Note To The Supreme Court: Individuals Will Have Option Of Buying Catastrophic Coverage Under Health Law

When the Solicitor General defended the constitutionality of the mandate in the Affordable Care Act before the Supreme Court last month, Chief Justice John Roberts complained that the law’s minimum coverage provision would require Americans to purchase coverage they could do without or in some cases would never need. “You’re requiring people who are not — never going to need pediatric or maternity services to participate in that market,” Roberts said. Associate Justice Antonin Scalia agreed, noting, “It may well be that everybody needs health care sooner or later, but not everybody needs a heart transplant, not everybody needs a liver transplant.”

At the time, health care advocates pointed out that the law allows Americans to purchase a wide array of insurance products, including less comprehensive packages for those who wish to pay lower premiums for their coverage. Today, a new report from the Kaiser Family Foundation puts a finer point on this argument:

With much of the controversy over the ACA focusing on the individual market, it is noteworthy that the minimum coverage requirement is for insurance that is significantly less generous (and with a lower premium) than what most people have today. It is a level of coverage that most would consider catastrophic, providing protection in the event of an expensive illness while subjecting routine expenses (except for preventive care) to a relatively high deductible. While much of the opposition to the individual mandate is likely due to views about the appropriate role of government, a better understanding of how it works and what it requires could moderate some of the resistance to it. [...]

People will have the option of buying more generous coverage than the minimum required, required, and lower-income enrollees will be eligible for cost-sharing subsidies that decrease their out-of-pocket costs. But, some may still find themselves with insurance that requires substantial cost-sharing.

For instance, a bronze plan would have a deductible of $4,375 and an out-of-pocket cost sharing limit of $6,350 — rates are are “significant and would be considered catastrophic plans, particularly for people without significant personal savings,” the report notes. “These plans would also meet the requirements for tax-preferred Health Savings Accounts,” it adds.

These aren’t the comprehensive policies that progressive health policy wonks would have hoped for. But they will offer individuals and families an opportunity to buy insurance that will only cover the bare minimum and hopefully satisfy the justices in the process.