WASHINGTON, DC: Administrator for the Centers for Medicare and Medicaid Services Mehmet Oz. He is favoring more use of catastrophic health plan coverage to lower premiums. (Photo by Kevin Dietsch/Getty Images)
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Administrator for the Centers for Medicare and Medicaid Services, Mehmet Oz, continues to push so-called catastrophic health plans with high deductibles and relatively low premiums. After patients pay large deductibles, these plans protect them against costs of care. Critics decry such plans as junk insurance, saying that they still leave patients at substantial financial risk.
By changing the rules governing Affordable Care Act plans, CMS is allowing maximum out-of-pocket limits that are 30% higher than before. Individuals on certain low-tier or bronze plans could have to pay up to $15,600 out-of-pocket for individual coverage or $31,200 per family before insurance kicks in. This change goes into effect in 2027.
In addition, CMS is greatly expanding so-called hardship exemptions that had restricted eligibility for catastrophic plans to people with very limited means or to those under the age of 30. Individuals of all ages and incomes will now be able to purchase coverage from such plans.
Furthermore, CMS will now allow insurers on the marketplace to lock consumers into multi-year contracts lasting up to 10 years.
CMS describes the moves as giving Americans “flexibility” and improving access to “affordable healthcare coverage.”
But critics argue that CMS is de facto promoting “junk” insurance, which could expose individuals to large out-of-pocket expenses should they become seriously ill.
ACA detractors counter by asserting that the law hasn’t solved what it was supposed to, namely, the affordability crisis in American healthcare. Premiums have steadily risen over the years, especially for those not eligible for subsidies. Standardized options included a double whammy of increasing premiums and deductibles or other patient cost-sharing. And so, offering cheap options, albeit with large deductibles and possible coverage gaps, is a way to address affordability without necessarily undermining the law.
In this vein, supporters of catastrophic plans suggest they offer consumers choices they didn’t have before. But Wendell Potter of HEALTH CARE un-covered says that choice is a “misleading word when many Americans are being financially cornered into skimpier coverage because comprehensive insurance has become unaffordable.” The danger with “junk plans,” Potter writes, is that people “only discover how weak their coverage is after their lives have already been turned upside down.”
The main reason to have health insurance is to help manage the financial risks from unexpected events. Even young and healthy individuals face uncertainty regarding their health. No-one knows when they will fall ill and require comprehensive coverage. I may be healthy today but get a heart attack tomorrow. Or I may be diagnosed with a condition requiring a lifelong medication regimen together with follow-up monitoring and care. Being stuck with a massive deductible and other high out-of-pocket expenses can be financially “toxic,” as the uniquely American increasing burdens of medical debt and bankruptcy attest.
The main criticism of high-deductible health plans of all kinds, including the ones favored by Oz, has been that people with such coverage typically must pay thousands of dollars out-of-pocket when they do get sick. And this is money many Americans don’t have, whether in savings or cash.
On top of the changes affecting patients’ financial calculus, beginning in 2028, some ACA consumers will be able to pick plans that don’t have dedicated networks of doctors and hospitals. Instead, these enrollees will search for providers willing to accept the amount their insurer will pay toward whatever non-emergency care they need.
Regulators say the policy aims to reduce costs by getting consumers to “shop for lower prices and negotiate directly with providers.” But experts warn that non-network plans might further undermine ACA safeguards intended to ensure sufficient numbers of healthcare providers are available in a geographic area or that patients aren’t hampered by surcharges if the doctors or hospitals they choose charge more than the insurer will reimburse.
Julie Appleby of KFF Health News notes that the new provisions could reduce ACA enrollment by up to an additional two million.
One could argue whether what’s happening is a further hollowing out of the ACA in lieu of a Congressional repeal of the law.