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07-29-09
New York, NY
Standardized Health Plans Help Consumers Choose
the Right Benefits and Better Financial
Protection
Consumers are
best protected when they can choose from among a
manageable number of standardized health
benefits packages, and when those standards
include annual out-of-pocket limits covering all
services, a new report finds.
In Role Models
and Cautionary Tales: Three Health Insurance
Programs Demonstrate How Standardized Health
Benefits Protect Consumers, the Medicare Rights
Center compares three health insurance
programs—Medicare Advantage (private health
plans, like HMOs, that are an alternative to the
government-run Original Medicare program) and
two Massachusetts programs, Commonwealth Choice
and Commonwealth Care, that are at the center of
the state’s health reform efforts.
“We hope that the
legislators working on health reform will
incorporate the lessons we’ve learned from these
programs into their final bill,” said Joseph
Baker, president of the Medicare Rights Center,
a national consumer advocacy group. “Health
reform is ultimately about protecting consumers.
Presenting consumers with clear, meaningful
options and comprehensive financial protection
are essential components of real reform.”
The study
compared the benefits packages offered through
these three programs, how they are regulated,
and how consumer counselors view the programs.
The study finds
that Commonwealth Care, which serves
Massachusetts residents with limited incomes,
provides the greatest level of protection for
consumers. In this program, plans are fully
standardized and have comprehensive
out-of-pocket limits that are tied to enrollees’
income. The simplified choices allow consumers
to focus on the premium costs and whether plans
allow access to their medical providers
In contrast,
Medicare Advantage and Commonwealth Choice allow
much more variation in benefit design, making
plan selection more difficult for consumers.
Medicare Advantage plans allow significant
leeway in benefit design and provide less
rigorous protection against out-of-pocket costs.
As a result, many consumers face a bewildering
array of plan choices and are at great risk of
choosing a plan that does not meet their health
care needs. Commonwealth Choice plans are
somewhat more standardized but allow significant
variation in consumers’ out-of-pocket
protections—leaving policyholders vulnerable to
unexpected costs.
Drawing from the
pitfalls and positive developments in all three
programs, this brief makes two recommendations
for consumer protections Congress should include
in health reform legislation:
A cap on
out-of-pocket costs: Require all health plans
sold through a health insurance exchange to
include a comprehensive annual cap on what
consumers pay out of pocket for medical care and
prescription drugs.
A standardized
benefit package: Require plans offered through
the exchange to have a limited number of
standard benefit designs, with each design
featuring standardized cost-sharing terms for
the services most important to health care
consumers.
Consumers Union,
the nonprofit publisher of Consumer Reports
magazine and longtime advocate for better health
insurance choices for consumers, sponsored this
study. “This timely study provides important
insights into how detailed regulatory and
legislative decisions can powerfully affect the
health insurance choices facing consumers,”
notes DeAnn Friedholm, campaign director for
health care reform at Consumers Union.
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