Abstract
For people with low and moderate incomes, the Affordable Care Act’s tax credits have made premium costs roughly comparable to those paid by people with job-based health insurance. For those with higher incomes, the tax credits phase out, meaning that adults in marketplace plans on average have higher premium costs than those in employer plans. The law’s cost-sharing reductions are reducing deductibles. Lower-income adults in marketplace plans were less likely than higher-income adults to report having deductibles of $1,000 or more. Majorities of new marketplace enrollees and those who have changed plans since they initially obtained marketplace coverage are satisfied with the doctors participating in their plans. Overall, the majority of marketplace enrollees expressed confidence in their ability to afford care if they were to become seriously ill. This issue brief explores these and other findings from the Commonwealth Fund Affordable Care Act Tracking Survey, February–April 2016.
BACKGROUND
About 26 million Americans have health insurance through the Affordable Care Act’s coverage expansions, either through the state or federal marketplaces or through expanded eligibility for Medicaid.1 Estimates from a recent survey (The Commonwealth Fund’s Affordable Care Act Tracking Survey, conducted between February and April 2016) indicate this coverage is improving people’s ability to get health care. Sixty-one percent of respondents who were enrolled in marketplace plans or Medicaid said they would not have been able to access or afford their care before they got their new insurance.2
Using these survey data, this brief examines the costs of marketplace plans and how consumers view the affordability of their health insurance. We compare premiums and deductibles reported by marketplace enrollees with those reported by adults in employer plans and examine whether these costs have increased over time. We also investigate if enrollees are choosing plans that limit the number of providers offered (“narrow network” plans) and the level of consumers’ satisfaction with the doctors participating in their plans.
AFFORDABILITY OF MARKETPLACE PLANS
Premium Costs Are Similar in Marketplace Plans and Employer Plans
Of the 11.1 million people enrolled in marketplace plans in 2016, more than eight of 10 are paying for their premiums with the help of federal tax credits.3 The effect of these tax credits on consumers’ costs is reflected in this brief’s findings.
Among adults with single policies (i.e., those covering only themselves), those enrolled in marketplace plans reported that the amount they pay for their premiums is similar to what people with employer-based coverage pay. Fifty-seven percent of adults in marketplace plans and 60 percent in employer plans spent less than $125 per month on insurance premiums. These figures include the one of five people with either type of insurance who paid nothing (Exhibit 1).4
Most people who purchased marketplace plans were eligible for premium tax credits. Fifty-nine percent of people with marketplace coverage had incomes under 250 percent of the federal poverty level ($29,425 for an individual and $60,625 for a family of four), making them eligible for the most generous premium subsidies (Table 1). As a result, 66 percent of these adults paid less than $125 a month toward their premium, including 26 percent who paid nothing. Among people with employer coverage in this income range, 60 percent paid less than $125 per month, including 16 percent who paid nothing.
Under the ACA, adults with incomes between 250 percent and 400 percent of poverty ($29,425 to $47,080 for a single person) receive smaller tax credits for marketplace coverage, while those with incomes above 400 percent of poverty receive no tax credit and pay the full premium. In contrast, most people in employer plans, regardless of income level, receive premium contributions from their employers. Thus, among adults at 250 percent of poverty or higher, 58 percent of those with marketplace coverage spent $125 a month or more on premiums compared with only 34 percent of those in employer plans.
Half of Adults in Marketplace Plans Say Their Premiums Are Affordable
When we asked people their views on affordability, we limited the survey sample to respondents who paid all or part of their premium and knew the amount they paid.
Half (49%) of adults with marketplace coverage found it somewhat or very easy to afford their premium (Exhibit 2). This rate is statistically unchanged from April–June 2014, after the ACA’s first open enrollment season (data not shown).5 People with marketplace coverage—those with low as well as higher incomes—found it more difficult to afford their premiums than did people with employer coverage. Compared to other survey respondents, employer plan enrollees with higher incomes reported the easiest time affording their premiums.
Views of affordability diverge at higher income levels. This reflects the phase out of premium tax credits in marketplace plans at higher incomes and the fact that people in employer plans are much more likely to have higher incomes than are marketplace enrollees. Half (51%) of 19-to-64-year-old adults in employer plans had incomes of 400 percent of poverty or higher, compared with only 19 percent of those in marketplace plans (Table 1).
