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.

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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 BegichRyan's victory trumps justice reform opponents There is great responsibility being in the minority Senate GOP deeply concerned over Trump effect 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.