This mcjoan diary is the kind of diary that makes Dkos bloggers like me, askew, Elise, Kitty, and many others who have left the Daily Kos so angry. The diary ignores the most basic information about actuarial science. We should at least be an information-based reality blog.
mcjoan argues that we need a public option because insurance companies will cherry-pick the healthy by offering plans with less catastrophic coverage and compensate the difference in minimum actuarial value (actuarial value is the apples-to-apples comparison measuring a plan's generosity) by offering benefits more attractive to the young and healthy while offering plans with more catastrophic coverage at the minimum actuarial value for the old and the sick.
Hello? What do you think will happen if insurance companies continue to cherry-pick the healthy and there is a public option? Where do you think the old and the sick will go? They'll go to the public option. Now how would the public option be affordable if the people on the public plan were significantly older and sicker than the people on private plans? The public option won't be affordable, and will cease to exist.
The way to reduce the risk of insurance companies cherry-picking the healthy by offering more benefits attractive to the healthy at the expense of catastrophic coverage isn't a public option -- it's regulation. You require insurance companies to offer a minimum level of services to be covered at a minimum actuarial value. Insurance companies could then offer benefits attractive to the young and the healthy on top of the minimum level of services to be covered at the minimum actuarial value. This is what H.R. 3200 does. Here's Section 122 of the bill:
SEC. 122. ESSENTIAL BENEFITS PACKAGE DEFINED.
(a) In General- In this division, the term `essential benefits package' means health benefits coverage, consistent with standards adopted under section 124 to ensure the provision of quality health care and financial security, that--
(1) provides payment for the items and services described in subsection (b) in accordance with generally accepted standards of medical or other appropriate clinical or professional practice;
(2) limits cost-sharing for such covered health care items and services in accordance with such benefit standards, consistent with subsection (c);
(3) does not impose any annual or lifetime limit on the coverage of covered health care items and services;
(4) complies with section 115(a) (relating to network adequacy); and
(5) is equivalent, as certified by Office of the Actuary of the Centers for Medicare & Medicaid Services, to the average prevailing employer-sponsored coverage.
(b) Minimum Services To Be Covered- The items and services described in this subsection are the following:
(1) Hospitalization.
(2) Outpatient hospital and outpatient clinic services, including emergency department services.
(3) Professional services of physicians and other health professionals.
(4) Such services, equipment, and supplies incident to the services of a physician's or a health professional's delivery of care in institutional settings, physician offices, patients' homes or place of residence, or other settings, as appropriate.
(5) Prescription drugs.
(6) Rehabilitative and habilitative services.
(7) Mental health and substance use disorder services.
(8) Preventive services, including those services recommended with a grade of A or B by the Task Force on Clinical Preventive Services and those vaccines recommended for use by the Director of the Centers for Disease Control and Prevention.
(9) Maternity care.
(10) Well baby and well child care and oral health, vision, and hearing services, equipment, and supplies at least for children under 21 years of age.
(c) Requirements Relating to Cost-sharing and Minimum Actuarial Value-
(1) NO COST-SHARING FOR PREVENTIVE SERVICES- There shall be no cost-sharing under the essential benefits package for preventive items and services (as specified under the benefit standards), including well baby and well child care.
(2) ANNUAL LIMITATION-
(A) ANNUAL LIMITATION- The cost-sharing incurred under the essential benefits package with respect to an individual (or family) for a year does not exceed the applicable level specified in subparagraph (B).
(B) APPLICABLE LEVEL- The applicable level specified in this subparagraph for Y1 is $5,000 for an individual and $10,000 for a family. Such levels shall be increased (rounded to the nearest $100) for each subsequent year by the annual percentage increase in the Consumer Price Index (United States city average) applicable to such year.
(C) USE OF COPAYMENTS- In establishing cost-sharing levels for basic, enhanced, and premium plans under this subsection, the Secretary shall, to the maximum extent possible, use only copayments and not coinsurance.
(3) MINIMUM ACTUARIAL VALUE-
(A) IN GENERAL- The cost-sharing under the essential benefits package shall be designed to provide a level of coverage that is designed to provide benefits that are actuarially equivalent to approximately 70 percent of the full actuarial value of the benefits provided under the reference benefits package described in subparagraph (B).
(B) REFERENCE BENEFITS PACKAGE DESCRIBED- The reference benefits package described in this subparagraph is the essential benefits package if there were no cost-sharing imposed.
In other words, insurance companies are required to offer hospitalization, mental health, prescription drugs, and all the other benefits listed in subsection b of Section 122 at a minimum actuarial value of around 70 percent (Subsection C, paragraph 3A) before they can offer dental benefits, gym membership, and other benefits attractive to the young and healthy.
The plans on the Exchange are the same way. Here's Section 203 of the bill:
SEC. 203. BENEFITS PACKAGE LEVELS.
(a) In General- The Commissioner shall specify the benefits to be made available under Exchange-participating health benefits plans during each plan year, consistent with subtitle C of title I and this section.
