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THE
COMMONWEALTH FUND
1
Shifting Health Care Financial Riskto Families Is Not a Sound Strategy:
The Changes Needed to EnsureAmericans’ Health Security
Karen DavisPresident
The Commonwealth Fundkd@cmwf.org
Invited TestimonyHouse Committee on Ways and Means
Subcommittee on HealthSeptember 23, 2008
THE COMMONWEALTH
FUND
2
THE COMMONWEALTH
FUND
A Broken System:The Growing Numbers of Uninsured
3
THE COMMONWEALTH
FUND
Health Insurance Coverage
Source: Authors’ estimates based on S. R. Collins, C. White, and J. L. Kriss, Whither Employer-Based Health Insurance? The Current and Future Role of U.S. Companies in the Provision and Financing of Health Insurance (New York: The Commonwealth Fund, Sept. 2007) and analysis of the Current Population Survey, March 2008, by Bisundev Mahato of Columbia University.
Uninsured(15%)
Employer (55%)
45.7 Million Uninsured, 2007
Medicaid(10%)
Medicare(13%)
Total population Under-65 population
Employer (62%)
Uninsured(17%)
Medicaid(11%)
Medicare(2%)
Military(1%) Military
(1%)
Individual(5%) Individual
(6%)
4
THE COMMONWEALTH
FUNDSource: P. Fronstin, “Sources of Health Insurance and Characteristics of the Uninsured: Analysis of the March 2008 Current Population Survey” Issue Brief No. 321 (Washington, D.C.: Employee Benefit Research Institute, Sept. 2008).
17.1 17.618.9
13.1 13.6 13.6 13.912.5
11.6 11.3 11.2 11.0 10.5 10.911.7
11.0
17.2 17.3
19.8 20.3 19.7
17.717.7 17.217.9
19.5 19.5
12.7
0
5
10
15
20
25
19941995 19961997 19981999 20002001 20022003 20042005 20062007
Percentage of Uninsured Children Has DeclinedSince Implementation of SCHIP While UninsuredWorking-Age Adults Have Increased, 1994–2007
Percent of population group uninsured
Non-elderly Adults
(Ages 18–64)
Children(Ages 0–17)
5
THE COMMONWEALTH
FUNDSource: DeNavas-Walt C, Proctor B, and Smith J. “Income, Poverty, and Health Insurance Coverage in the United States: 2007.” Washington: Census Bureau, 2008.
11%–13.8%
17.25%–24.8%
13.8%–17.25%
7.9%–11%
Uninsured Rates, by State,Two-Year Average, 2006–07
TX 24.8%
MA7.9%
6
THE COMMONWEALTH
FUND
Inadequate Coverage:The Rise of the Underinsured
7
THE COMMONWEALTH
FUND
25 Million Adults Underinsured in 2007,Up from 16 Million in 2003
Uninsuredduring the year
49.5(28%)
Insured all year, not
underinsured102.3(58%)
Insuredall year,
underinsured25.2
(14%)
2007Adults ages 19–64
(177.0 million)
Uninsuredduring the year
45.5(26%)
Insured all year, not
underinsured110.9(65%)
Insuredall year,
underinsured15.6(9%)
2003Adults ages 19–64
(172.0 million)
*Underinsured defined as insured all year but experienced one of the following: medical expenses equaled 10% or more of income; medical expenses equaled 5% or more of income if low-income (<200% of poverty); or deductibles equaled 5% or more of income.Source: C. Schoen, S. R. Collins, J. L. Kriss, and M. M. Doty, “How Many Are Underinsured? Trends Among U.S. Adults, 2003 and 2007,” Health Affairs Web Exclusive, June 10, 2008. Data: Commonwealth Fund Biennial Health Insurance Surveys (2003 and 2007).
8
THE COMMONWEALTH
FUND
Almost Three-Fourths of Low-Income AdultsAges 19–64 Are Uninsured and Underinsured, 2007
28
48
16
24
11
14
0
20
40
60
80
Total Under 200% of poverty 200% of poverty or
more
Underinsured*
Uninsured during year
* Underinsured defined as insured all year but experienced one of the following: medical expenses equaled 10% or more of income; medical expenses equaled 5% or more of incomes if low-income (<200% of poverty); or deductibles equaled 5% or more of income.Data: 2007 Commonwealth Fund Biennial Health Insurance Survey (Schoen et al. 2008).
