The Affordable Care Act has been one of the most significant changes to public policy in the United States in a generation. It’s a tremendously complex policy initiative that involves an unbelievable amount of coordination between dozens of government agencies, and scores of private insurance companies. One of the biggest criticisms of the health insurance in the United States before the ACA became law was that even those who were insured could face catastrophic financial outcomes if they did get a debilitating illness because their insurance coverage was inadequate to protect them from huge medical bills.
Are the ACA plans perpetuating this problem?
In order to take a look at the coverage offered under the ACA, I analyzed a publicly available dataset of plans that were available in the insurance exchanges. One simple benchmark of how much coverage a plan offers is the Maximum Out of Pocket Costs (MOOP). In plain language the Max Out of Pocket is the maximum amount that a family would have to pay in a calendar year, at which point the insurance company would cover all other expenses completely. It’s a worst case scenario. There are two years of data in which to assess this. The embedded figure is a histogram of the Max Out of Pocket for 2014 and 2o15. The Department of Health and Human Services sets guidelines for maximum values for MOOP. In 2014, the maximum allowed was $12,700 and in 2015 it was $13,200.
One of the pleasant surprises of the ACA rollout is that more plans are available through the exchanges in 2015 than 2014. In fact the number of total plans almost doubled in 2015 from 11,763 to 22,314. That’s a sign that insurance companies are seeing the exchanges as a viable business model and want to enter the marketplace. However, the downside of that is that many of the new plans have very high Max Out of Pockets. In 2014, 36.1% of plans had family Max Out of Pockets of $12,700, which was the highest allowed under law. In 2015, when the maximum MOOP was raised to $13,200 many plans took advantage. In fact, in 2015 over 40% of all plans offered through the ACA had a MOOP of at least $12,700 dollars and 15% of plans had raised their MOOP to $13,200.
So, the initial impressions of the ACA are mixed. More insurance companies are buying in, which is undoubtedly a good thing for consumers. However, many of these plans do not offer serious financial protections for subscribers and could result in families facing financial hardship if they do have a catastrophic illness or injury.