The Patient Protection and Affordable Care Act (PPACA) is supposed to narrow the gap between what older consumers and younger consumers pay for individual health coverage.
But the PPACA health insurance exchange program create new gaps in the cost of what coverage costs for older enrollees and newer enrollees in some small-group health plans.
Consultants at Wakely, a health care actuarial consulting firm, compare SHOP plan premium allocation methods – composite rating and list billing — in a draft report posted on the website of the District of Columbia Health Benefit Exchange Authority.
PPACA calls for the U.S. Department of Health and Human Services (HHS) and states to set up a system of exchanges, or Web-based health insurance supermarkets for individuals and small groups, by Oct. 1. The District of Columbia has decided to run its own exchange program, rather than letting HHS provide exchange services for its residents.
PPACA will require all exchange plans to cover standardized “essential health benefits” (EHB) benefits package, and it will require all plans sold through an exchange to fit into one of four “metal levels” based on the percentage of the actuarial value of the EHB package that the plan covers.
The most basic plans, or “bronze level” plans, must cover about 60 percent of the actuarial value of the EHB package. The value percentages are about 70 percent for silver plans, about 80 percent for gold plans and about 90 percent for platinum plans.
HHS will require SHOP exchanges to give employers the option of letting employees choose from a coverage menu that includes all exchange plans offered at a given “metal level.”
In the individual market today, carriers in some states charge the oldest insureds five times as much as they charge the youngest. PPACA would limit the maximum ratio between the chargest for the oldest enrollees and the youngest to 3 to 1.