32
72
27
9
THE COMMONWEALTH
FUND
An Estimated 116 Million Adults Were Uninsured,Underinsured, Reported a Medical Bill Problem, and/or
Did Not Access Needed Health Care Because of Cost, 2007
Medical bill/debt problem17.7 million
10%
Cost-related access problem25.9 million
15%
Source: The Commonwealth Fund Biennial Health Insurance Survey (2007).
Adequate coverage and no bill or access problem
61.4 million35%
Uninsured anytime during the year or underinsured
17.6 million10%
Medical bill/debt andcost-related access problem
54.4 million31%
177 million adults, ages 19–64
10
THE COMMONWEALTH
FUND
20
45
3125
31
9
1913 15
29
60
42
34
24
46
37
72
57
45
54
3945 47
60
71
0
25
50
75
Did not fill a
prescription
Did not see
specialist
when needed
Skipped
medical test,
treatment, or
follow-up
Had medical
problem, did
not see doctor
or clinic
Any of the four
access
problems
TotalInsured all year, not underinsuredInsured all year, underinsuredInsured now, time uninsured in past yearUninsured now
Uninsured and Underinsured Adults ReportHigh Rates of Cost-Related Access Problems
Percent of adults ages 19–64 who had cost-related access problemsin the past 12 months
Source: The Commonwealth Fund Biennial Health Insurance Survey (2007).
11
THE COMMONWEALTH
FUND
26
19
813
8
43
23
31
47
61 61
3632
48
29
0
25
50
75
Not able to pay
medical bills
Contacted by
collection
agency*
Had to change
way of life to
pay medical
bills
Medical bills
being paid off
over time
Any medical
bill problem or
outstanding
debt
Insured, not underinsured Underinsured Uninsured during year
Sixty Percent of Adults Who Were Underinsured or Uninsured Reported Medical Bill Problems or Debt
Percent of adults ages 19–64
* Includes only those individuals who had a bill sent to a collection agency when they were unable to pay it.Source: The Commonwealth Fund Biennial Health Insurance Survey (2007).
12
THE COMMONWEALTH
FUND
Insured Adults with Less Comprehensive Coverage and Benefit Limits Are More Likely to Face Medical Bill and/or Debt Problems
43
56
65
59
53
44
33
29
30
22
24
27
0 25 50 75 100
Percent of continually insured adults ages 19–64 with bill and/or debt problems
Source: The Commonwealth Fund Biennial Health Insurance Survey, 2007.
MD did not charge more than insurance coveredMD charged more than insurance would pay; patient
paid difference
Health plan does not limit total dollar amountHealth plan limits total dollar amount
Annual premium is less than 10% of incomeAnnual premium is 10% or more of income
Deductible is less than 5% of incomeDeductible is more than 5% of income
Has both Rx and Dental CoverageHas neither Rx nor Dental Coverage
No expensive bills for services not coveredHad expensive medical bills for services not covered
by insurance
13
THE COMMONWEALTH
FUND
26 2834
51
22 2532
47
64
4238
44
0
25
50
75
Had expensive medical
bills for services not
covered by insurance
Doctor charged more
than insurance would
pay and you had to pay
difference
Had to contact
insurance company
because they did not
pay a bill promptly or
denied payment
Any problem with
health plan
All insured adults Insured all year, not underinsured Insured all year, underinsured
Underinsured Adults Report Higher Rates of Health Insurance Plan Problems than Adults with Adequate Insurance
Percent of adults ages 19–64 who were insured all yearand had problems with health insurance plan
Source: The Commonwealth Fund Biennial Health Insurance Survey (2007).
THE
COMMONWEALTH FUND
14Prescription Drug Cost-Sharing, Average Copayments
Among Covered Workers, 2000–2007
$8
$15
$29
$11
$25
$43
$63
$0
$10
$20
$30
$40
$50
$60
$70
Generic Preferred Non-Preferred Fourth Tier
2000 2007
Source: Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits, 2007 Annual Survey.
15
THE COMMONWEALTH
FUND
Annual Outpatient Visits Coverage Among Workers with Mental Health Coverage, 2006
All Plans
No Limit13%
20 or Less35%
21–3030%
31–5014%
>508%
Source: Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits, 2007 Annual Survey.
