By now it’s clear to most everyone that health care reform is really health insurance reform. Most of the more substantive changes contained in the major health reform bills in Congress are targeted at health insurers. For example, all of the bills would eliminate insurers’ ability to deny coverage to anyone on the basis of a pre-existing condition. At the same time, the bills require all individuals to purchase health insurance coverage or face a financial penalty.
Many Americans are up in arms over the idea that the government will “force” them to buy insurance. I guess I can sort of see why that would bother some people, but I think that once we take a look at what the government is actually doing when it comes to insurance, perhaps we won’t be so outraged–at least not at the government. Private insurers on the other hand, well…..
The most common way of assessing the level of coverage offered by a health insurance plan is to look at the plans generosity as measured by its actuarial value. Put simply, actuarial value is how much of the costs of care are covered by the insurer out of pooled premiums. The rest (i.e., 100% of costs – actuarial value) is paid for by the consumer. Now, this is not quite the same as coinsurance. We are all familiar with the idea that once we’ve reached our deductible our insurer pays 80% of costs and we pay 20%. But such a plan’s actuarial value is not 80%, because we have to account for all of the out-of-pocket expenses including the deductible. Make sense?
So here’s a chart showing the average actuarial value of employer-based as well as non-group (i.e., individual) insurance plans, along with the range of actuarial values for plans outlined under the various health reform bills in Congress. Remember, a higher actuarial value means that your insurer pays a greater portion of the cost of your care, and consequently that you pay less out-of-pocket. (You’ll need to click it to see a larger version.)
The bottom line? Every bill in Congress would be a substantial improvement to the plans available on the non-group market, and every bill in Congress would have plans that exceed the average actuarial value of current employer-based plans. If you’ve ever looked at your current insurance coverage and thought: “I wish I had better health insurance benefits.” Then maybe you should write your member of Congress and urge them to pass reform this year.