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What the actuarial values in the Affordable Care Act mean
What the actuarial values in the Affordable Care Act mean
- Collection:
- Health Policy and Services Research
- Series Title(s):
- Focus on health reform
- Author(s):
- Levitt, Larry, author
Claxton, Gary, author - Contributor(s):
- Henry J. Kaiser Family Foundation, issuing body.
- Publication:
- Menlo Park, CA : Henry J. Kaiser Family Foundation, April 2011
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Actuarial Analysis
Health Care Reform -- legislation & jurisprudence
Insurance Coverage
United States
United States. - Genre(s):
- Technical Report
- Abstract:
- The Patient Protection and Affordable Care Act (ACA) establishes various tiers of health insurance coverage. These tiers are used for three primary purposes: (1) To set the minimum amount of coverage many people must have to satisfy the requirement that they be insured or pay a federal tax penalty beginning in 2014. (2) To establish standardized levels of insurance individuals and small businesses can buy in health insurance purchasing Exchanges or in the outside market. (3) And, as benchmarks for premium and cost-sharing subsidies provided to lower and middle income people buying their own insurance in Exchanges. The ACA identifies a range of services that must be included in the benefits package that all individual and small business plans must use--and requires preventive services to be covered with no patient cost-sharing--with further details to be developed by the Secretary of Health and Human Services (HHS). These requirements apply to all tiers of health insurance coverage, meaning that differences in the levels of coverage will reflect variation in cost-sharing, not differences in the underlying benefits. However, the levels of coverage in the ACA are not defined using specific deductibles, copays, and coinsurance. Rather, they are specified using the concept of an "actuarial value" (AV). For example, a plan with an actuarial value of 70% (referred to as a "silver" plan in the ACA) means that for a standard population, the plan will pay 70% of their health care expenses, while the enrollees themselves will pay 30% through some combination of deductibles, copays, and coinsurance. The higher the actuarial value, the less patient cost-sharing the plan will have on average. The percentage a plan pays for any given enrollee will generally be different from the actuarial value, depending upon the health care services used and the total cost of those services. And, the details of the patient cost-sharing will likely vary from plan to plan. The levels of coverage provided for in the ACA are central to the coverage people will get and how they will ultimately perceive the effects of the health reform law. But, actuarial values are not an inherently intuitive idea for most people, so the Kaiser Family Foundation initiated a study to estimate the deductibles and coinsurance that would meet the thresholds defined in the ACA. Because there is inherent uncertainty in actuarial analysis--driven by different assumptions and data--the study commissioned estimates from three well-established actuarial and benefits consulting firms: Actuarial Research Corporation, Aon Hewitt, and Towers Watson. This brief explains the coverage tiers established in the ACA, presents the actuarial estimates from the three firms, and discusses the potential policy implications.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)
- Extent:
- 1 online resource (1 PDF file (5 pages, 1 unnumbered page)).
- NLM Unique ID:
- 101611453 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/101611453