ACA Policy Paper: ACA Benefit Design
Allyson Troyer
9 December 2018
HAP 5453
U.S Healthcare Systems
Dr. Kinney/Mattachione
Introduction
The Patient Protection and Affordable Care Act was enacted March 23, 2010 by President Obama, more commonly known as the Affordable Care Act (ACA). The primary reasons for enactment of the ACA was to reduce the number of uninsured, expand access to care, and to help make coverage more affordable. The policy acquired from the Affordable Care Act that was analyzed in this report is the Benefit Design. The benefit design policy was set to be effective as of January 1st, 2014. The benefit design was created to provide an essential benefits package that contains a comprehensive set of healthcare services that must be required by plans on the exchanges (“Summary,” 2013). There are some exceptions to the requirements for individual and employer-sponsored plans that were grandfathered in, to help ease the transition of the ACA (“Future,” 2017). The benefit design was furthermore designed to ensure that plans sold in the marketplaces and in the individual and small group markets must also fit into one of four metal tiers defined by their actuarial value (AV). The four metal tiers and their AV are:
Bronze 60% AV, Silver 70% AV, Gold 80% AV, and Platinum 90% AV. Insurers have flexibility to change the cost-sharing features within the metal tiers. (Tolbert, 2015). The helps set an out of pocket limit for the plans found on the market place, however they change just about each year. Another unique part of the benefit designs of the ACA was that it prohibited abortion coverage from being required as an essential health benefits (“Summary,” 2013).
Understand and Define the Problem
The need for a health reform such as the ACA, could not come soon enough with the increasing number of uninsured and the lack of access to healthcare especially for those low-income families. The ACA benefit design was to help create a uniform set of covered services among health insurance plans and help relay the information to the public in easy to understand language, to help benefit those with low health literacy. Stated by a study from the common wealth fund “prior to the passage of the ACA, the individual insurance market was a known to be a difficult place for consumers without employer-based health benefits to purchase insurance. It also was challenging for insurers to sell insurance without incurring large losses. Consequently, insurers went to great lengths to exclude people with even minor health problems. The Commonwealth Fund Biennial Health Insurance Survey in 2010 found that more than one-third of people who attempted to purchase health insurance in the individual market in the past three years had been turned down, charged a higher price, or had a condition excluded from their health plan” (Beutel, Doty, Gunja, & Collins, 2017). Per an article written by Sara Collins in 2010 “Nearly two-thirds of the 45.7 million uninsured people under age 65 had incomes that are less than 200 percent of the poverty level, or had an income of about $44,100 per year for a family of four. Furthermore, of the estimated 25 million underinsured adults, who could not afford their out-of-pocket medical costs despite having insurance, was found that more than half had incomes under 200 percent of poverty. Prescription drug coverage is now one of the 10 essential health benefits required by the ACA and must be included with all new exchange plans. This is a substantial shift; prior to the implementation of the ACA, nearly 1 out of 5 health insurance plans purchased privately by individuals and families lacked drug benefits (Reisman, 2015). The benefit design policy of ACA set out to tackle these obstacles.
Analysis Criteria
Population Benefit
The ACA has led to many improvements in healthcare. Studies show that the ACA is significantly reducing the number of uninsured people. A recent analysis by the RAND Corporation found that nearly 17 million more Americans have become insured since the health insurance exchanges opened. According to Gallup data, the number of uninsured among adults in the US 18 years of age or older dropped to 11.9% for the first quarter of 2015, showing a drop of about 6 percent at the end of year 2013 (Reisman, 2015). The increase in the number of insured has resulted in an increase in the use of healthcare services, leading to better health outcomes among newly insured individuals. ACA essential benefit design provided several new requirements that insurers must implement in their plans. All plans offered on the exchanges must include at least the 10 categories of essential health benefits and must be designed per 4 standard metal tiers based on cost-sharing levels. The 10 categories include: ambulatory patient services, emergency services, hospitalization, pregnancy, maternity, and newborn care, mental health and substance use disorder services, prescription drugs, rehab services and devices, laboratory services, preventive and wellness services, chronic disease management, pediatric services, including oral and vision care (for pediatric only, adult are not required). Additional benefits which must include are breastfeeding coverage and birth control coverage with the exceptions of grandfathered plans and religious exemptions (“Health Benefits,” 2018). Research is showing that the ACA has great potential to improve health and health care for people with chronic conditions such as diabetes. Uninsured adults 19 to 64 years of age with diabetes had less access to health care and lower levels of preventive care, health care use, and expenditures than insured adults. Therefore, the ACA provided an increase in access and coverage to those with chronic condition such as diabetes. The ACA has led to a drop in the number of diabetic complications and improved health outcomes (Reisman, 2015).
