The Reality of Massachusetts Health Care
By Arnold Kling
More than 200,000 people with health insurance would have to buy additional coverage to meet proposed minimum standards under the state’s new health insurance law, according to a count completed by insurers yesterday.
Most of the individuals do not have coverage for prescription drugs or have drug coverage that is more restrictive than the minimum proposed by the state board implementing the law.
…Another board member, Jonathan Gruber, said: “It’s a hard issue. There’s a trade-off between making sure we have real coverage and minimizing disruption to the market.”
Gruber, an MIT economics professor, said he was pleased with the board’s proposal on drug coverage. But “we’re very far away from finalizing this,” he added. “My mind is still open.”
And so we count on Gruber to be a Philosopher-King.
Anyone who thinks that Massachusetts is using a market-friendly approach to health insurance should visit the web site of the Connector, which is under the board referred to in the article above.For example, read through this Request for Response whereby the Connector spells out in the tiniest detail what insurance coverage must consist of. Some excerpts (sorry about the typography):
no product offering that includes a fee schedule for medical services (e.g., plan maximum benefit of $500 per day for inpatient care, or $50 per office visit, etc.) will be approved by the Connector.
PREMIER PLAN DESIGN PARAMETERS
Outpatient Medical Care Office Visits/Routine
checkups/Well-child visits $10
Outpatient Surgery (OP Hospital/Ambulatory Surgery Centers) No charge
X-rays/Labs No charge
Inpatient Medical Care Room and Board (includes deliveries/surgeries/x-rays/labs) No charge
Prescription Drugs Retail (Up to 30-days supply)
(generic/preferred brand/non-preferred brand) $10/$25/$45
Mail order (Up to 90-days supply) $20/$50/$135
Emergency Care $50
Inpatient Mental Health & Substance Abuse
(non-biologically based up to 60 days per calendar year) No charge
Outpatient Mental Health & Substance Abuse
(non-biologically based up to 24 visits per calendar year) $10
Inpatient SNF/rehab (100 day max) No charge
Short-term outpatient rehab (60 visits per calendar year) $10
Ambulance (emergency only) No charge
Durable Medical Equipment (up to $1,500 per year) No charge
Hospice No charge
Vision (one exam every 24 months) $10
All Massachusetts mandated benefits must be covered.
carriers are also required to submit an alternative Premier plan design that is actuarially equivalent (+/- 5%) to the plan design noted above. This alternative plan design must cover the same medical services but need not replicate the benefits (cost-sharing), so long as the estimated value of claims covered under this design is within 5% of the covered claims projected for the Premier plan. For example, a second plan design might increase emergency room charges and/or specialist visit co-payments, decrease primary care and/or generic drug co-payments, offer a more limited provider network, and/or enhance wellness/fitness benefits.
The Value plan’s relative value should be approximately 80 percent of the Premier plan. Carriers are required to submit three product offerings at the Value plan level. However, to encourage a wide range of product offerings under this plan level, the relative value of the plan designs may be between 72.5% and 87.5% of the Premier plan. Carriers are allowed to offer any combination of plans within this relative value range.
If possible, one product offering should be an HMO, one product offering a PPO, and at least one product offering should include a select or tiered provider network (preferably including both physicians and hospitals). The Connector recognizes, however, that many carriers do not currently offer all three plan designs, and therefore carriers will not be required to submit an HMO, PPO and limited or tiered network product offering.
The relative value of Minimum Creditable Coverage plans should be 60% of the Premier plan, plus or minus 2 percent. Carriers are required to submit two product offerings at this benefit level, and the Connector encourages carriers to consider submitting for consideration products that provide some preventive/primary care services prior to a deductible. These products should be priced two ways; (1) based on the assumption that a prescription drug benefit is required; and (2) based on the assumption that a prescription drug benefit is not required. For the products that include a drug benefit, carriers will be allowed to limit drug coverage and/or apply an up-front deductible prior to the drug coverage taking effect.
In addition to the products described above, carriers must also propose a health benefit plan that carries an average individual premium of $320. Carriers should price this product using an age rating factor of 1.0, no rating adjustment related to SIC/industry classification, and that this is the Minimum Creditable Coverage plan.