Report: ‘Copper’ Exchange Plans Could Save Money, Boost Enrollment

Adding "copper" plans to the menu of options sold through the Affordable Care Act's insurance exchanges starting in 2016 would result in 350,000 additional U.S. residents enrolling in coverage and $300 million in deficit reduction over 10 years, according to a report by Avalere Health, Modern Healthcare's "Vital Signs" reports.

Background

Under the Affordable Care Act, the lowest-tier of plans sold through the ACA's exchanges -- called bronze plans -- are expected to cover 60% of an average enrollee's medical costs. The proposed copper plans, supported by America's Health Insurance Plans and several lawmakers, would cover 50% of such costs.

Report Findings

The report -- commissioned by the Council for Affordable Health Coverage -- estimated that copper plan premiums would be about $4,600 per year in 2016, nearly 18% below those of the average bronze plan (Demko, "Vital Signs," Modern Healthcare, 8/19).

As a result of the lower premiums, researchers estimated that 50% of those in the individual market currently enrolled in bronze plans would switch to copper plans and that nearly 75% of new enrollees who would have selected bronze plans would instead select a copper plan (Avalere Health report, 6/6).

According to the report, "[i]ntroducing a new tier in 2016 may cause some individuals who have already enrolled in a marketplace plan to re-evaluate their prior choice, while also attracting other individuals who are expected to enroll for the first time in a marketplace plan that year."

Further, the report found that the federal government would save $5.8 billion over a decade in reduced subsidy costs, but would take in $5.5 billion less revenue, mostly from a reduction in fines collected via the employer mandate penalty because more employers would continue offering coverage (Al-Faruque, The Hill, 8/19). Specifically, researchers estimated that 4% of employees who would have had their coverage dropped by their employers -- representing 0.1% of the current employer-sponsored market -- would instead retain their employer-based coverage with the introduction of copper plans (Avalere Health report, 6/6).

Reaction

Katherine Hempstead of the Robert Wood Johnson Foundation noted that only 20% of consumers opted for a bronze plan during the first open enrollment period and added that she does not think there is much of a market for lower-cost plans. She said, "It doesn't seem like there's a strong consumer preference for that." In addition, she expressed concern that copper plans would attract consumers with lower incomes who would be less able to pay the higher out-of-pocket costs ("Vital Signs," Modern Healthcare, 8/19).