Lower-Income Adults with Marketplace Coverage Less Likely to Have High Deductibles
The ACA requires insurers that sell plans in the marketplaces to offer silver-level plans that come with cost-sharing reductions for adults earning between 100 percent and 250 percent of the federal poverty level. These reductions lower an individual’s deductible amount, copayments, and coinsurance, substantially so for enrollees with the lowest incomes.6 In 2016, 57 percent of marketplace enrollees are estimated to be covered by plans with these reductions.7
The effect is clear: among marketplace enrollees living under 250 percent of poverty, 30 percent said they had deductibles of $1,000 or more (Exhibit 3). But more than two-thirds (68%) of marketplace enrollees at 250 percent of poverty or more reported deductibles of $1,000 or greater. Cost-sharing reductions become less generous as income rises and are phased out completely at 250 percent of poverty. The share of adults with incomes between 138 percent and 250 percent of poverty with deductibles of $1,000 or greater was also significantly smaller than the share of adults with incomes of 250 percent of poverty or higher (45% vs. 68%) (data not shown).
Cost-sharing reductions have made deductibles similar to those incurred in employer plans for adults with lower incomes. The share of lower-income adults with high deductibles is similar in marketplace plans and in employer plans. At higher incomes, however, marketplace enrollees were significantly more likely than employer plan enrollees to have a high-deductible plan.
Lower-Income Adults with Marketplace Coverage Less Likely to Report Premium Increase
The survey finds evidence that the tax credits are protecting many enrollees from premium increases. Higher-income adults were much more likely to report premium increases than lower-income adults were (Exhibit 4). About two-thirds (64%) of people in marketplace plans with incomes of 250 percent of poverty or more reported their premiums had increased over the time they had their plan, compared to 45 percent of adults with lower incomes who receive the largest tax credits.
In contrast to premiums, deductibles and copayments on average were more likely to have stayed the same over the course of people’s enrollment in the marketplaces. Half (51%) of adults who had marketplace coverage since before January 2016 and whose plans had a deductible reported that their deductible amounts stayed the same, while 36 percent reported an increase and 10 percent reported a decrease (data not shown).8 These results were similar across income categories. Similarly, nearly half of adults with marketplace coverage since before January 2016 reported the amount they pay in either copayments or coinsurance for doctor visits (48%) and prescription drugs (45%) has stayed the same (data not shown). One-third (34%) of enrollees reported their copayments or coinsurance increased for doctor visits, while 29 percent reported an increase for prescription drugs.
Most Marketplace Enrollees Were Confident They Could Afford Health Care If Sick
We asked people about their confidence in their ability to afford care if they were to become seriously ill. Majorities of people with marketplace plans (61%) and employer plans (79%) were very or somewhat confident they could afford needed care if they became sick, but larger shares of those with employer plans expressed confidence (Exhibit 5).
PROVIDER NETWORKS
Four of 10 Adults Chose a Narrow Network Plan
Insurer competition in the marketplaces has led to the proliferation of health plans that offer a narrow, or limited, network of health care providers at a lower price than plans with broader networks. This has led to concerns over access to care.
In the survey, more than half (54%) of people who were enrolled in a marketplace plan for the first time or who had changed plans said they had the option of choosing a less expensive plan featuring fewer doctors or hospitals (Exhibit 6). Of those, 41 percent selected the limited network plan.
Across all marketplace plans, more than three-quarters (78%) of enrollees who either recently enrolled or had changed plans reported being very or somewhat satisfied with the doctors covered by their insurance (Exhibit 7). Among these adults, 64 percent reported their plans have some or all of the doctors they want. Sample size limitations prevented us from examining differences between people enrolled in narrow vs. broader network plans.
Rate of “Surprise Medical Bills” Similar in Employer and Marketplace Plans
The proliferation of narrow network plans does not appear to be creating more problems with so-called surprise medical bills. Such bills arrive unexpectedly from an out-of-network provider, as when, for example, a patient is operated on by an in-network surgeon at an in-network hospital but is billed by an out-of-network anesthesiologist.9 We found no difference in the rate of reports of surprise bills between adults with employer coverage and adults with marketplace coverage: about one of five in both groups reported they had experienced a surprise medical bill (Exhibit 8).
SHOPPING FOR MARKETPLACE PLANS
Cost Was Most Important Factor in Selecting a Plan
Premiums and cost-sharing figured most prominently in people’s decisions regarding choice of marketplace plan (Exhibit 9). Six of 10 (62%) adults who either had enrolled in private plans through the marketplace for the first time or switched health plans said the premium amount (36%) or the amount of the deductible and copayments (26%) was the most important factor in their decision. Choice of doctors and hospitals was also important. More than one-quarter (28%) said the inclusion of their preferred provider (doctor, health clinic, or hospital) in their plan’s network was the most important factor in choosing a plan.
Fewer Than Half of Adults Found It Easy to Find an Affordable Plan
When asked about their experiences finding affordable plans and adequate coverage, adults’ views were the same as they were in April-to-June 2014 and March-to-May 2015. Low- and higher-income adults alike found it difficult to find affordable plans. This year, 42 percent of adults who visited the marketplace and whose incomes make them eligible for coverage said it was somewhat or very easy to find an affordable plan (Exhibit 10).10
Why Do Marketplace Enrollees Switch Plans or Keep Them?
