By Ashley Mayo, Strategic Engagement Fellow
If you’re a healthcare nerd like me, you know that Colorado recently made its preliminary Essential Health Benefits (EHB) benchmark plan recommendation. What that means in non-wonk English is that our state is starting to make decisions about the minimum coverages that insurers selling insurance in the small group and individual health insurance markets must include in their plans when Obamacare takes full effect in 2014. The EHB plan must include coverage in 10 specific categories listed by the federal government, in order ensure that consumers get insurance that is not only affordable, but also high quality.
Bringing up EHBs often gets people wondering: will there be less choice and variation amongst insurance plans? Will consumers have to pay for a bunch of coverage they don’t want? The simple answer to these questions is no. In fact, once the Affordable Care Act takes full effect, consumers will have more information and choice around healthcare.
The long answer involves getting a little wonky, so stick with me.
Obamacare requires that in 2014 all health plans – those sold both inside and outside the new state exchanges – will have to comply with the minimum standards set by federal law. But even with these requirements consumers will have a lot of choice. There will be four tiers of coverage: bronze plans, which must cover at least 60% of a consumer’s healthcare costs, silver which must cover 70%, gold which must cover 80%, and platinum which must cover 90%. Finally, there will be a catastrophic coverage option available to anyone under age 30, as well as those who can prove that even with subsidies, purchasing insurance would be a financial hardship.
Catastrophic coverage is definitely not for everyone. With these plans, a consumer trades low monthly premiums for a high deductible. That is, they’ll pay quite a bit more out of pocket for things like routine doctor visits and prescriptions, but once they reach their deductible, the policy will kick in and start covering care according to EHB guidelines. For a healthy young person who doesn’t use a lot of medical care, a catastrophic plan may be a good option: you’ll save money if you don’t need much care, and if you do have a major illness or accident, you’re covered after you have paid the deductible. However, deciding to purchase catastrophic coverage is not something to be done lightly. Currently, deductibles for this kind of insurance range from about $2,000 to $5,000. The government is expected to set standards for catastrophic plans before the ACA takes full effect in 2014.
What Obamacare and its reforms to private insurance mean is that consumers will be able to make more informed decisions about their coerage. They will be able to compare silver plans to silver plans and catastrophic plans to catastrophic plans – and know what they are getting – so they can get the most affordable coverage for to meet their health care needs.