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Millions of
people could qualify for federal subsidies that will pay the entire
monthly cost of some health care plans being offered in the online
marketplaces set up under President Obama’s health care law, a
surprising figure that has not garnered much attention, in part
because the zero-premium plans come with serious
trade-offs. 

Three independent estimates by Wall
Street analysts and a consulting firm say up to seven million
people could qualify for the plans, but federal officials and
insurers are reluctant to push them too hard because they are
concerned about encouraging people to sign up for something that
might ultimately not fit their
needs. 

The bulk of these plans are so-called
bronze policies, the least expensive available. They require people
to pay the most in out-of-pocket costs, for doctor visits and other
benefits like hospital stays. 

Supporters of
the Affordable Care Act say that the availability of free-premium
plans — as well as inexpensive policies that cover more — shows
that it is achieving its goal of making health insurance widely
available. A large number of those who qualify have incomes that
fall just above the threshold for Medicaid, the government program
for the poor, according to an analysis by the consulting firm
McKinsey and Company. 

The latest
analysis was conducted by McKinsey’s Center for U.S. Health System
Reform, whose independent research has been cited by the federal
government and others. 

“The whole
point of the law was not only to cover the uninsured, but so people
didn’t have to make choices between food or drugs, or going to the
doctor or dentist,” said Karen Davis, a health policy expert at the
Johns Hopkins Bloomberg School of Public Health. “It’s what it is
designed to do.” 

Many insurers
tried to price their least expensive plans so they would become
free or nearly free with the addition of subsidies that are set
based on a person’s income and the cost of a midlevel, or silver,
plan. 

Independence Blue Cross in Philadelphia
has four plans that are free to some customers. But the company,
along with other insurers, has been careful not to publicize its
free coverage for fear of alienating customers who will need to pay
more. 

“We’re not advertising zero dollar,”
said Brian Lobley, a senior vice president at Independence Blue
Cross. But the company is promoting monthly premiums in the $20 to
$30 range, he said. 

The Obama
administration has also stressed affordability over coverage with
no monthly charge, frequently saying that the cost of coverage will
be less than a monthly cellphone bill for many consumers. Officials
at the Department of Health and Human Services would not comment on
the McKinsey analysis, saying in a statement that the goal of the
health law was to provide a range of options for people with
differing needs and budgets. 

The analysis
found that five million to six million people who are uninsured
will qualify for subsidies that will be greater than the cost of
the cheapest bronze or silver plan. A million more people with
individual insurance could also be eligible, according to McKinsey,
although estimates of the size of the market for private individual
insurance vary widely. None of the people in the analysis qualify
for Medicaid. 

The availability of zero-premium plans
may make the deal especially enticing to the healthy young people
the marketplace needs to succeed, said Mark V. Pauly, a professor
of health care management at the University of Pennsylvania’s
Wharton School. “This is such a good deal that you’d have to
believe you were immortal not to really pick it up,” he
said. 

Although they vary in their design,
bronze plans generally cover about 60 percent of a person’s medical
costs. All plans, including bronze, must cover standard benefits
like prescription drugs, maternity care and mental health
treatment. 

The availability of the zero-premium
plans varies across the country. McKinsey found that about 40
percent of the uninsured in Missouri will be able to select a
no-cost bronze plan, for example, compared with 2 percent of the
uninsured in New Jersey. 

Its estimate,
based on an analysis of premiums for plans offered in the
marketplaces in all 50 states and the District of Columbia, is in
line with two other estimates, by Credit
Suisse
and Morgan
Stanley. 

The McKinsey researchers also found
that about half of the people eligible for zero-premium plans were
under 39 and uninsured. The Obama administration has been
emphasizing the affordability of its plans for young people, a
critical group because their participation in the marketplaces will
help keep overall premiums low. 

It is
impossible to know who will actually sign up, and whether they will
choose a zero-premium plan. 

For many
people, paying slightly more for a silver plan may be a much better
option, experts said. Ninety percent of those who will have the
option of buying the no-cost plans make less than 250 percent of
the federal poverty level, which is $28,725 for an individual, and
$58,875 for a family of four. People earning below those thresholds
are eligible for the most generous assistance, but only if they
choose a silver plan. 

About a million
of those who will qualify for free coverage will be able to buy a
silver plan for no monthly cost. McKinsey, which is
releasing a report
about the new insurance marketplaces,
estimates that the cost of silver plans for the people who qualify
for a zero-premium bronze plan will range from $40 to $50 a
month. 

“They may be getting zero premiums, but
they’re also leaving a lot of money on the table if they don’t
enroll in a silver-level plan,” said Sabrina Corlette, a professor
at Georgetown University’s Health Policy
Institute. 

All plans, including bronze policies,
limit annual out-of-pocket costs to $6,350 for individuals and
$12,700 for families. But insurers and advocates said out-of-pocket
costs — even those under that limit — can be daunting to people
with low incomes. 

For Mark and
Elisabeth Horst, both artists in Albuquerque, the risks of signing
up for a bronze plan were outweighed by the prospect of getting it
free. The Horsts, who make $24,000 a year between them, qualified
for $612 in monthly subsidies, but the cost of a bronze plan was
$581 a month. 

“We’re in good health,” Mr. Horst
said. 

Besides, he said, they can always
switch to a better plan next year. “At this point, it’s a little
bit of a gamble.” 

Not everyone
selects the cheapest option. Dante Olivia Smith, a lighting
designer from Manhattan, learned that federal subsidies would allow
her to buy a bronze plan for $24 a
month. 

“It was astounding,” she said. “I
almost started crying, and called my
mom.” 

In the end, however, she went with a
silver plan for $91 a month that included dental and vision
coverage. Ms. Smith, who is 30, said she opted for the more
comprehensive plan because of her work, which requires her to climb
ladders and use power tools. 

“If I had a
different job, for 24 dollars a month I would have been like
‘Woo-hoo!’ ” she said. “But the reality is, I know what my risks
are in my life.”


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