Examining the Value of Subsidies of Health Plans and Cost-Sharing for Prescription Drugs in the Health Insurance Marketplace

Background: The Affordable Care Act (ACA) initiated federally and state-run health insurance exchanges, or marketplaces, with health plans offering subsidies for plan members as well as coverage for essential health benefits, to help individuals, families, and small businesses find health plans that fit their specific needs. A recent study found that the value of these healthcare subsidies varied with the number of health plans in the different geographic rating areas, but that study only examined the premiums and the deductibles of those health plans.

Objectives: To examine the value of subsidies of health plans, including cost-sharing for prescription drugs in the health insurance marketplace.

Methods: We have used publicly available health plan data from HealthCare.gov and from county population data obtained from the US Census Bureau in June 2015. The average-weighted premium; medical deductible; medical maximum out-of-pocket spending; and cost-sharing for generic drugs, preferred and nonpreferred brand-name drugs, and specialty drugs were calculated for the second lowest-cost silver plan in each geographic rating area. These were then compared across geographic areas with different numbers of plans to determine the value of the subsidies. We also compared the difference between the cost of the average silver plan and the second lowest-cost silver plan for each area to determine the cost to enrollees if they selected the average silver plan.

Results: The monetary value of the subsidies provided by health plans was lower in areas with a larger number of plans, because the second lowest-cost silver plans in these areas tended to have lower premiums and higher deductibles. For the most common type of cost-sharing for generic and for preferred brand-name drugs, plan enrollees would likely have a lower or similar copayment if they selected the average-cost silver plan instead of the second lowest-cost silver plan. However, they may end up paying approximately $8 less in copayment for nonpreferred branded drugs and approximately 4% less for coinsurance after a deductible for specialty drugs if they resided in a geographic area with fewer than 11 plans.

Conclusion: The value of subsidies provided by the ACA-initiated health plans in the healthcare marketplace, including cost-sharing for prescription drugs, varies across geographic areas with different numbers of health plans. This suggests that potential enrollees should consider cost-sharing for prescription drugs in addition to health plans' premiums and deductibles when choosing their health plan.