Analysis: O-Care ‘copper plan’ could save billions

Allowing a cheaper healthcare plan on the ObamaCare exchanges could help bring down federal healthcare spending by $5.8 billion over the next 10 years, according to a new analysis.

Avalere, a healthcare consulting firm, released a report Tuesday that found creating a lower-tiered plan on the health exchanges, often called a “copper plan,” could significantly reduce federal healthcare spending.

“Introducing a new tier in 2016 may cause some individuals who have already enrolled in a marketplace plan to re-evaluate their prior choice, while also attracting other individuals who are expected to enroll for the first time in a marketplace plan that year,” said the report.

The idea of offering a copper plan has been floated by the main health insurance lobby group, America’s Health Insurance Plans, and championed by Sen. Mark BegichMark BegichSenate GOP deeply concerned over Trump effect Ex-Sen. Kay Hagan joins lobby firm Unable to ban Internet gambling, lawmakers try for moratorium MORE (D-Alaska).

Under the Affordable Care Act, entry-level health plans that meet the minimum coverage requirements are called bronze plans. They tend to have the highest out-of-pocket costs but lower premiums and must cover at least 60 percent of the customer’s healthcare spending.

Avalere’s research shows if Congress were to allow a new copper plan that would be required to only cover a minimum of 50 percent of the costs, it would reduce premiums for plan holders by 18 percent compared to bronze plans in 2016.

The analysis estimates the government would save $5.8 billion in ObamaCare subsidies by allowing the plan. Researchers say more business are likely to enroll employees in the copper plan instead of paying a penalty under the ACA for not offering healthcare coverage.

However, it would also mean the federal government would lose out on $5.5 billion in revenues because fewer employers would have to pay the employer mandate. In sum the analysis said the plan could reduce the federal deficit by $300 million by 2024.