Cost
The ACA benefit design sets out to contain the out of pocket expenses for healthcare spending per individual or per family, this rate changes from year to year. In 2017, per healthcare.gov shows the out-of-pocket limit for a Marketplace plan was $7,150 for an individual plan and $14,300 for a family plan. In 2018, the out-of-pocket limit for a marketplace plan was $7,350 for an individual plan and $14,700 for a family plan. (“Health Benefits,” 2018). As you can see this numbers have slowly increase from the 2010 when they were $5,950 per individual and $11,900 per family (“Summary,” 2013). The ACA recognized various tiers of health insurance coverage. These tiers are generally used for three reasons: (1) To established the minimum amount of coverage many people must have, to satisfy the requirement of being insured or pay a federal tax penalty that began in 2014. (2) It is used to establish the standardized levels of insurance, individuals and small businesses can buy on health insurance exchanges or in the outside markets. (3) It also severed as benchmarks for premium and cost-sharing subsidies provided to lower and middle income people buying their own insurance in exchanges (Summary, 2018). These requirements above apply to all tiers of health insurance coverage, but the levels of coverage will reflect differences in cost-sharing not differences in the fundamental benefits.
Administration
The ACA benefit design policy is a federal regulation that is overseen by a sector of the Center of Medicaid and Medicare Services (CMS). The ACA requires the Secretary of Health and Human Services to ensure that the “scope” of essential health benefit coverage is equal to the scope of benefits provided under a “typical employer plan,” this helps set a minimum standard for what has to be covered within each benefit category. To help maintain these standards, the Obama administration had states select an EHB “base benchmark plan” from among a menu of ten plan options which include: the three largest small group plans, the three largest state employee health plans, the three largest federal employee health plan options, or the largest HMO offered in the state’s commercial market. Then states could add supplemental coverage to ensure they fit all of the requirements mandated by the ACA. The Trump administration is proposing alternatives to the EHB selection process in the future offering 3 options. (1) Adopt the EHB benchmark plan that any other state used in 2017 (2) use the same EHB benchmark plan as in 2017, but replace one or more benefit categories of that plan with those of other states’ EHB benchmark plans or (3) create a new EHB benchmark plan from scratch (Lueck, 2017). It will be interesting to see the impact of changes of the ACA in the future. Would the changes lead to increase or decrease in coverage and access to healthcare? Time will only tell.
Stakeholder
The ACA benefit design created policies to ensure that each healthcare plan contained a pre-determined list of requirements. This can affect patients and healthcare providers. The increase in the insured population that resulted from the ACA caused in increase in access to healthcare. Whereas healthcare providers on the other side gained more business and an increase in patients to care for. This could be viewed as a benefit and a burden at the same time. The benefit being the ability to provide healthcare to more American. The burden being the time strained and ability to accommodate the newly insured, will this cause a decrease in quality of care?
Evaluation
Arguably one of the greatest benefit of the ACA benefit design was the easier access to insurance through the marketplace exchanges. The ACA benefit design made it easier to understand and chose a plan. The essential benefits requirements insured that the plans offered on the exchanges met the basic requirement of healthcare.
A major benefit of the ACA essential benefit design was the requirement of preventive services without requiring any patient cost-sharing. Approximately 76 million people which include about 19 million children have received no-cost coverage for preventive health services since the ACA preventive services coverage rules took effect. This coverage went into action on September 23, 2010 for new individual and employer-based coverage, not including grandfather plans. (Tolbert, 2015). In addition, private health insurance policies commonly must provide coverage for an added set of preventive health services for women without copay, coinsurance, or deductible requirements, such as well-woman visits, all FDA-approved contraceptives, screening and counseling for STIs, breastfeeding support and supplies, and domestic violence screenings. Certain religious employers are specifically exempt from the contraceptive coverage requirement and are not required to include coverage, but must instead send a form to Human and Health Services or their insurance company stating their opposition to covering contraceptives. The organizations that qualify for the accommodation are not required or pay for contraceptive coverage. A negative side to the religious exemptions is that those who are employed under a religious exempt organization and seek contraception would have to pay the cash out of pocket price for the contraception, subsequently the payment would not apply to patient’s deductible or contribute to the max out of pocket spending (Tolbert, 2015).
To help make transition to the new market reforms easier, the ACA excused certain plans from some of the new health insurance requirements. These plans as refereed to earlier are the grandfathered plans. To retain grandfathered status, plans must not exclude benefits to diagnose or treat a condition; increase cost sharing beyond certain specified limits; or reduce the employer share of the premium by more than 5%. Grandfathered plans are exempt from some of the new insurance market rules such as the provision of preventive services with no cost-sharing, and review of premium increases of 10% or more. The grandfather plans however must extend coverage to dependents up to age 26 and eliminate lifetime and annual limits on coverage. In addition, grandfathered plans can no longer impose pre-existing condition exclusions on children or adults (Tolbert, 2015). However, some insurers may choose to lose their grandfathered status as the benefits may not outweigh the risk or they prefer to choose a benchmark plan that would allow them to market to new members on healthcare exchanges. These changes from could result in benefits to the consumer with all the required services, but on the other side could lead to dropped insurance plans and the headache of seeking new insurance.
