We can assume, under the mandate, a Low-Cost insurance plan offering. Senate Finance calls it the Silver Plan. Here’s how the cost for an individual and family of 4 looked on September 5, 2009. Has it improved?

Single Policy – 73% Actuarial Value – Avg. Premium $5,000 + Cost Sharing of $1,500

Family Policy – 73% Actuarial Value- Avg. Premium $15,000+ Cost Sharing of $4,500

Would the experts here like to chime in and let us know what this really means?

The range of income percent for premium + cost sharing for the Low-Cost Silver Plan varies from:

8.2% to 17.3% of income for a single person
9.7% to 19.6% of income for a family

But, if the plan has a 73% Actuarial Value, don’t these people have to pay 27% of their health care costs, heaven forbid they run up a $100,000 hospital bill? Details below:

Those in the know on the Hill, if you are here, has the Analysis of Exchange Subsidies and Enrollee Payaments in the Senate Finance Committee’s Specifications as of September 5, 2009 improved on behalf of the people? I am looking at this sheet as I type.

The heaviest burden is on those between 250% and 350% of the Federal Poverty Level (FDL) which is projected to be $11,800 for a single person and about $24,000 for a family of four.

The premium plus cost sharing percent for a single person earning between 250% and 350% of FDL is 19.4% – 19.6%.

The premium plus cost sharing percent for a family earning between 250% and 350% of FDL is 19.4% – 19.6%.

How much more will be added if, in fact, the 73% Actuarial Value means that they will have to pay 27% of their expenses if they exceed the $1,500 Single Person and/or the $4,500 Family deductibles?

If they do have to pay 27% of health care costs above the deductible, won’t we still see these families facing medical bankruptcies?

Not be be a downer here, but so little is being discussed regarding the nuts and bolts of what it will cost you and I if we choose the Low-Cost Silver Plan because that is all we can afford?


This is what I found:

Individual Experience in Actuarially Equivalent Plans
Two plans’ benefit packages—that is, the benefits covered and the cost-sharing for those benefits—are actuarially equivalent if the percentage of medical expenses paid by the plan for a given population would be approximately the same. However, two plans can be actuarially equivalent while the details of their covered benefits and cost-sharing can be very different. In addition, although the percentage paid by the plan overall may be similar between the two plans, an individual’s experience in each plan could differ substantially.

For example, consider two actuarially equivalent plans. Plan A has a $400 deductible, after which 20% coinsurance is charged, with an out-of-pocket maximum of $5,000. Plan B has a deductible of $2,500, after which the plan pays 100% (out-of-pocket maximum of $2,500). Both have an actuarial value of 80%; that is, if a standardized population of adults enrolled in job-based coverage had this benefit package, both plans would be expected to pay 80% of the medical expenses incurred for that population.

Now consider the experience of two individuals—one who has total medical expenses of $2,500 for a broken leg, compared to one who has $25,000 for outpatient cancer treatments. For the person with the broken leg, Plan A would pay a higher percentage than Plan B—67% rather than 0%. For the cancer patient, however, Plan A would pay a lower percentage than Plan B—80% rather than 90%.

Thus, while the actuarial value reflects the overall percentage of medical expenses paid by the plan for a given population, it is not necessarily indicative of what will be paid on behalf of a particular individual. People with a choice of actuarially equivalent plans must still determine which benefit package would be best for them individually, also taking into account the premiums and the other characteristics that affect premiums (as previously discussed, breadth of provider networks, etc.).

The only way to guarantee that individuals’ cost-sharing is equivalent between plans is if the plans are identical in the benefits covered and the cost-sharing permitted for each covered benefit.

However, this requires the body governing plans to specify the benefit package without variation. While this may make it easier for enrollees to compare plans and their premiums, it would limit plans’ ability to design benefit package that some individuals might prefer or that might be used to encourage more appropriate use of health care, for example.


Well, that cleared up all our questions. NOT!

Do they try to make this complicated?

So, a 73% actuarial value, Low-Cost Silver Plan means that our potential cost for health care, under this plan, could be 27% of our health care costs.

$100,000 health care costs could cost an individual or family $27,000.

For a family earning $75,000 this means their % of income for health care could be

36% out-of-pocket for health care if you run up a $100,000 bill?

Is there a cap on what we have to pay if we are unlucky enough to have an expensive health care event like Swine Flu w/complications requiring a week in intensive care?

Could we ask Congress to speak more about the real costs for those between 250% and 350% of the Federal Poverty Level, as the largest percent of Americans fall into this category?

If the above is the case, and there is no cost containment controls implemented on hospitals and insurers, we could all end up bankrupt if, heaven forbid, we experience a severe health event.

Here’s the conclusions reached in a study to address the problems in Massachusetts mandate program:

The underlying reasons for general health care cost growth are the growth in new technologies (including pharmaceuticals) and the increase in chronic illness; these are issues throughout the United States.

The cost problems in Massachusetts are
exacerbated by the market power of a number of academic medical centers
and a lack of serious competition in both the insurance and hospital markets.