benefits.” Although some categories of care are mandated, many benefits (e.g., infertility treatment, chiropractic care, subspecialty care) are not specified. Dr. Gruber’s experiences, he said, imply that the committee can expect to “hear from advocates, all with compelling arguments about important things to include.” The committee and the U.S. Department of Health and Human Services (HHS) will need to make difficult decisions about how or whether to “go beyond the list” of categories included in the ACA.
Dr. Gruber reminded the committee that the ACA already eliminates annual and lifetime limits and requires maternity, mental health, habilitation, and pediatric vision and dental coverage. Such benefits, he noted, are not part of typical employer plans. The issue, he asked the committee, “is how much further do you want to go?”
Limitations on Coverage
Although the ACA prohibits annual and lifetime limits on coverage, it does not “rule out more specific limits,” such as limits on the number of mental health or physical therapy visits, or step therapies (e.g., requiring certain prescription drug regimens such as starting treatment with a generic drug). Consequently, Dr. Gruber said, HHS will have to address “the extent to which it wants to allow these sorts of limits on coverage or the extent to which it wants to say, ‘if a benefit is covered, it must be covered in an unlimited fashion.’” Moreover, decisions about one set of benefits can have repercussions for others. For example, the cost of adding a certain prescription drug benefit may vary depending on the extent of allowable mental health coverage because increased mental health coverage is associated with increased use of prescription drugs to treat mental illness.
Patient Cost Sharing
Dr. Gruber pointed out that the ACA provides relatively little guidance on cost sharing other than limiting the deductibles for small businesses and instituting out-of-pocket (OOP) maximums that are a function of income. The committee could decide, he said, to “make decisions” or “remain silent” about issues of cost sharing. For example, the committee could decide to advise the Secretary to have a maximum deductible for individuals, co-insurance not more than a specific amount, or co-pays not more than a specific amount. The committee could also advise the Secretary on the nature of cost sharing. In particular, Dr. Gruber suggested the committee consider providing guidance on “what the out-of-pocket maximum applies to” because the ACA does not “go into enough detail” (i.e., does it apply to everything in the insurance package). He advised the committee to have a broad OOP maximum if the idea is to protect people.
Committee member Dr. Santa commented that the ACA’s variation in OOP maximums by income is “an unusual aspect of benefit design” that may “create selection issues since health status tends to vary with income.” Dr. Gruber noted, however, that it is unlikely that people will strategically work harder to change their OOP maximum, so selection is not a “significant issue.” The variable OOP maximums, he noted, are “really about protection” from high costs as a function of income. West Virginia’s state employee plan, for instance, has a similar feature in which OOP maximums vary by income (Public Employees Insurance Agency, 2011).
Dr. Gruber briefly explained the concept of actuarial value to the committee and audience. Four levels of coverage are stipulated in ACA—bronze, silver, gold, and platinum—and each has differing actuarial values that reflect how much of the cost is borne by the insurer and how much by the patient.1 The silver tier of plans specified in the ACA has an actuarial value of 0.7, he said. This means that on average, across all of the people within the silver tier plan offered by an insurer, the insurer must cover 70 percent of the cost. In other words, for a healthy person who utilizes few services, the insurance company would cover very little because the person has not yet met the required deductible. For a sick person who incurs high medical costs, the insurer may cover close to 100 percent because the patient has considerably exceeded the personal OOP maximum. The actuarial values, he said in
1 Patient Protection and Affordable Care Act of 2010 as amended. Public Law 111-148 § 1302(d)(1)(A)-(D), 111th Cong., 2d sess.