Today, the Institute of Medicine, as requested, proposed an option to avoid the risk that coverage will be either too flimsy or too costly, as my colleague Jessica Zigmond reported.
In its report, an IOM committee said insurance under requirements of the Affordable Care Act should resemble the coverage offered by small employers, to start.
The Affordable Care Act requires health plans sold to small business and individuals to include essential health benefits, though the law required HHS to define essential. Congress did stipulate that benefits must mirror those offered by typical employers.
But what's a typical employer health plan?
Small employers are more likely to offer workers one health plan option with higher deductibles than large employers, where workers more often have more flexibility and lower up-front financial barriers to care, a recently published survey of employer benefits shows.
Congressional staff disagreed on the question when asked by the IOM earlier this year, with a split between current and former staff for Republicans (small employers) and Democrats (large employers).
Most businesses are smaller, but the majority of people with employer-sponsored insurance work for large employers, the IOM report said. But nearly all large employers offer health plans while only 59% of small employers do. “Thus,” the report said, “the workers of these smaller firms are the target of health reform coverage.”
And premiums and benefits do not appear to differ much between small and large employers, based on the review of health plans by three major insurers and limited public information, the report said. Employers of all sizes were equally likely to offer outpatient surgery, home health, hospice and skilled-nursing coverage, according to U.S. Bureau of Labor Statistics figures.
However, large employers were more likely to cover autism services than small employers in a 2009 survey by consultant Mercer. And small employers shift more financial risk to households with deductibles and cost-sharing than large employers, the report said.
The IOM recommended that the typical small employer plan should be modified with a premium target that increases in line with medical inflation. Once established, essential benefits should “be continuously improved and increasingly specific,” the IOM said.
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