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Job No. 1: affordable health care

By Jay MacDonald · Bankrate.com
Tuesday, November 15, 2011
Posted: 10 am ET

What will those bronze-silver-gold-platinum health insurance plans ultimately look like when the government-run state exchanges mandated by health care reform open for business in 2014?

A recent report by the independent Institute of Medicine recommends that, above all else, the new plans must be affordable with a capital A. The recommendations apply to plans that will be sold in insurance exchanges designed for individuals and small businesses with fewer than 50 employees.

Some may have assumed that just because the title of the enabling legislation, the Affordable Care Act, has a certain bargain-basement ring to it that a reasonable sticker price on mandated coverage for consumers would be a foregone conclusion.

But behind the scenes, there's a world of arm-wrestling going on between medical specialty groups hoping to convince the plan architects at the Department of Health and Human Services to carve out a lucrative role for them, and equally persuasive employer and insurance lobbyists trying to keep the scope of mandated coverage in check.

The Institute of Medicine surprised some and delighted businesses when it steered clear of specific recommendations on health insurance benefits, and instead stressed the importance of making the plans affordable for consumers, small businesses and the government. HHS has not indicated when it will issue rules on the plan requirements. 

The Institute recommends that HHS reverse-engineer the plans by estimating the average premium that those covered under a typical small-business plan would pay three years from now and making sure they don't exceed that amount by adding on expensive specialized services.

Under health care reform, the exchanges will offer four plan options, including (from lowest to highest cost): bronze – covers 60 percent of health care costs; silver – 70 percent; gold – 80 percent; and platinum – 90 percent.

But which benefits will be deemed "essential," and therefore mandatory, and which will not remains a hotly debated issue.

According to an actuarial study by the National Health Council, the Massachusetts health insurance program after which the ACA is modeled includes 26 state mandates, or add-ons, that comprise 12 percent of health care premiums.

HHS Secretary Kathleen Sebelius thanked the Institute for its cautionary report and vowed that her department would organize "listening sessions" to solicit public input before pushing ahead with plan design.

We all want great health insurance at the cheapest possible price. But the Institute's report is a welcome and timely reminder that it's not just the devil that's in the details – it's the costs as well.

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