Health law enrollments show consumers shun cheapest plans for care

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NEW YORK -- Most Americans are avoiding the lowest-priced health plans on the Obamacare insurance exchanges, taking advantage of government subsidies to seek more protection against high treatment costs.

Only 19 percent of enrollees chose the coverage with the cheapest premiums, called bronze, while 7 percent picked the most expensive, the Health and Human Services Department said in a report. Mid-level silver plans drew 62 percent. The lower the plan level, the higher the out-of-pocket costs.

That's good news for insurers who were concerned that too many people would pick the cheapest premiums, then discover that they couldn't pay the plans' higher deductibles for medical care, said Michael Mahoney of GoHealth, a private online platform that helps people enroll. The popularity of the silver plans shows that consumers are selecting the best package of financial assistance offered through the government exchanges.

"The silver plan's cost-sharing subsidy makes them a great option," said Carrie McLean, director of customer care at eHealth Inc., an online insurer.

The Patient Protection and Affordable Care Act requires individuals to carry insurance or pay a penalty as it seeks to cover many of the nation's estimated 48 million uninsured. Those who don't receive coverage through their workplace or a government program can select a plan using the new exchanges that opened for business Oct. 1.

Based on income, two subsidies are available to help pay the cost: one that covers premiums and another that reduces deductibles and co-payments. While premium assistance applies to every tier, the cost-sharing aid applies only to silver plans.

Bronze plans cover only 60 percent of costs, making consumers liable for maximum deductibles of $6,000 a person in medical care. "It's too risky to take on that exposure if you don't have that kind of money," said Karen Pollitz, a Kaiser Family Foundation senior fellow.

For a family on a silver plan with an income at 150 percent of the federal poverty level, the cost-sharing assistance reduces a $12,700 annual out-of-pocket maximum to $4,500, and for an individual, from $6,350 to $2,250, said Mr. Mahoney, GoHealth's senior vice president of consumer marketing. The cost-sharing subsidies were intended to encourage consumers to "buy up," he said.

The law requires insurers to accept all customers regardless of their medical history or condition and provide some benefits, such as free preventative care.

The insurance companies don't want too many people signing up for platinum plans with the most expensive premiums because those customers typically are sicker, older patients who know they will see their doctors frequently, said Brian Wright, a New York-based analyst at Monness Crespi Hardt & Co. "So overall, the greater the percentage of enrollment in the bronze and silver plans, the better from a risk pool perspective," he said.

Bruce Broussard, chief executive officer of Humana Inc., said early enrollment in higher metal tiers was "greater than we anticipated," with 25 percent of customers picking a platinum plan, and 52 percent picking silver as of Dec. 31. Since then, they have seen members start to skew younger and pick more silver plans, representing 58 percent of their enrollments at the end of January, he said in a call with analysts Feb. 5.

In addition to the 7 percent platinum, 12 percent of the exchange selected plans through Feb. 1 were at the gold level, the Health and Human Services report showed.

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