16
THE COMMONWEALTH
FUND
Uninsured and Underinsured Adults with Chronic ConditionsAre More Likely to Visit the ER for Their Conditions
33
2633
1519
32
46 43
62 64
0
25
50
75
Skipped doses or did not fill
prescription for chronic condition
because of cost**
Visited ER, hospital, or both for
chronic condition
Total
Insured all year, not underinsured
Insured all year, underinsured
Insured now, time uninsured in past year
Uninsured now
Percent of adults ages 19–64 withat least one chronic condition*
* Hypertension, high blood pressure; heart disease; diabetes; asthma, emphysema, or lung disease.** Adults with at least one chronic condition who take prescription medications on a regular basis.Source: The Commonwealth Fund Biennial Health Insurance Survey (2007).
17
THE COMMONWEALTH
FUND
Coverage Is Eroding in Small Firms
18
THE COMMONWEALTH
FUND
999791
80
57
69
9994
8376
45
60
0
25
50
75
100
Total 3–9
workers
10–24
workers
25–49
workers
50–199
workers
200+
workers
2000 2007
Employer Coverage Continues to Erodefor Employees of Small Firms
Percent of firms offering health benefits
Source: S. R. Collins, C. White, and J. L. Kriss, Whither Employer-Based Health Insurance? The Current and Future Role of U.S. Companies in the Provision and Financing of Health Insurance (New York: The Commonwealth Fund, Sept. 2007). Data: The Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits, 2000 and 2007 Annual Surveys.
19
THE COMMONWEALTH
FUND
Three of Five Workers with Any Time Uninsured AreSelf-Employed or in Firms with Fewer than 100 Workers
Self-employed/1 employee12%
20–99 employees17%
Source: The Commonwealth Fund Biennial Health Insurance Survey (2007).
Full-time or part-time working adults ages 19–64with any time uninsured, by employer size
(27.5 million)
500 or more employees19%
2–19 employees30%
100–499 employees15%
Don’t know/refused7%
20
THE COMMONWEALTH
FUND
$3,205 $3,134$3,146$3,354
$3,579$3,150
$3,383
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
All small
(1-49)
All large
(50 or
more)
1-9
Employees
10-24
Employees
25-99
Employees
100-999
Employees
1000+
Employees
Single Premium by Size of Firm, Adjusted for Actuarial Value
Dollars
Source: J. Gabel, R. McDevitt, L. Gandolfo et al., “Generosity and Adjusted Premiums in Job-Based Insurance: Hawaii Is Up, Wyoming Is Down,” Health Affairs, May/June 2006 25(3):832–43.
THE
COMMONWEALTH FUND
21
Source: Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits, 2007 Annual Survey.
Small-Firm Workers More Likely than Large-FirmWorkers to Contribute Large Share of Premium
for Family Coverage
72%
28% 24%
76%
Worker Contribution Firm Contribution
63%
37%
All Firms Large Firms(200+ workers)
Small Firms(3–199 workers)
22
THE COMMONWEALTH
FUND
Deductibles Have Risen Sharply,Especially in Small Firms, Over 2000–2007
PPO = preferred provider organization. PPOs covered 57 percent of workers enrolled in an employer-sponsored health insurance plan in 2007.Source: The Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits, 2000 and 2007 Annual Surveys.
187 210157
461
667
382
$0
$150
$300
$450
$600
$750
$900
Total Small firms, 3–199
employees
Large firms, 200+
employees
2000 2007
Mean deductible for single coverage (PPO, in-network)
THE
COMMONWEALTH FUND
23
Source: Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits, 2007 Annual Survey.
Deductible for Single Coverageby Plan Type and Firm Size, 2007
$343
$667$751
$1,865
$408$382
$1,596
$0
$500
$1,000
$1,500
$2,000
HMO PPO POS HDHP
Large Firms Small Firms
24
THE COMMONWEALTH
FUND
People with ESI* Who Say That EmployersDo a Good Job Selecting Quality Insurance Plans
7468
7569 70
75 76
0
25
50
75
100
Total <200% 200%+ <20 20–99 100–499 500+
Percent
*ESI = employer-sponsored insurance. FPL = federal poverty level.Note: Based on respondents age 19-64 who were covered all year by their own employer’s insurance.Source: S. R. Collins, J. L. Kriss, K. Davis, M. M. Doty, and A. L. Holmgren, Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families, The Commonwealth Fund, September 2006.
