for affordable coverage, HHS recently announced changes to Marketplace coverage that aim to assist consumers in finding a plan that is most affordable. This is important, as Kaiser’s recent report found that adults with difficulty affording their premiums were also more likely to report difficulty understanding aspects of their coverage. First, carriers selling through the FFM for the 2017 plan year will be required to offer a standard plan option with standardized in-network deductibles, cost-sharing limits, and copayments and coinsurance amounts. These standardized options will make it easier for consumers to compare benefits and costs across plans. These changes in the FFM build on efforts in state Marketplaces such as California, which requires insurers to offer standardized plan designs that specify which services may be subject to a deductible and otherwise limiting out-of-pocket costs. California also recently announced changes to their contracts with insurers that require plans to provide consumers with more tools to help consumers make informed choices when selecting plans and the costs of covered benefits.

In addition, HHS has revised the template for the Summary of Benefits and Coverage that serves to inform consumers of the costs and benefits associated with their plan. These summaries will now contain more information on which services are covered before the deductible and other limitations such as situations where cost-sharing on a covered service does not count toward the consumer’s out-of-pocket limit, numerical or dollar limits on services, and prior authorization requirements.  While long term trends suggest that out-of-pocket costs will continue to pose challenges for affordability and access for consumers, these tools will allow them to make more informed decisions about their coverage.