Nearly half (46%) of adults with marketplace coverage since before the most recent open enrollment period said they have changed plans over the time they have had coverage.11 We asked why people had either changed or kept their plans.
Switching plans. Among adults who had changed their marketplace plans, 45 percent did so because their old plan was no longer being offered (Exhibit 11). Similar to their priorities in selecting a plan, 40 percent reported they switched plans for a lower premium, 30 percent did so for more of the doctors or hospitals they want, and 16 percent did so to obtain a lower deductible.
Keeping the same plan. Most adults (87%) reported they kept the same plan simply because it was easier to do so (Exhibit 12). About three-quarters (77%) of adults said they kept the same plan because they were satisfied with their coverage, and 64 percent did so because they liked the doctors in their network.
CONCLUSION
The affordability of marketplace plans continues to be the subject of considerable debate. A recent analysis of insurers’ 2017 rate requests in 14 large cities by the Kaiser Family Foundation finds a weighted average increase of 10 percent.12 While these preliminary requests are subject to state rate review, it is likely that premium increases will be higher in 2017 than in 2016.13
However, most consumers will be shielded from the full premium increase. More than eight of 10 marketplace enrollees have tax credits to help pay their premiums. The tax credit is calculated as the difference between what enrollees are required to pay as a share of their income and the premium of the benchmark silver plan in their market. This means that most of the premium increases next year will be absorbed by enrollees’ tax credits, particularly if they select the benchmark plan. An analysis by the U.S. Department of Health and Human Services (HHS) of 2016 premiums found that among people eligible for tax credits in marketplace plans, premiums rose by just 4 percent on average, or $4 per month, despite earlier predictions of much larger increases across plans offered in 2015.14 The large amount of plan switching found in this survey, as well as in HHS marketplace data, indicates that many people will likely shop for the best deal.
The findings present cautionary notes for policymakers. People with higher incomes with marketplace coverage who receive little to no subsidy are more likely to pay more for their premiums and have a high deductible than those in employer plans. Overall, people in marketplace plans are less likely than those in employer plans to view their plans as affordable; fewer than half of those who had shopped for a plan said it was easy to find a plan they could afford. Adjustments to the marketplaces will likely be needed to ensure that consumers can afford both the insurance and the health care they need. These could include changes to the marketplace subsidies and to the law’s premium stabilization programs—in particular, the reinsurance program—that have helped moderate premium growth in the marketplace’s first three years. However, the fundamental driver of premiums across all health insurance markets is the underlying rate of growth in medical costs. Therefore, ongoing systemwide efforts to slow the rate of increase in medical expenditures will be critical.
Table 1. Demographics of Overall Sample, Adults Enrolled in the Marketplace, and Adults Enrolled in Employer-Sponsored Insurance
| Total adults (% ages 19–64) |
Enrolled in a private health plan through the marketplace (%) |
Enrolled in employer-sponsored insurance (%) |
|
| Unweighted n | 4,802 | 432 | 2,237 |
| Age | |||
| 19–34 | 34 | 32 | 29 |
| 35–49 | 32 | 28 | 35 |
| 50–64 | 32 | 37 | 33 |
| Race/Ethnicity | |||
| Non-Hispanic White | 61 | 60 | 70 |
| Black | 13 | 14 | 9 |
| Latino | 17 | 21 | 11 |
| Asian/Pacific Islander | 5 | 2 | 5 |
| Other/Mixed | 2 | 1 | 2 |
| Poverty status | |||
| Below 138% poverty | 30 | 27 | 9 |
| 138%–249% poverty | 20 | 32 | 17 |
| 250%–399% poverty | 18 | 22 | 23 |
| 400% poverty or more | 32 | 19 | 51 |
| Health status | |||
| Fair/Poor health status, or any chronic condition or disabilitya |
52 | 48 | 45 |
| No health problem | 48 | 52 | 55 |
| Political affiliation | |||
| Democrat | 29 | 34 | 28 |
| Republican | 19 | 20 | 22 |
| Independent | 24 | 23 | 25 |
| Something else | 17 | 14 | 16 |
| Adult work status | |||
| Full-time | 53 | 43 | 73 |
| Part-time | 14 | 25 | 10 |
| Not working | 33 | 32 | 17 |
| Employer sizeb | |||
| 1–24 employees | 26 | 49 | 15 |
| 25–99 employees | 14 | 18 | 12 |
| 100–499 employees | 14 | 11 | 16 |
| 500 or more employees | 43 | 18 | 54 |
a At least one of the following chronic conditions: hypertension or high blood pressure; heart disease; diabetes; asthma, emphysema, or lung disease; or high cholesterol.
b Base: full- and part-time employed adults ages 19–64.
Source: The Commonwealth Fund Affordable Care Act Tracking Survey, February–April 2016.