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QHP buyers like silver

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(Bloomberg) – Public health insurance exchange users are flocking to mid-level silver plans.

Only 19 percent are choosing the low-value bronze plans, and 7 percent are choosing top-value platinum plans. Twelve percent are signing up for gold plans, and 62 are enrolling in silver plans.

The Patient Protection and Affordable Care Act (PPACA) requires exchange plans, or “qualified health plans” (QHPs), to cover set percentages of the actuarial value of a basic package of essential health benefits.

The percentages are about 60 percent for bronze plans, 70 percent for silver plans, 80 percent for gold plans and 90 percent for platinum plans.

The strong interest in silver plans may be good news for insurers, because it reduces the odds that budget-conscious consumers will pick the plans with the cheapest premiums, then discover that they can’t handle the low-actuarial-value plans’ out-of-pocket costs, according to Michael Mahoney of GoHealth LLC.

GoHealth is running a private Web-based enrollment site.

The exchange program makes cost-sharing subsidies available for low-income consumers who buy silver plans.

Bronze plans can have deductibles of up to $6,000 per person.

“It’s too risky to take on that exposure if you don’t have that kind of money,” Karen Pollitz, senior fellow at the Kaiser Family Foundation, said in a telephone interview.

For a family on a silver plan with an income at 150 percent of the federal poverty level, the cost-sharing assistance reduces a $12,700 annual out-of-pocket maximum to $4,500, and for an individual, from $6,350 to $2,250, Mahoney said.

The cost-sharing subsidies were intended to encourage consumers to “buy up,” Mahoney, senior vice president of consumer marketing at GoHealth, said in a telephone interview.

Health insurers are assuming that the patients signing up for gold plans and platinum plans will be older and sicker than average, said Brian Wright, a New York-based analyst at Monness Crespi Hardt & Co.

“So overall, the greater the percentage of enrollment in the bronze and silver plans, the better from a risk pool perspective,” Wright said in a telephone interview.

Bruce Broussard, chief executive officer of Humana Inc. (NYSE:HUM), said early enrollment in higher metal tiers at his company was “greater than we anticipated,” with 25 percent of customers picking a platinum plan, and 52 percent picking silver as of Dec. 31.

In January, the company has seen members start to skew younger and pick more silver plans, Broussard said in a call with analysts on Feb. 5.

Joseph Swedish, chief executive officer of WellPoint Inc. (NYSE:WLP), which has the most plans on the public exchanges, said silver and bronze plans were the “most popular metal levels by a wide margin.” This was “consistent with expectations,” he said in a call with analysts on Jan. 29. At the end of January, WellPoint had 500,000 new members enrolled through the exchanges.

–Editors: Andrew Pollack, Bruce Rule

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