Saturday, August 23, 2014

Obamacare's Metallic Plans: Add Cash As Well As Copper

Avalere Health has given a budget score to the so-called “copper plan”, a potential Obamacare policy proposed by health insurers that would cover 50 percent of the actuarial value (AV) of the policy. AV is the average amount a plan with a given set of benefits is likely to pay, given a standard population.

Actually estimating actuarial value in Obamacare is complicated. Keeping it simple: we can say that if the standard population would cost $8,000 per beneficiary, a copper plan would expect to pay $4,000 of the costs. Currently, Obamacare plans are bronze, silver, gold, and platinum, with AVs ranging from 60 percent to 90 percent.

Insurers should be free to offer copper, or lead, or brass or whatever policy they want. However, as long as the federal government is subsidizing insurers billions of dollars in these exchanges, it should offer some of the money for beneficiaries’ direct use, via deposits in Health Savings Accounts, Health Reimbursement Arrangements, or Flexible Spending Arrangements, instead of handing it over to insurers.

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