0To prepare for this Discussion: Review the materials on critical reading strategies and on the MEAL plan for paragraphs.Read the provided article in the Learning Resources, taking note of where the a

Design of Health Insurance Policies

The implementation of the Affordable Care Act (ACA) in October of 2013 made it possible for all uninsured citizens to obtain medical coverage. Expanding coverage for previously uninsured citizens would also increase the amount spent on health care nationally. The government encouraged states to expand Medicaid to cover disabled and low-income persons in exchange for subsidies. “The Oregon Health Insurance Experiment found that gaining Medicaid coverage resulted in a 40% increase in ED visits by beneficiaries compared with their counterparts who remained uninsured and must have had to pay for ED visits out of pocket,” Baicker and Levy (2015, p399). One way to control health care spending is through cost-sharing. Cost-sharing is one method of reducing expenses on the patient side and also used as a method to obtain a higher value of care. As with any pool of beneficiaries, there are some who require more health care than others so that question rises is it fair for all to pay the same copays? In addition to the government and states, employers faced the responsibility of insuring employees at reasonable rates also.

Employers face the same issues as states in that a moral hazard is expected when insurance coverage is provided. According to Getzen (2015) a change in behavior that results from having insurance and that increases expected losses, such as the higher utilization of covered medical services by employees equates to a moral hazard. This is a direct connection to adverse selection in which people likely to sustain loss are more likely to purchase insurance. In looking at the scenario of a benefits manager designing a health insurance policy for a company with 50 employees, 40% of whom are considered older with a chronic disease; the remaining employees that are younger and have no known health issues, the best policy would be an open HMO.

An open HMO is part of a managed-care organization that contracts with hospitals and physicians to form provider networks. HMOs ensure costs are contained but for employees/ patients that need more frequent medical care, such as the 40% with diabetes from the scenario, an open HMO seems to be the best option as they represent the adverse selection. “Patients desiring a little extra freedom of choice could enroll in a preferred provider organization (PPO) plan, which would allow them to occasionally use outside physicians or hospitals by paying extra,” Getzen (2015, p11). Benefit managers and policymakers should work to find the best solution for employees and citizens, but also design policies that are equitable.

References:

Baicker, K., & Levy, H. (2015). Cost sharing as a tool to drive higher-value care. JAMA Internal Medicine, 175(3), 399-400.

Getzen, T. (2015). Health economics for the healthcare administrator (Laureate custom edition). New York: Wiley