Question:
Are ACA-compatible Catastrophic plans really more expensive (on average) than the other "metal" plans? After deeper analysis, it seems like a Catastrophic plan costs less out-of-pocket than a Bronze plan and has a high break-even point with a Silver plan.
However as all advice online seems to go against this, I'm wondering if something is missing in my analysis below.
Analysis
I am helping someone select health insurance from a health insurance marketplace and am finding conflicting information regarding which plan is cheaper/appropriate. The following plans are example plans available directly from one of the providers: https://fideliscare.affordablecareadvisor.com/
Plan | Catastrophic | Bronze | Silver
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Monthly | $176.89 | $324.45 | $408.04
Premium | | |
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Deductible | $6,850.00 | $3,500.00 | $2,000.00
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Out-of | $6,850.00 | $6,850.00 | $5,500.00
Pocket Max | | |
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Average | 0% After | 50% | *10%
Co-insurance | Deductible | |
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Generic | 0% after | $10 after | $10
Drugs | deductible | deductible |
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* The silver plan is all co-pays after the deductible so the
10% is an approximation for the purposes of this analysis.
Looking for advice online, one finds that Bronze plans are pitched as the cheapest but with high out-of-pocket costs, Silver as a good balance of out-of-pocket costs and premiums, and Catastrophic a cheaper alternative than Bronze (if you qualify) but with highest cost due to the high deductible.
At first glance, it does seem that Catastrophic is risky/more-expensive as the $6,850 deductible looks very high. However once you plug the numbers into a chart to predict out-of-pocket costs and, most importantly, include the monthly premium in the calculation, the results are surprising:
What I am reading from this is that at all levels of medical spending, out-of-pocket costs are lower for the Catastrophic plan than the Bronze plan. The large difference in premiums ($150/month or $1,800 per year) and the low cost-sharing of 50% seems to account for this. The Silver plan behaves more as expected as it costs more upfront but tapers off once you reach the deductible. However it is again interesting to see that the break-even point with the Catastrophic plan is at $5,000 in medical expenses.
