• Deductibles in the exchanges

    A reader asks by email,

    I had a question about deductibles under the Patient Protection and Affordable Care Act. Can they be arbitrarily high under the act?

    Not really. At the same time, there isn’t an explicit ceiling. Here’s how it’s explained in a Kaiser Family Foundation document (PDF).

    [T]he levels of coverage in the ACA are not defined using specific deductibles, copays, and coinsurance. Rather, they are specified using the concept of an “actuarial value” (AV). For example, a plan with an actuarial value of 70% (referred to as a “silver” plan in the ACA) means that for a standard population, the plan will pay 70% of their health care expenses, while the enrollees themselves will pay 30% through some combination of deductibles, copays, and coinsurance. The higher the actuarial value, the less patient cost-sharing the plan will have on average. The percentage a plan pays for any given enrollee will generally be different from the actuarial value, depending upon the health care services used and the total cost of those services. And, the details of the patient costsharing will likely vary from plan to plan.

    For more on coverage in exchanges, costsharing, and actuarial value, read the KFF doc. (Aside: I didn’t know “costsharing” was one word now. I don’t believe I ever used it as such. Maybe I will now. But it feels weird.)


    • I’m confused.

      In this post:


      Ezra Klein quotes Blue Cross Blue Shield as being concerned that they may not be able to construct a Bronze plan (60% AV) while staying within a limit of $2,000 “out of pocket deductible” annually. Apparently BCBS is lobbying for a change to ACA regulations that would permit a higher deductible level.

    • I hope that I can keep my $10,000 deductible plan. I can see The Democrats wanting to reduce the number of people in those plans that pay nothing over some level but I think they should encourage higher deductibles at least for people with above high school education.

    • The $2,000 deductible applies only to small group plans I believe. Between the essential benefits and the OOP maxes, 60% could be pretty hard to get with a $2k deductible.

      So they are arbitrarily low for small group and there is a cap on how high based on the max out of pocket.

    • This is an area we will be looking at with Milliman regarding our plan.
      The basic design would be similar to Obamacare, even with first dollar coverage.
      In addition, a participant can elect to build up paid-up coverage, so that, with no claims, he can accumulate $25,000 in paid-up benefits in 36 months, and $50,000 in benefits in 60 months.
      Even though he has first dollar coverage, his premiums are based on a deductible set to match his paid-up balance.
      I know that one health care attorney has attempted to get a waiver on just the HRA.
      We will probably be attempting to get a waiver on just our paid-up benefits plan, which actually fund an increasing deductible.
      We believe the government will like our plan design, for by sharing in the risk, premiums are lowered, and the corresponding subsidies are lowered. We would be “lessening the burdens of government, ” a key reason for a not-for -profit (insurer) to exist.
      Don Levit