ACA: Catastrophic health plans not too popular
BY MONIFA THOMAS Staff Reporter February 1, 2014 1:36AM
Screen grab of the "catastrophic plans" offered on Healthcare.gov. that few people are interested in.
Updated: March 3, 2014 3:00PM
When Americans bought health insurance in January through the Affordable Care Act, just 1 percent of them chose a catastrophic plan, according to the federal government.
Sixty percent of people nationwide who signed up and bought plans offered on HealthCare.gov selected a midrange silver plan, 20 percent picked a bronze plan, 13 percent chose a gold plan and 7 percent went with platinum. (Percentages have been rounded up, equaling more than 100 percent.)
The metal titles on the types of health insurance plans offered as part of Obamacare reflect different prices of premiums and deductibles offered. Bronze plans would have lower premiums than a platinum plan, but higher out-of-pocket expenses, for example.
A fifth type of plan, catastrophic, is offered only for people who are under 30 years old or those who get a “hardship exemption” from the marketplace to qualify for the plan. In December, President Barack Obama’s administration also expanded eligibility for the catastrophic plan to people who lost their individual health plans because they didn’t meet ACA standards.
Premiums for catastrophic plans may be the lowest available, but deductibles tend to be much higher. The plan includes requirements that apply to other plans but doesn’t offer any benefits other than three primary care visits per year before the plan’s deductible is met.
There’s no good number for how many people would have been eligible to get a catastrophic plan, but very few elected to get it, according to data released in January by the U.S. Department of Health and Human Services.
It was the same in Illinois. None of the 61,111 state residents who chose an insurance plan selected a catastrophic one. The platinum level also had a low percentage — 1 percent — of takers in Illinois.
As was the case nationally, silver plans were the most popular for Illinoisans.
The federal government said they had no expectations on how many people would buy this specific plan, as choosing an insurance plan is a personal decision based on a variety of factors.
Experts say it’s not surprising, though, that people aren’t rushing to buy a catastrophic plan.
“It was never supposed to be a driver of enrollment,” Karen Pollitz, a senior fellow at the Kaiser Family Foundation, said. “Given that the superhigh deductible plans don’t seem to be that popular to begin with, and then only a subset of people are eligible to buy the catastrophic plans, that would seem to be what’s going on.”
The law doesn’t allow tax credits, which are available for people who make between 133 percent and 400 percent of the federal poverty level, to be used toward a catastrophic plan purchase.
Sabrina Corlette, a senior research fellow at Georgetown University’s Center on Health Insurance Reforms, said not being able to use a tax credit for insurance is likely a key reason so few people have chosen a catastrophic health plan so far.
Many people likely noticed that when you compare, say, a bronze-level plan with a catastrophic plan, the bronze may have the same high deductible as the catastrophic. But with a bronze plan, you can at least get a tax credit, Corlette said.
For example, a 25-year-old in Cook County who makes $16,000 a year can buy a catastrophic plan for $136 a month with a deductible of $6,350. That same 25-year-old could qualify for a $121 per month tax credit, which would allow her to buy a bronze plan with no monthly premium and have a deductible of $6,000 a year.
Those who might find a catastrophic plan appealing are people ineligible for a tax credit, those who are able to set money aside to protect themselves financially if they do have a health problem and those who are relatively healthy, Corlette said.
The deadline to buy an insurance plan for this year is March 31, and it’s possible more young people may choose the catastrophic plan as the deadline approaches.