FINANCIALLY SUBOPTIMAL HEALTH INSURANCE CHOICES BY LOW-INCOME CONSUMERS

Purpose: We examined health insurance plan choices after the introduction of health insurance exchanges by the Patient Protection and Affordable Care Act (ACA). The ACA provides premium tax credit (PTC) and cost-sharing reduction (CSR) subsidies to lower-income enrollees; to receive these subsidies, lower-income enrollees must choose qualified plans.

Method(s): We conducted interviews among a random sample of 2,103 adult enrollees in individual market health insurance plans offered in California in 2014. We used self-reported household income and size to assess subsidy eligibility. Those eligible for CSR+PTC subsidies had incomes ≤250% of the federal poverty level (FPL), those only eligible for PTC subsidies were between 251-400% FPL. We examined whether these enrollees chose subsidy-eligible plans: to receive the PTC, enrollees had to select a plan through the exchange; to receive the CSR, enrollees had to select an on-exchange Silver-tier plan. We also examined the types of assistance enrollees received when choosing their plan and the perceived affordability of their premiums and out-of-pocket costs during the year. We used multivariate models to adjust for sociodemographic characteristics.

Result(s): In California’s 2014 individual insurance market, 51% of enrollees were at or below 250% FPL, 22% were between 251-400% FPL, and 27% were >400% FPL. Among the subsidy-eligible, 17% purchased plans off-exchange (e.g., directly through insurers), thus forgoing subsidies (14% of PTC+CSR-eligible and 25% of PTC-eligible). Among CSR-eligible enrollees who chose on-exchange plans, 77% enrolled in Silver plans vs. 17% Bronze and 7% Gold/Platinum plans. Subsidy-eligible enrollees who purchased off- vs. on-exchange plans were less likely to receive help from Covered California counselors (9% vs. 32%) and more likely to use insurance agent/brokers (31% vs. 24%). Among subsidy-eligible enrollees, those who purchased off- vs. on-exchange were more likely to have a lot of difficulty paying premiums (e.g., 27% vs. 12%, OR=2.7, 95%CI: 1.5-4.9 among those 251-400% FPL); among CSR+PTC-eligible enrollees (≤250% FPL) those who purchased on-exchange Bronze vs. Silver plans more frequently had difficulty paying out-of-pocket costs (16% vs. 8%, OR=2.3, 95%CI: 1.3-4.3).

Conclusion(s): Many lower-income enrollees appeared to forfeit available premium and/or cost-sharing assistance by purchasing plans that were ineligible for subsidies. Enrollees who received subsidies perceived their insurance and medical care to be more affordable than those who did not.