(b) Limitation on Health Benefits Plans Offered by Offering Entities- The Commissioner may not enter into a contract with a QHBP offering entity under section 204(c) for the offering of an Exchange-participating health benefits plan in a service area unless the following requirements are met:
(1) REQUIRED OFFERING OF BASIC PLAN- The entity offers only one basic plan for such service area.
(2) OPTIONAL OFFERING OF ENHANCED PLAN- If and only if the entity offers a basic plan for such service area, the entity may offer one enhanced plan for such area.
(3) OPTIONAL OFFERING OF PREMIUM PLAN- If and only if the entity offers an enhanced plan for such service area, the entity may offer one premium plan for such area.
(4) OPTIONAL OFFERING OF PREMIUM-PLUS PLANS- If and only if the entity offers a premium plan for such service area, the entity may offer one or more premium-plus plans for such area.
All such plans may be offered under a single contract with the Commissioner.
(c) Specification of Benefit Levels for Plans-
(1) IN GENERAL- The Commissioner shall establish the following standards consistent with this subsection and title I:
(A) BASIC, ENHANCED, AND PREMIUM PLANS- Standards for 3 levels of Exchange-participating health benefits plans: basic, enhanced, and premium (in this division referred to as a `basic plan', `enhanced plan', and `premium plan', respectively).
(B) PREMIUM-PLUS PLAN BENEFITS- Standards for additional benefits that may be offered, consistent with this subsection and subtitle C of title I, under a premium plan (such a plan with additional benefits referred to in this division as a `premium-plus plan').
(2) BASIC PLAN-
(A) IN GENERAL- A basic plan shall offer the essential benefits package required under title I for a qualified health benefits plan.
(B) TIERED COST-SHARING FOR AFFORDABLE CREDIT ELIGIBLE INDIVIDUALS- In the case of an affordable credit eligible individual (as defined in section 242(a)(1)) enrolled in an Exchange-participating health benefits plan, the benefits under a basic plan are modified to provide for the reduced cost-sharing for the income tier applicable to the individual under section 244(c).
(3) ENHANCED PLAN- A enhanced plan shall offer, in addition to the level of benefits under the basic plan, a lower level of cost-sharing as provided under title I consistent with section 123(b)(5)(A).
(4) PREMIUM PLAN- A premium plan shall offer, in addition to the level of benefits under the basic plan, a lower level of cost-sharing as provided under title I consistent with section 123(b)(5)(B).
(5) PREMIUM-PLUS PLAN- A premium-plus plan is a premium plan that also provides additional benefits, such as adult oral health and vision care, approved by the Commissioner. The portion of the premium that is attributable to such additional benefits shall be separately specified.
(6) RANGE OF PERMISSIBLE VARIATION IN COST-SHARING- The Commissioner shall establish a permissible range of variation of cost-sharing for each basic, enhanced, and premium plan, except with respect to any benefit for which there is no cost-sharing permitted under the essential benefits package. Such variation shall permit a variation of not more than plus (or minus) 10 percent in cost-sharing with respect to each benefit category specified under section 122.
(d) Treatment of State Benefit Mandates- Insofar as a State requires a health insurance issuer offering health insurance coverage to include benefits beyond the essential benefits package, such requirement shall continue to apply to an Exchange-participating health benefits plan, if the State has entered into an arrangement satisfactory to the Commissioner to reimburse the Commissioner for the amount of any net increase in affordability premium credits under subtitle C as a result of an increase in premium in basic plans as a result of application of such requirement.
In other words, only the premium-plus plans can offer vision care, dental benefits, and other items attractive to young folks after they've offered the minimum level of services covered at the minimum actuarial value, which in the premium-plus plans means no-deductibles and co-pays for everything. I doubt if they young and healthy want to buy that much health insurance.
We need to get off this mentality that the public option (which I favor) or some other single-payer system is the only solution to every single problem. Regulations work.
P.S.: For those of you who don't understand actuarial value, the Congressional Research Service has a good definition of it:
Actuarial value is a summary measure of a health insurance plan’s benefit generosity. It is expressed as the percentage of medical expenses estimated to be paid by the insurer for a standard population and set of allowed charges. An actuarial value may also be referred to as a "benefit rate." One purpose of an actuarial value is to distill all the benefit and enrollee cost-sharing provisions of a health insurance plan into a single number, for easier comparisons among plans. For example, under Massachusetts’ health reform, individuals purchasing unsubsidized coverage through the Connector have the choice of three benefit levels: Gold, Silver and Bronze. A Gold benefit package must be actuarially equivalent to the Gold package specified by the Connector, with low copayments and no deductible. The Gold benefit package has an estimated actuarial value of 93%. The Silver benefit package that an insurer develops can have greater cost-sharing (e.g., a deductible, higher copayments) but must have an actuarial value between 67% and 81%. The Bronze package must have an actuarial value of roughly 56%.