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New Policy Brief from Mathematica Looks at State Policies to Encourage Limited-Benefit Health Plans
Contact: Cheryl Pedersen, (609) 275-2258
WASHINGTON, D.C. (March 5, 2009)—Limited-benefit plans offer less comprehensive coverage at lower premiums than conventional health plans. A new policy brief from Mathematica Policy Research, Inc. looks at state efforts to encourage the use of these plans as a way to provide some coverage amid escalating costs. Historically, these plans have not made a significant impact on reducing the large and growing numbers of Americans who are uninsured. The brief describes different types of plans, their costs and enrollment, and state policies designed to promote them.
Limited-benefit plans generally require high deductibles, exclude coverage of some services, or both. The brief examines high-deductible health plans, which are widely available in the private market, and typically cover the same services as conventional health plans but with much higher out-of-pockets costs for consumers. Georgia is the first state attempting to subsidize high deductible plans. The brief also looks at state policies to allow the purchase of “bare-bones” plans—plans that exclude coverage for some state-mandated benefits and may offer very limited coverage for other services as well. In states that permit the sale of bare-bones plans, they are offered through associations, by low-wage employers, or as part of a state coverage expansion.
Proponents of limited-benefit plans argue that their lower premiums can help expand coverage and that some coverage is better than none. In addition, they contend that enrollees who have to pay more out of pocket might use health care more judiciously. Critics are concerned that enrollees do not understand the out-of-pocket costs they face and that high expenses can lead to too little care and more serious illness. Policyholders may be underinsured, possibly leading to unmanageable levels of medical debt.
“Some programs that heavily subsidize the premiums for limited-benefit plans have succeeded in enrolling people who were previously uninsured,” said Lynn Quincy, author of the brief and a senior researcher at Mathematica, “But in the absence of subsidies or in the presence of modest subsidies, there is little evidence that limited-benefit plans enroll a significant number of uninsured people.”
“State Policies to Encourage High-Deductible and Limited-Benefit Health Plans: Costs, Constituents, and Concerns” is available at http://www.mathematica-mpr.com/pdfs/Health/statepolicyencourage09.pdf. The study was funded by AARP.
Mathematica, a nonpartisan research firm, conducts high quality, objective policy research and surveys to improve public well-being. Its clients include federal and state governments, foundations, and private-sector and international organizations. The employee-owned company, with offices in Princeton, N.J., Washington, D.C., Cambridge, Mass., Ann Arbor, Mich., and Oakland, Calif., has conducted some of the most important studies of health care, education, welfare, employment, nutrition, and early childhood policies and programs in the U.S.