% FPL Number of employees in firm
25
THE COMMONWEALTH
FUND
Individual Insurance Market WorksLess Well than Employer Coverage
26
THE COMMONWEALTH
FUND
Adults ages 19–64 with individual coverage or who thought about or tried to buy it in past three years who: Total
Health Problem
No Health
Problem<200% Poverty
200%+ Poverty
Found it very difficult or impossible to find coverage they needed
34% 48% 24% 43% 29%
Found it very difficult or impossible to find affordable coverage
58 71 48 72 50
Were turned down or charged a higher price because of a pre-existing condition
21 33 12 26 18
Never bought a plan 89 92 86 93 86
Individual Market Is Not an Affordable Option for Many People
Source: S. R. Collins, J. L. Kriss, K. Davis, M. M. Doty, and A. L. Holmgren, Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families, The Commonwealth Fund, September 2006.
27
THE COMMONWEALTH
FUND
Adults with Employer CoverageGive Their Health Plans Higher Ratings
Than Those in the Individual Market
22 2214
31 32
20
0
25
50
75
Total ESI Individual
Very good
Excellent
Source: S. R. Collins, J. L. Kriss, K. Davis, M. M. Doty, and A. L. Holmgren, Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families, The Commonwealth Fund, September 2006.
53 54
34
Percent of adults ages 19–64 insured all year with private insurance
28
THE COMMONWEALTH
FUND
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
U.S. population Health expenditures
Health Care Costs Concentrated in Sick Few—Sickest 10% Account for 64% of Expenses
1%5%
10%
49%
64%
24%
Source: S. H. Zuvekas and J. W. Cohen, “Prescription Drugs and the Changing Concentration of Health Care Expenditures,” Health Affairs, Jan/Feb 2007 26(1): 249–257.
Distribution of health expenditures for the U.S. population, by magnitude of expenditure, 2003
50%
97%
$36,280
$12,046
$6,992
$715
Expenditure Threshold
(2003 Dollars)
29
THE COMMONWEALTH
FUND
Risk Pooling and Employer Premium Contributions Lower the Cost of Health Benefits for Adults with Employer Coverage Relative to Those
with Individual Market Coverage
13 1322
7 5
32
0
25
50
75
Total Employer Individual
Annual out-of-pocket premium $6,000 or more
Annual out-of-pocket premium $3,000–$5,999
20 18
54
Percent of adults ages 19–64 insured all year with private insurance
Source: S. R. Collins, J. L. Kriss, K. Davis, M. M. Doty, and A. L. Holmgren, Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families, The Commonwealth Fund, September 2006.
30
THE COMMONWEALTH
FUND
Public Programs Work
31
THE COMMONWEALTH
FUND
2%
2%
5–15%
15–25%
25–40%
0 10 20 30 40 50
Medicare
Medicaid
Large group
Small group
Non-group
Only Two Percent of Premiums in Medicare and Medicaid Are Spent on Non-Medical Expenditures
Percent of premiums spent on non-medical expenditures
Source: K. Davis, B. S. Cooper, and R. Capasso, The Federal Employees Health Benefit Program: A Model for Workers, Not Medicare, The Commonwealth Fund, November 2003; M. A. Hall, “The Geography of Health Insurance Regulation,” Health Affairs, March/April 2000 19(2):173–84.
32
THE COMMONWEALTH
FUND
809
413 400
279352
735
356
221 198 215
0
200
400
600
800
1000
Inpatient Office-based
doctor
Outpatient/ER Prescription Dental/other
Private Medicaid
Medicaid’s Spending on Health ServicesIs Lower Than That of Private Coverage
Expenditures ($) on health services for people without health limitations in private coverage and Medicaid
Source: J. Hadley and J. Holahan “Is Health Care Spending Higher Under Medicaid or Private Insurance?” Inquiry, Winter 2003 40(4):323–42.
33
THE COMMONWEALTH
FUND
Percent Annual Per Enrollee Growth inMedicare Spending and Private Health Insurance
and FEHBP Premiums for Common Benefits
9.0
5.9
10.1
8.89.6
10.7
0
2
4
6
8
10
12
1969–2003 1999–2003
Medicare Private Health Insurance FEHBP*Percent
* FEHBP estimates are for 1969–2002 and 1999–2002 from Levit et al., “Health Spending Rebound Continues in 2002,” Health Affairs 23 (January/February 2004):147–59.Source: Analysis by Office of the Actuary, Centers for Medicare and Medicaid Services, January 2005.
