Question

Analyze the effect of health care reform on the health care consumer who uses a incentive-based health care insurance product

Answer 1

Ans. The health reform legislation passed in March 2010 will introduce a range of payment and delivery system changes designed to achieve a significant slowing of health care cost growth. Most assessments of the new reform law have focused only on the federal budgetary impact. This updated analysis projects the effect of national reform on total national health expenditures and the insurance premiums that American families would likely pay.

Extending health insurance coverage to essentially all Americans will increase medical spending, at least in the short run. (Some argue that increased coverage will lower spending over time by making it possible to pursue more-aggressive cost-containment policies without risking access to care for the uninsured, but in this analysis we do not consider such effects.) From previous, are available to estimate the magnitude of the increase in spending. Hadley and colleagues, for example, estimated that each uninsured individual who gains coverage will incur annually an additional $1,600 of medical care expenses—an increase of 70 percent. The Congressional Budget Office estimated that spending for uninsured individuals, if they become insured, will increase by 25 percent to 60 percent. The actual increase will depend in part on the rates that are paid to health care providers for treating currently uninsured patients.

For our estimates, we increase the $1,600 figure over time with expected increases in medical costs. We then multiply the revised amounts by the number of newly insured resulting from health reform to produce a total estimate. Fully phased in, incremental coverage costs about $75 billion per year to cover 60 percent of the uninsured, or 2 percent of total health care spending.

Reducing insurer administration and modernizing the delivery of health care services will each result in reductions in private insurance premiums. Private premiums might be affected by other provisions as well.

Health reform might also alter the generosity of the average insurance benefits offered, which may raise premiums for certain groups. In the current market, many people have coverage that is extremely limited, with deductibles totaling many thousands of dollars and entire classes of services that are excluded. Such people will face premium increases under reform, although the quality of the coverage will be significantly improved and out-of-pocket expenses reduced.

The federal government has put billions of dollars into a variety of programs aimed at improving the way health care is delivered. The Affordable Care Act authorized a broad agenda of reform projects, including accountable care organizations bundled payments, value-based purchasing, primary care initiatives, and other payment and service delivery models. The Medicare Access and CHIP Reauthorization Act of 2015 established new ways of paying physicians intended to promote high-quality patient care.

Some incentivized health plans reduce health insurance premiums or provide other financial rewards for individuals who meet certain health targets. We'll examine the most common types of health insurance incentives and discuss how they are impacted by federal law.

Most large employers that offer health benefits to their employees also offer wellness programs designed to promote employee health and productivity and reduce health care costs for them and the company. About 30% of large employers offer incentives in these wellness programs, such as cash payments and discounts on insurance premiums.

Screening services to monitor health status and identify health risks.

Lifestyle management services to encourage healthy behavior and reduce health risks.

Disease management services to help people with chronic conditions manage their health.

There are two broad categories of wellness programs: participatory wellness programs and health-contingent programs. Let's examine the differences and the federal standards that apply to them.

Health-contingent wellness programs do not reward individuals for merely participating, but instead reward individuals for achieving specific health goals. The insurance discount that Emily receives for walking 30 minutes every day is an example of a health-contingent program.

Health-contingent programs can be divided into two basic sub-groups:

Activity-only programs reward individuals for taking specific health related actions like exercising or dieting. These programs reward individuals for engaging in specific behaviors rather than achieving specific health outcomes.

Outcome-based programs require individuals to attain or maintain a specific health outcome, such as meeting standards for blood pressure and cholesterol. Individuals must clearly demonstrate improved health outcomes to qualify for rewards or incentives in these programs.

Federal law makes it illegal for employers to discriminate against an employee based on their health status. Under the Employee Retirement Income Security Act employer-sponsored health plans are generally prohibited from charging individuals different health insurance premiums based on a health factor.