Designing Standardized Health Plans: A Call For Consumer Advocacy and Engagement
By Jim Manley, Consumers for Quality Care Board
As a Capitol Hill staffer who had a front-row seat for the creation and passage of the Affordable Care Act (ACA), now enhanced by the American Recovery Plan Act, I believe it is an extremely important piece of legislation for millions of Americans across the country, including those who must rely on individual health insurance. In addition to providing financial assistance to consumers to purchase coverage, it requires all individual health plans to broadly cover a comprehensive set of benefits, adhere to limits on cost-sharing, and offer plans within specified tiers that cover roughly the same percentage of average medical costs. However, even with these consumer protections in place, choosing the right health insurance plan is complicated.
Standardized plans can help. By allowing consumers to identify plans that have identical cost-sharing, standardized plans can empower consumers to decide between plans based on their premiums, networks, and overall quality and while enabling consumers to understand their selected plan and subsequent coverage more fully. In addition, standardized plans create a more level playing field for insurers, therefore, promoting insurer competition that is more focused on price, quality, and networks. Standardized plans can also serve as a vehicle to improve the adequacy and affordability of coverage.
However, under current federal law, designing standardized plans is challenging. Specifically, standardized cost-sharing features require trade-offs and balancing competing goals. It is not possible to meet all desired goals within plan design constraints and the need to fit within each metal tier of coverage. The ACA requires all marketplace plans have an actuarial value (AV) that fits within the four metal tiers. The AV is a percentage that represents the share of the total medical costs of the average enrollee that are covered by the plan. Balancing decisions such as which services should be provided pre-deductible and specific cost-sharing amounts (such as deductibles, copays and coinsurance for each benefit category, and maximum out-of-pocket limits) with the actuarial value requirements of each metal tier means that the plan design options are not unlimited.
Consumer advocates — including those who have a seat at the table when it comes to the designing of standardized plan options — must be ready to play a meaningful role in the process, which includes setting clear goals, ensuring expert analysis is included, and committing to public transparency for the process of designing standardized plans. This is a time-intensive and detailed process for those involved, including navigating decisions related to trade-offs in order to ultimately guarantee the best outcome for consumers. Furthermore, consumer advocates must ensure that actuarial analysis — which determines whether a plan design will fall within AV targets — plays a transparent role in the process and allows consumer advocates to publicly and more easily vocalize the benefits of plan design to the consumers for which they advocate.
Today, only seven states and the District of Columbia require some or all of the individual marketplace plans offered through the health insurance marketplace to be standardized plans. With a new Congress and a new administration in power, it’s possible federal rules may change soon to ensure standardized plans are offered more widely. For that reason, Consumers for Quality Care turned to researchers from the McCourt School of Public Policy at Georgetown University to develop a consumer advocacy guide, “Key Considerations for Consumer Advocates,” to help consumer advocates prepare for discussions around standardized plan development in states and at the federal level.
Standardized plans can be an important component to continuing to realize the full benefits of the ACA. But in order to make this happen, consumer advocates must be prepared to inform policy decisions and play a strong role in standardized plan design. As states and the Federal government continue to consider adopting standardized plans, consumers have an opportunity to participate in policy and decision-making that will directly impact their future health. I highly recommend you take it!
Jim Manley is a former senior adviser to Sens. Harry Reid (D-Nev.) and Edward Kennedy (D-Mass.). He now serves on the board of directors of Consumers for Quality Care, a coalition of health advocacy organizations and former policy makers working to provide a voice for patients in the health care debate as they demand better care.