34
THE COMMONWEALTH
FUND
Medicare Extra Plan Would LowerAnnual Premiums for Individuals and Families
Source: C. Schoen, K. Davis, and S. R. Collins, “Building Blocks for Reform: Achieving Universal Coverage with Private and Public Group Health Insurance,” Health Affairs, May/June 2008 27(3):646–57; G. Claxton, “Health Benefits in 2007: Premium Increases Fall to an Eight-Year Low, While Offer Rates and Enrollment Remain Stable,” Health Affairs, September/October 2007 26(5):1407–16.
$12,106
$4,479
$3,108
$8,424
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
Single Coverage Family Coverage
Average Premium for Employer Coverage
Average Premium for Medicare Extra Plan
35
THE COMMONWEALTH
FUND
Medicare Beneficiaries Have Better Access toPhysician Services than Privately Insured People, 2005
7483
75
89
6775 75
86
0
20
40
60
80
100
Routine care Illness/injury Primary care Specialist
Medicare Privately InsuredPercent
Never had a delay to appointment No problem finding physician
Source: MedPAC Report to the Congress: Medicare Payment Policy, March 2006, p. 85.
36
THE COMMONWEALTH
FUND
Rising Premiums and Insurance Administrative Costs
37
THE COMMONWEALTH
FUND
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2007,and Commonwealth Fund analysis of National Health Expenditures data.* Estimate is statistically different from the previous year shown at p<0.05.^ Estimate is statistically different from the previous year shown at p<0.1.Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.Historical estimates of workers’ earnings have been updated to reflect new industry classifications (NAICS).
12.0
18.0
0.8
6.1*7.7*
13.9^
12.9*10.9*
8.2*
5.3*
11.2*
8.5 9.2*
0
5
10
15
20Health insurance premiums
Workers earnings
Overall inflation
National health expendituresper capita
Increases in Health Insurance Premiums Compared with Other Indicators, 1988–2006
Percent
38
THE COMMONWEALTH
FUND
Cumulative Changes in Annual National Health Expenditures and Other Indicators, 2000–2007
0
25
50
75
100
125
2000 2001 2002 2003 2004 2005 2006* 2007*
Net cost of private health insurance administration
Family private health insurance premiums
Personal health care
Workers earnings
Notes: Data on premium increases reflect the cost of health insurance premiums for a family of four/the average premium increase is weighted by covered workers. * 2006 and 2007 private insurance administration and personal health care spending growth rates are projections.
109%
65%
91%
24%
Percent change
Sources: A. Catlin, C. Cowan, S. Heffler et al., “National Health Spending in 2005: The Slowdown Continues,” Health Affairs, Jan./Feb. 2007 26(1):143–53; J. A. Poisal, C. Truffer, S. Smith et al., “Health Spending Projections Through 2016: Modest Changes Obscure Part D’s Impact,” Health Affairs Web Exclusive (Feb. 21, 2007):w242–w253; Henry J. Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits Annual Surveys, 2000–2007 (Washington, D.C.: KFF/HRET).
39
THE COMMONWEALTH
FUND
Percentage of National Health ExpendituresSpent on Insurance Administration, 2005
a 2004 b 2001
* Includes claims administration, underwriting, marketing, profits, and other administrative costs; based on premiums minus claims expenses for private insurance.Data: OECD Health Data 2007, Version 10/2007.Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2008
Net costs of health insurance administration as percent of national health expenditures
1.92.3
2.83.3
3.9 4.2 4.34.8
5.6
6.97.5
0
2
4
6
8
10
aa ab
40
THE COMMONWEALTH
FUND
Administrative Hassles Related toMedical Bills and Insurance Are Serious Problems
for More Than a Quarter of Adults
1018
8
18
22
18
0
10
20
30
40
50
Total Fair/Poor Health Excellent/Very
Good/Good Health
Serious problem
Very serious problem
Source: S. R. Collins, J. L. Kriss, K. Davis, M. M. Doty, and A. L. Holmgren, Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families, The Commonwealth Fund, September 2006.
