A study conducted by Harvard researchers on the insurance purchased through the state insurance exchange, the Commonwealth Connector, showed that some families experienced high levels of financial burden and higher-than-expected costs.
The financial burdens were also more pronounced among people with incomes less than 400 percent of the federal poverty level (FPL) and for families with a greater number of children.
"We conclude that those with lower incomes, increased healthcare needs, and more children will be at particular risk after they obtain coverage through exchanges in 2014," noted the study authors, which will appear in the May issue of Health Affairs. "Policy makers should develop strategies to further mitigate the financial burden for enrollees who are most susceptible to encountering higher-than-expected out-of-pocket costs, such as providing cost calculators or price transparency tools."
Some of the factors leading to high financial burden for those buying insurance through the Massachusetts insurance exchange is the out-of-pocket premiums for non-group coverage tend to be higher, which is further exacerbated by a lack of an employer contribution to the premium costs, even though the Massachusetts system provides subsidies to those earning less than 300 percent of FPL The study further found that insurance products offered through the exchange tended to have higher levels of of cost-sharing, primarily through high-deductible health plans.
"Financial burden resulting from out-of-pocket health care costs is more prevalent among people with private non-group insurance than in any other group, including the uninsured," the report noted. "High levels of cost sharing and the complexity of high-deductible plans may lead to problems paying medical bills and underuse of needed care."
The study is one of the first of its kind to use the experience in Massachusetts to try to get an indication of the realities that will be faced by families buying their health insurance coverage via the state health insurance exchanges beginning this October for coverage in 2014. The researcher used data from 393 families in Massachusetts who had bought insurance on the Commonwealth Connector representing a range of socio-economic groups.
One factor leading to high burden could be the actuarial value of the average "bronze" plans offered in Massachusetts, the researchers said. There, bronze plans had actuarial values that ranged between 40 percent and 50 percent, dramatically lower than the 60 percent for a bronze plan required under the ACA. It also found that of the plans sold on the Connector, nearly 90 percent with either bronze or silver plans (silver plan actuarial values on the Connector are roughly in line with federal standards).
But even those with incomes in excess of 400 percent FPL showed experienced relatively high rates of financial burden, largely based on the plan design. Nearly one-quarter of people in this group experienced financial burden, with 39 percent responding that they had out-of-pocket costs that were higher than they expected.
"Given the complexity of health insurance choices and consumers' limited understanding of health insurance benefits, policy makers will need to provide outreach and simplified information to promote optimal plan choices," the authors wrote.
In conclusion, the report noted that financial burden and higher-than-expected costs are common among people buying their insurance through the exchange in Massachusetts and that federal policy makers can use this understanding to help craft methods to help those who will buy their insurance through the exchanges better understand what their health insurance will provide.
"Policy makers will need to develop strategies to mitigate financial burden and facilitate discussion between patients and providers about the value of health care choices," the report concludes. "Cost calculators or other tools to provide out-of-pocket cost information could help enrollees anticipate potentially burdensome costs, and discussions with providers could help them understand whether lower-cost alternatives are possible or whether the service could safely be forgone."
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