A controversial component of the ACA benefit design is the explicit prevention of abortion services as a requirement of the essential health benefits. No health plan is required nor prohibited to cover abortion services under the ACA (Tolbert, 2015). However, 25 states have enacted laws that prohibit coverage of abortion on their health insurance marketplace, one of those states being Oklahoma. For the remaining states that do not have coverage requirements and a marketplace plan issuer whom opts to cover abortion care beyond the narrow circumstances of rape, incest and life endangerment, then the ACA requires the issuer to follow special accounting measures. The issuer must have two separate accounts into which enrollees’ premium payments are deposited: one from which abortion claims (beyond instances of rape, incest or life endangerment) are paid and another comprising the clear majority of enrollees’ premium dollars from which all other claims are paid. This is to ensure that federal revenue is separated from the private funds used to cover abortion. To help aid in transparency of abortion plan which is still a problem today that we face today, the ACA does require that plans covering abortion beyond cases of rape, incest or life endangerment must inform individuals of this coverage (Hasstedt, 2015).
To help improve the current policy I think there should be exceptions to the required benefit design. The advantage to the ACA benefit design guarantees that people who need benefits have access to affordable care. The disadvantage is that it can make others pay for benefits they don't necessarily need and can theoretically increase the cost of coverage (The Future, 2017). Some of the services that are required are not necessary for everyone to have, but they are still required to pay premiums that contain all of the required benefits. For example, should someone who is not able to have children be required to pay for lactation services and equipment. If policy allowed consumers to pick and choose what additional services they wanted covered on their insurance plans, apart from a few non-negotiables. The consumers would benefit with the ability to design a personal plan that would be more affordable and help better inform the consumer what services are actually covered on their healthcare plan. This could also lead to an increase in the number of insured due to incentive to design personalized healthcare programs. The cost would be manageable and by designing personalized plans would help consumers understand the prices they were paying in effort to be more transparent. This would increase fairness as each plan would be tailored to each person. The weakness of this plan would be that it would require a more complicated administration and strategy to design and implement custom plans for everyone.
References
Beutel, S., Doty, M. M., Gunja, M. Z., & Collins, S. R. (2017, February 1). How the Affordable Care Act Has Improved Americans' Ability to Buy Health Insurance on Their Own. Retrieved from https://www.commonwealthfund.org/publications/issue-briefs/2017/feb/how-affordable-care-act-has-improved-americans-ability-buy
Collins, S. (2010, July 13). How the Affordable Care Act of 2010 Will Help Low- and Moderate-Income Families. Retrieved from https://www.commonwealthfund.org/blog/2010/how-affordable-care-act-2010-will-help-low-and-moderate-income-families
Hasstedt, K. (2015, April 09). Abortion Coverage Under the Affordable Care Act: Advancing Transparency, Ensuring Choice and Facilitating Access. Retrieved from https://www.guttmacher.org/gpr/2015/04/abortion-coverage-under-affordable-care-act-advancing-transparency-ensuring-choice-and#map.
Health Benefits and Coverage Find out what Marketplace health insurance plans cover. HealthCare.gov. https://www.healthcare.gov/coverage/what-marketplace-plans-cover/. Accessed September 22, 2018
Lueck, S. (2017, November 07). Administration's Proposed Changes to Essential Health Benefits Seriously Threaten Comprehensive Coverage. Retrieved from https://www.cbpp.org/research/health/administrations-proposed-changes-to-essential-health-benefits-seriously-threaten
Reisman, M. (2015). The Affordable Care Act, Five Years Later: Policies, Progress, and Politics. P & T : a peer-reviewed journal for formulary management, 40(9), 575-600.
Summary of the Affordable Health Care Act. KFF. https://www.kff.org/health-reform/fact-sheet/summary-of-the-affordable-care-act/. Published April 25, 2013. Accessed September 1, 2018.
The Future of U.S. Health Care. RAND Corporation. https://www.rand.org/health/key-topics/health-policy/in-depth.html. Published August 21, 2017. Accessed September 22, 2018.
Tolbert, J. (2015, March 20). The Coverage Provisions in the Affordable Care Act: An Update – Health Insurance Market Reforms. Retrieved from https://www.kff.org/report-section/the-coverage-provisions-in-the-affordable-care-act-an-update-health-insurance-market-reforms/