By Kev Coleman
HealthPocket, March 7, 2013
Given that health insurance plans will have to meet new minimum coverage standards starting in 2014, HealthPocket examined the current marketplace of individual health plans to measure the market disruption that will occur as these plans are replaced by plans compliant with the new standards.
Our research took the Affordable Care Act’s Essential Health Benefits as our starting point. The Essential Health Benefits are the minimum categories of health insurance coverage that every qualified health plan must have starting January 1, 2014. HealthPocket then examined 11,100 individual health plans across the United States to see how many plans had coverage in each of the Essential Health Benefit categories.
The data shows that there will be a near complete transformation of the individual and family health insurance market starting in 2014. Less than 2% of the existing health plans in the individual market today provide all the Essential Health Benefits required under the Affordable Care Act (ACA).
On average, the health plans provided 76% of the ACA’s Essential Health Benefits. Benefits such as hospitalization, emergency care, and ambulatory services (such as visits to a primary care doctor or specialist) were covered by almost all plans in one form or another. A more detailed analysis of our results revealed that the missing 24% of Essential Health Benefits were concentrated around a few categories.
Dental and vision care for children was the least likely of the Essential Health Benefits to be provided in base benefits for a health insurance plan. Only one out of four plans nationally had these benefits within their base coverage. Looking at these benefits at a more granular level revealed that only 8% of plans provided coverage for dental check-up services. Maternity coverage was nearly as infrequent as pediatric dental and vision coverage. Two thirds of health plans did not offer their beneficiaries prenatal, delivery, and postnatal healthcare coverage. Substance Use Disorder Coverage was frequently absent in health insurance coverage as well. Only half of plans covered inpatient and outpatient services for substance use issues (e.g. alcohol or drug addiction). Mental health coverage was slightly better with six out of ten plans covering inpatient and outpatient treatment.
Implications for Health Insurance Premiums?
One of the questions raised by the results of this study is whether the coverage expansion required by the ACA will cause premiums to rise in 2014. Although the answer to that question is beyond the scope of this study, premiums could rise due to a combination of factors, including:
* The closing of the coverage gap as described in this study
* Guarantee issue provisions that will allow people with pre-existing medical conditions to enroll in health plans
* ACA actuarial value requirements on the maximum out-of-pocket costs that can be charged to beneficiaries
By Don McCanne, M.D.
One of the problems that needed to be addressed by the Affordable Care Act (ACA) was the fact that health plans in the individual market have very skimpy benefits – benefit packages that were designed by private insurers who were attempting to keep their premiums competitive. This study confirms the extent of the inadequacies of these plans.
In response, ACA included a mechanism to require a minimum basic level of essential health benefits (EHB). The expansion of the benefits to be covered, along with guaranteed issue to those with preexisting disorders, and placing a maximum on out-of-pocket costs, will all result in significantly higher premiums for plans offered in the individual market. That is in spite of the fact that many will still find the benefits to be deficient, and will still face large out-of-pocket costs because of the low actuarial values of the plans that most people will select.
Even with subsidies, these plans will be expensive. And for those who do not qualify for subsidies? Maybe those potential purchasers would finally see the wisdom of establishing an equitable public system of financing health care through progressive taxes – a single payer national health program. They certainly aren’t going to like what they are going to get under ACA.