28
40
26
Percent reporting serious problems spending time on paperwork or disputes related to medical bills and health insurance in past two years
41
THE COMMONWEALTH
FUND
Concentration of Managed Care Enrollment,1988–2000
Note: The largest national managed care firms include Blue Cross and Blue Shield plans, Aetna US Healthcare, Kaiser Permanente, United Health, and PacifiCare. HMO enrollment includes enrollees in both traditional HMOs and point-of-service plans.Source: Centers for Medicare and Medicaid Services, CMS Chart Series, Table 1.17.
Two-thirds of managed care enrollees are enrolled in the nation’s 10 largest managed care firms.
66.565.0
56.254.6
45.8
0%
20%
40%
60%
80%
1988 1991 1994 1997 2000
Percent enrolled in 10 largest firms
42
THE COMMONWEALTH
FUND
66%–80%
Less than 50%
50%–65%
81%–100%
WA
ORID
MT ND
WY
NV
CAUT
AZ NM
KS
NE
MN
MO
WI
TX
IA
IL IN
AR
LA
AL
SCTN
NCKY
FL
VA
OH
MI
WV
PA
NY
MD
MEVTNH
MARI
CT
DE
DCCO
GAMS
OK
NJ
SD
Market Share of Three LargestHealth Plans, by State, 2002–2003
Note: No data are available for Alaska and Hawaii.Source: J. C. Robinson, “Consolidation and the Transformation of Competition in Health Insurance,” Health Affairs, November/December 2004 23(5):11–24.
43
THE COMMONWEALTH
FUND
Operating Earnings Margin in LargestU.S. Health Plans, 2000–2003
YearWellPoint (excluding Anthem)
AnthemUnitedHealth
GroupAetna CIGNA
2000 4.9 8.5 5.7 2.3 3.6
2001 6.6 5.1 6.7 -0.8 8.0
2002 7.1 6.6 8.7 3.2 5.9
2003 8.1 7.8 10.2 7.7 8.9
Note: Operating earnings = earnings before interest and taxes.Source: J. C. Robinson, “Consolidation and the Transformation of Competition in Health Insurance,” Health Affairs, November/December 2004 23(5):11–24.
44
THE COMMONWEALTH
FUND
Massachusetts Connector Has Improved Choicesand Lowered Premiums
Typical uninsured 37-year-old, pre- and post-reform
Pre-reform Post-reform
Monthly premium $335 $184
Rx coverage None $100 deductible
Deductible $5,000 $2,000
Source: Jon Kingsdale, Executive Director, Commonwealth Health Connector, “Design of Connector as an Element of NHI,” July 23, 2008.
THE
COMMONWEALTH FUND
45FEHBP Enrollment by Type of Plan
Employee Organizations(generally PPOs)
17%0.7 million
HMOs24%
1 million
Blue Cross/Blue Shield (PPOs)
58%2.3 million
Note: Excludes an estimated 4 million dependents.Source: Mark Merlis, Personal communication, September 16, 2008.
46
THE COMMONWEALTH
FUND
1. A standard benefit adequate is defined and available to all
2. Premiums to the enrollee for a standard plan are affordable regardless of income
3. Enrollees have and use comparable information
4. Marketing practices which mislead or discriminate against the sick are prohibited and strictly enforced
5. Market rules on guaranteed issue and renewal, community rating
6. Risk-adjustment of premiums
7. Insurers compete on the basis of value-added they bring in fostering quality and efficiency
8. Premiums are reasonable and have low administrative overhead
Rules to Improve Functioning of Insurance Markets
47
THE COMMONWEALTH
FUND
Conclusion
Action is needed to guarantee affordable coverage. This should include:
• Health insurance premium assistance to low-income and modest-income families who can not afford family premiums that now average over $12,000 even under employer plans.
• Strengthening not weakening employer coverage
• Setting national rules for the operation of individual health insurance markets
• Creating insurance connectors, such as the one in Massachusetts, that make affordable health insurance policies available to those without access to employer coverage
• Offering a public plan modeled on Medicare to small businesses and individuals would lower premiums by 30 percent and increase the stability of insurance coverage.
• Building on Medicare, Medicaid, and SCHIP to cover older adults, the disabled now in the Medicare two-year waiting period, and low-income adults as well as children. Private insurance markets do not serve these populations well.
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