Buying health coverage is a complex process. Consumers must compare and evaluate premiums, benefits, drug formularies, and provider networks across a range of insurance products. In choosing the best plan for themselves and their families, consumers must consider their monthly budgets and anticipate their healthcare needs for the coming year.

Deciding which plan to buy is especially important for those with chronic diseases, as these individuals are likely to encounter out-of-pocket costs for health services, in addition to monthly premiums. Better Shop Around: Out-of-Pockets Prescription Drug Costs in Covered California Plans describes how plan variation and formulary design choices impacted consumers’ out-of-pocket costs in 2014. It highlights the sometimes complex considerations consumers must take into account when choosing a plan.

Findings from this analysis include:

Consumers who rely on specialty drugs experience higher out-of-pocket costs than those who do not use specialty drugs.

Because California requires standard benefit designs, prescription drug formulary placement is the primary source of variation in out-of-pocket costs across different plans.
While standard benefit designs limit variation across plans, consumer costs will still vary based on an enrollee’s unique health needs.
For consumers with significant health needs, cost-sharing reduction silver plans dramatically reduce expected enrollee costs relative to nonsubsidized alternatives.
Some unsubsidized consumers may benefit from paying higher premiums for a platinum plan to reduce their total annual costs.
Regardless of income, medication-reliant consumers face front-loaded spending at the start of the year as a result of deductible requirements and specialty tier costs.

Read the full report.