Some people are now suggesting that the country should make health insurance plans more affordable for moderate-income and high-income people by creating a new class of “copper level” individual health plans.
In theory, the plans would appeal to healthy, budget-conscious people by covering just 50 percent of the actuarial value of the essential health benefits (EHB) package.
In the real world, the plans would pretty much require any intelligent people who bought them to also buy accident insurance, hospital indemnity insurance and other supplemental health insurance products that are, for the moment, excepted from the scope of Patient Protection and Affordable Care Act (PPACA) major medical coverage requirements.
That could create great opportunities for the supplemental products issuers, and also grave dangers.
A copper plan would appeal mainly to workers who have incomes over 400 percent of the federal poverty level and don’t qualify for a premium subsidy, or workers with incomes over 250 percent of the federal poverty level, who don’t qualify for PPACA cost-sharing reduction subsidies and don’t qualify for a particularly attractive premium subsidy.
On the one hand, the copper plans certainly would protect healthy young people who don’t qualify for the premium subsidies or the cost-sharing reduction subsidies against health care catastrophes. The relatively high-income young people who paid for copper level coverage would also get “no cost” coverage of the PPACA basic preventive services package.
But, on the other hand, let’s face it: The real beneficiaries of the copper plans would be insurers and providers that want to take healthy young adults’ money without giving them any significant protection against pneumonia or broken legs.
Assuming that the government and insurers would discourage providers from waiving cost-sharing bills, or that the providers themselves would resist that, copper coverage holders would find that breaking an arm would be as much of a financial catastrophe as having a heart attack or a brain tumor.
On the third news, the good news — for supplemental health issuers, at least — is that a copper coverage holder with common sense would have to use some of the premium savings from buying copper coverage to pay for supplemental insurance, to reflect the reality that the copper coverage would provide no protection against any of the health problems the consumer could expect to suffer.
The young, healthy, Web-savvy, Facebook-friended, Instagram-aware consumers who were angry about exchange enrollment website and exchange plan billing problems this year would suddenly be looking closely at supplemental health insurance enrollment system efficiency, onboarding system effectiveness and claim payment practices — and sharing complaints about any glitches with everyone.
If a few stories about supplemental policies that don’t work go viral, the bubble of PPACA-free freedom that now protects the supplemental product issuers could pop.
See also: States may tighten ancillary product rules.
On the fourth hand, some of the biggest major medical coverage sellers don’t get much revenue from PPACA-excepted products. Letting the PPACA-free bubble pop might be great for them.