Hard To Please Everyone With A Single Health Plan

What should a health insurance policy cover?  The answer to that question varies widely depending on who you ask.  A 22 year old man might say that it just needs to cover catastrophes and have low premiums.  A 30 year old woman might say that it’s important for health insurance to cover maternity care.  A 60 year old who takes maintenance medication for cholesterol and blood pressure will likely say that it’s important for health insurance to cover prescription drugs.  For my family (and for lots of the clients we work with here in Colorado), an HSA-qualified plan is ideal, as long as we feel confident that everything will be covered if and when we meet the deductible.  For us, it’s a perfect mix of low premiums and good safety-net coverage.  But there are plenty of people who are willing to pay higher premiums in order to get a more comprehensive policy that covers a range of services before the deductible is met.

The point is, there really is no one-size-fits-all when it comes to health insurance.  In terms of health care reform, unless someone just starts handing out free health care (without tax increases or premiums…), it will be tough to get people to agree on a single plan, or even a handful of coverage options.

Each state has its own regulations in terms of what all policies in that state have to cover.  The rules are different for group and individual health insurance.  In Colorado, for example, all policies have to cover well-child care, PSA testing and mammograms (based on age).  All group plans have to cover maternity, but individual plans do not.  There are a handful of individual carriers in Colorado that do offer maternity as an optional benefit (Assurant, United HealthOne, and Rocky Mountain Health Plans) but the majority of individual plans do not.  This is because the state doesn’t require it, and the market won’t support it (the premiums are expensive, and very few people choose to pay the extra premiums for maternity care on individual health insurance policies).

For people who get their health insurance coverage from their employer, there aren’t likely to be a lot of choices in coverage, but the employer is probably subsidizing a good chunk of the premiums, which makes it easier to accept whatever is offered.  For people buying health insurance in the individual market, there are lots of options, but pricing and medical underwriting can often limit the choices.

Bill Kramer has written an article about the issues involved in designing a national benefit plan.  Overall, the process and compromises involved sound a lot like what goes into designing private health insurance policies: a delicate balance between cost and coverage, targeting the widest consumer group possible.  The major advantage that the private health insurance market has in this regard is that it can implement a wide range of options, with policies ranging from bare-bones catastrophic coverage to very comprehensive “gold-plated” coverage.

If health care reform ends up involving a public, national health insurance option, it would be wise for them to offer multiple plan designs in order to give people choices in terms of premiums and coverage.  Otherwise, it’s unlikely to appeal to a large number of people.

I found Bill’s article in the Health Wonk Review, hosted this week at Health Care Policy and Marketplace Review, written by Robert Laszewski.

About Louise Norris

Louise Norris has been writing about health insurance and healthcare reform since 2006. In addition to the Colorado Health Insurance Insider, she also writes for healthinsurance.org, medicareresources.org, Verywell, Spark by ADP, and Boost by ADP, and Gusto. Follow on twitter and facebook.

Comments

  1. Don Levit says

    Louise:
    I agree with you.
    It is extremely difficult to decide which benefits provide the greatest benefit for the dollars contributed.
    This is why the benefits should be defined in dollars, subject to meeting the 213(d) qualifications of medical expense.

    Second, we have to design plans in which the healthy are provided incentives to enter and stay in the insurance pools.
    I have been reading the debates in the House and Senate in regards to Social Security, right before it was passed.
    One of the suggestions regarding unemployment insurance was to provide employers the option of setting up their own reserve funds, as opposed to all the employers contributing to one state fund.
    The advantage of this option was to reward those employers who had low unemployment insurance claims, to provide them with lower premiums, or maybe no premiums for a time, if overfunded.
    A similar provision should be made for individuals who have low insurance claims.
    Don Levit

  2. Don,
    I agree to a point. It does make sense to reward employers who have low unemployment claims, and individuals who work to keep themselves healthy and thus have low health insurance claims.

    But what would the implications be for sick people? It makes me nervous to open the door to any more variance in premiums based on claims status (we already have this provision in individual health insurance – initial underwriting uses health history to set premiums for most policies in Colorado) because it would seem to make it even harder for sick people to get and keep health insurance.

    But I agree that there needs to be a focus on providing incentives for healthy people to maintain health insurance, rather than a system that rewards people who wait until they need care before seeking out health insurance. Otherwise there’s no effective way to spread costs across the whole population.

  3. Don Levit says

    Louise:
    Underwriting makes me nervous also.
    That is why I am suggesting a waiting period, perhaps 2 years, before the insurance goes into effect.
    We need to think of protecting both sides of the equation.

    We need to encourage healthy people to enter the pool, without discouraging unhealthy people (thus the 2-year waiting period for all comers).

    Next, I suggest a plan in which benefits vary in direct contributions to premiums made.
    I also suggest that total benefits be reduced by a pecentage of claims incurred, so that participants “get credit” for being part of the pool.
    The credits can increase based on length of time in the pool.
    Don Levit
    This is a defined contributiuon approach, which has some similarities to community rating.

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