The contents and the pricing structures of health care coverage products for individuals and for persons with “small group” coverage will undergo very big changes come January 2014. More mandates from the federal “Patient Protection and Affordable Care Act” (“PPACA”) are on the way. But who knows of this near future?!
Not only will most adults have to get coverage, through their work or on their own, or pay a penalty – the SCOTUS-blessed “individual mandate” -- but for individuals and small group members (50 or 100 employees, depending on the state), the benefits in that coverage will be mandated, and how they are to be labeled and offered are also mandated: in “actuarial value” bands or tiers with the metal monikers of “Platinum,” “Gold,” “Silver” and “Bronze.
The PPACA mandates that the coverage for such folks contain a core of “Essential Health Benefits” (“EHB”), that actually are rather comprehensive. These EHBs include:
-- ambulatory patient services
-- emergency services
-- maternity and newborn care
-- mental health and substance use disorder services, including behavioral health
-- prescription drugs treatment
-- rehabilitative and habilitative services and devices
-- laboratory services
-- preventive and wellness services and chronic disease management
-- pediatric services, including oral and vision care
Obviously this EHB package is not a “bare bones” set. Plans and carriers can offer additional benefits to these, and individual states can also mandate others, but the Congress wanted to ensure that all individuals and small group employees/members would receive a solid core of benefits, whether they wanted or needed them or not. Not everyone needs maternal care or pediatric dental, for examples, but the thought is that if everyone is covered for them, then the general health of the population will be advanced and the cost will be more bearable for those who do need them.
But if the Essential Health Benefit base is set, the pricing of it is not. The plans and carriers must offer the EHB in four different pricing bands, distinguished by their “actuarial values.” This is fancy talk for a combination of the actual benefits offered, how much the plan or carrier will pay, and the percentage of the cost the individual must bear, through copayments, shared payments, deductibles and the like. This “AV” is calculated on the total costs for the EHB that a standard population is expected to incur.
The Metal Bands thus require the enrollee/insured to pick up on average 10% of the cost in the Platinum Band, 20% in the Gold Band, 30% in the Silver Band, and 40% in the Bronze Band. The purpose of structuring the pricing of the EHB this way is to help the consumer, whether that be an individual or a small employer, to understand the zone of cost they would be getting into and also to compare products across multiple issuers. The bands are intended to provide an indicator of what a given EHB product is worth to the consumer. It is intended also to foster competition amongst plans and carriers.
Each metal band corresponds to an Actuarial Value, based on the cost-sharing features of the given products and their specific benefits. The Actuarial Value of a given EHB product is determined by using (reader cautioned to brace firmly) a federal “Actuarial Value Calculator,” which of course has yet to be released by the government.
The plans and carriers are getting anxious as they prepare for the brave-new-world of PPACA-mandated constructs that will go into effect January 1, 2014. Many months of internal product re-design and pricing, of operational re-tooling and ramp-up, and of subscriber and enrollee communications are required.
Some observers anticipate that the cost clarity of this metal band construct will usher in a new Bronze Age, as beleaguered small employers seek out coverage products least costly to them, with maximum cost-sharing by their employees, which would be 40% in the Bronze Band.
But the Metals Are Coming and the Essential Health Benefits too – for help, speak with your employer, contact your HMO or insurance carrier, or surf the Internet!