In 2024, a record 20.5 million Americans enrolled in comprehensive coverage through the Affordable Care Act (ACA) marketplaces. Thanks to federal policy that supports premium affordability, 4 in 5 HealthCare.gov enrollees were able to enroll in coverage for $10 or less per month. Yet many low- and moderate-income marketplace enrollees still struggle to afford their plans’ out-of-pocket costs, including deductibles, coinsurance, and copayments. A 2023 Commonwealth Fund survey found that 37 percent of respondents with marketplace coverage had delayed or skipped needed health care in the past 12 months because of cost.
Accordingly, states are leveraging the ACA’s successes and enhanced assistance made possible by the American Rescue Plan Act and Inflation Reduction Act to take action to address consumer affordability beyond premiums, aiming to lower out-of-pocket costs so that everyone with marketplace plans can get the care they need.
In the first session of a four-part CAP series on state health care affordability, CAP Health Policy Director Natasha Murphy moderated a discussion with Colin Baillio, New Mexico deputy superintendent of insurance; Miranda Dietz, policy research specialist and project director of the California Simulation of Insurance Markets microsimulation model (CalSIM) at the UC Berkeley Center for Labor Research and Education; and Laura Waddell, health care program director at New Jersey Citizen Action. These experts shared insights from their state’s efforts to improve marketplace plan affordability beyond premiums by reducing or eliminating deductibles, employing standardized plan designs, and increasing plans’ actuarial values.
New Mexico’s state out-of-pocket affordability program directly lowers deductibles, copays, and coinsurance for certain marketplace plans
New Mexico established a Health Care Affordability Fund in 2021. The fund uses state provider fee revenue to invest in lowering marketplace coverage costs, including through the state out-of-pocket assistance program (SOPA), which was launched in 2023. To benefit from SOPA, consumers must select a “Turquoise Plan.” Turquoise Plans are enhanced silver-level plans that offer reduced deductibles, out-of-pocket limits, copays, and coinsurance to individuals and families with incomes up to 400 percent of the federal poverty level (FPL). In addition, the state’s standardized plans, known as “Clear Cost” Turquoise Plans, improve cost predictability and affordability by eliminating coinsurance—copays only—and only subjecting a few services to the deductible. Baillio noted that there is strong interest in coverage that offers lower out-of-pocket costs: Turquoise Plan enrollment grew from 17,500 in 2023 to nearly 30,000 in March 2024.
California employs standardized plans to lower or eliminate deductibles for lower-income marketplace enrollees
High deductibles are a primary pain point for marketplace enrollees. Dietz noted that according to analysis of 2021 member profile data, about half of subsidized California marketplace enrollees were in plans with deductibles that exceeded 5 percent of their income—or, in other words, were underinsured. To improve deductible affordability, the state’s standardized benefit design plans offer first-dollar coverage for primary preventive care and many outpatient services. To further reduce out-of-pocket costs, California introduced an enhanced cost-sharing reduction (CSR) program in 2024 that eliminates deductibles and increases the actuarial value for silver plan enrollees with incomes up to 250 percent of the FPL.
New Jersey is seeking to improve affordability by better aligning marketplace premiums with plan generosity
New Jersey currently has legislation (S. 1971) under consideration that aims to advance affordability and simplify the insurance market by reducing the cost of gold plans relative to silver plans. Generally, gold plans have higher monthly premiums and lower out-of-pocket costs compared with silver plans. For households with incomes over 200 percent of the FPL who do not quality for full cost-sharing reduction subsidies, gold plans can be a more cost-effective choice. However, in New Jersey, the lowest-cost gold plan was, on average, 37 percent more expensive than the lowest-cost silver plan in 2024. As a result, New Jersey currently has the lowest gold plan enrollment rate in the country, at 1.4 percent. The proposed legislation would change insurer rate filing requirements to align gold and silver plan premiums over a two-year period. Waddell noted that this change would assist consumers and “bring better value for the insurance that they are purchasing.”
Federal premium supports enable state affordability initiatives
Baillio, Dietz, and Waddell agreed that while state reforms can make meaningful differences in lowering marketplace plan out-of-pocket costs, these efforts supplement, but cannot replace, federal support. The extension of enhanced federal financial assistance for marketplace premiums beyond 2025 will be critical to the sustainability of these innovative state affordability policies.