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Avalere: Creation of PPACA copper plans could save big

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Creating a new, less expensive exchange plan could save both the health care industry and consumers big, a new study asserts.

Consulting firm Avalere Health said creating a copper-tier plan could help bring down federal health care spending by $5.8 billion over the next 10 years. And it could reduce premiums for plan holders by 18 percent compared to bronze plans in 2016.

In turn, that could draw more consumers to the exchanges.

“Introducing 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,” the report said.

A copper plan would have an actuarial value of 50 percent. Bronze plans have an actuarial value of 60 percent; silver plans have 70 percent approximate coverage; gold plans have 80 percent coverage and platinum plans have 90 percent.

Creating a copper health plan has been floated around as a cheaper health care coverage option for nearly a year. U.S. Sen. Mark Begich, D-Alaska, proposed legislation last fall to create copper plans under PPACA. And in June America’s Health Insurance Plans urged the administration to create a cheaper tier of coverage — or catastrophic plan — that would still comply with other standards and rules under PPACA, including the minimum benefits standards and free preventive care, but would be cheaper than the other offered plans.

“Such a plan would offer consumers the option of coverage that has lower monthly premiums but still provides the comfort of knowing that their costs will be limited in the event of a serious illness or injury,” AHIP said in its proposal.

Some naysayers of the idea have said the government could lose out on revenues because more businesses would enroll employees in the copper plan instead of paying a penalty under the employer mandate.

Other critics say that a copper plan could leave moderate-income insureds seriously underinsured, and that moderate-income insureds might strongly prefer to get more help with paying everyday medical bills to unlimited coverage for rare catastrophic conditions.

But, using similar methods to those used by the Congressional Budget Office, Avalere analysis showed offering a copper plan could lower spending by $5.8 billion over 10 years; reduce taxes by $5.5 billion over the same period and cut the deficit by $0.3 billion.

Still, the firm’s previous research shows that lower actuarial value products are typically associated with higher copayments and deductibles borne by consumers.


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