Obamacare Insurance for $0 a Month?

Exploring the McKinsey & Co. Report on Zero-Net Premiums.

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Between 7 and 8 million Americans are eligible to get health insurance at no monthly cost on their state's Obamacare exchange, once tax subsidies for lower-income individuals and families are factored in. A clearer picture is now emerging as to what kind of "free" coverage they're able to get. According to a recent analysis by the consulting firm McKinsey & Company, as much as 40 percent of the uninsured population in certain states will qualify for so-called zero-net-premium coverage. In almost every state, at least 5 percent of the uninsured fall into this group.

Zero-net-premium coverage isn't the same as free health care. In many cases, the cheapest plans - which are most likely to be free once a subsidy is applied - offer the fewest benefits, so people who choose them could end up facing hefty bills for hospitalizations and other care.

According to the McKinsey report "Exchanges Go Live: Early Trends in Exchange Dynamics," released in October, between 6 and 7 million Americans may be eligible for a zero-net-premium plan in the bronze tier. Bronze plans are those designed to cover about 60 percent of an insured person's health care bills, meaning that they can expect to pay for the other 40 percent of the care they get. In addition, approximately 1 million may qualify for a zero-net-premium silver plan, which is designed to cover 70 percent of covered expenses.

McKinsey analysts led by David Knott analyzed about 21,000 qualified health plans available in the 2014 exchange market. In 7 states, over 35 percent of the uninsured population can qualify for a zero-net premium health plan and in an additional 14 states, they estimate that 25 to 35 percent of uninsured residents are eligible. The McKinsey report doesn't delve deeply into the demographics of those who would be eligible for zero-net-premium plans. Older people face higher premiums but also larger subsidies. The same is true for families, as compared to individuals.

However, monthly premiums are only one factor in the equation of choosing a health plan. Deductibles, copayments and other forms of cost-sharing can significantly affect cost. And there's good reason to look beyond monthly premium price. Plans vary considerably in the breadth of their networks of covered hospitals, doctors and other providers. "[A]bout two-thirds of hospital networks on the exchanges are narrow or ultra-narrow," McKinsey director Paul Mango told Julie Appleby of Kaiser Health News. Narrow networks mean much less choice in primary-care doctors, specialists, and/or hospitals. Before signing up for an insurance plan, check the company's website to see if your doctors and hospitals are in- network.

Some insurers have created tiered networks or networks where hospitals and providers are divided into levels of expense. Consumers technically have access to the entire network, but if they purchase a plan with tier-one doctors and hospitals, for example, they would have to pay more to see doctors or use hospitals in higher tiers. These structures help insurers keep costs down by "gatekeeping," or making it more expensive to get more expensive care while also allowing consumers to have more choice over their healthcare options. Independence Blue Cross in Philadelphia, for example, doesn't define their tier-one insurance plans as "narrow" because if a consumer wants to see a doctor in tiers two or three, they can. They just have to be okay with paying more. Tier-one plans comprise 50 percent of the hospitals, and 40 percent of the primary-care doctors and specialists, in the complete IBC network, reported The Philadelphia Inquirer.

Findings from the McKinsey report suggest that an increase in "managed-care-like" health plan designs is also playing into gatekeeping so patients will need to get referrals from primary-care doctors for further treatment or to see specialists. Roughly 60 percent of all 2014 exchange plans are either health maintenance organization (HMOs) or exclusive provider organizations (EPOs).


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