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healthcarepaper - To Secretary Sebelius From First Last...

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To: Secretary Sebelius From: First Last, PPS114, Fall Date: 12/18/11 A Partial Evaluation of the IOM Report Introduction As part of its goal to expand coverage, the Patient Protection and Affordable Care Act (PPACA) of 2010 set up a system of health insurance exchanges with the goal of providing an affordable way to cover individuals and small businesses. 1,2 For an insurance plan to qualify to participate in the exchange market, it must cover the Essential Health Benefits (EHB), 3 based on a set of categories defined by the Secretary of Health and Human Services (HHS). In order to define these categories HHS contracted with IOM to make recommendations to help determine the EHB. 4 I believe that the secretary should follow the IOM recommendation as they provide for a cost effective way to initiate a program of adequate universal coverage. Furthermore, these recommendations provide a way to improve the EHB and keep the coverage adequate over time. Defining the EHB. The Small-Business Plan as the Yardstick The small-business plan provides an appropriate basis for program analysis, with respect to affordable actuary rates and cost-growth reduction. One of the goals of the exchange program is to provide individuals and small businesses with affordable insurance plans. 1 If the package is much more extensive, the actuary cost will rise and the plan will become prohibitively expensive for the population that it intends to cover. In addition, given the individual mandate, this may create an incentive for some to move to Medicaid. Furthermore, even though the percentage of the small businesses with insurance has been falling, most small businesses still offer insurance (59 % in 2007). 5 With the existing exchange program pooling the risks, premiums will go down thereby making insurance coverage affordable for a larger group. 6 Since small-business plans are less comprehensive than their large-business counterparts, the moral hazard associated with the
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former plans is smaller than it is with a more comprehensive plan and this could lead to smaller cost growth when compared to more extensive coverage plans—an assessment derived from the RAND report. 7 Since 33% of the uninsured are small-business employees 5 I believe this achieves the goal of expanding coverage to this vulnerable group, and by making coverage more affordable, it further expands coverage to a larger pool of individuals. An insurance plan measured against the small employer yardstick, with added benefits, adds enough protection to make it a good starting point for exchange coverage. The exchanges are designed to primarily impact individual consumers, small businesses, and the self-employed. 1 This population tends to be “relatively older, less educated, lower income, and more racially diverse than current privately-insured populations.” 8 The majority of exchange enrollees are projected to be previously uninsured and self-report that they are in worse health, but have fewer diagnosed chronic conditions, than the current privately-insured population.
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