Exam 17: Economic Evaluation of Health Policy: The Patient Protection and Affordable Care Act of 2010

Consider the market for health insurance for medium-size employers (50-100 employees) after January 1, 2014. Under the PPACA, such employers will be subject to penalties if they don't offer health insurance to their workers, and health insurance exchanges should be able to present an attractive option for them to offer coverage. At the same time, an alternative opportunity to buy coverage outside of the state exchanges will still remain. Keeping in mind that premiums for each employer group will depend on the average age of the entire pool of employees and some companies may tend to have a primarily older (or younger) workforce, discuss the potential impact of this policy on both markets: within vs. outside of health insurance exchanges. Are adverse selection issues likely to arise in any of these markets? Justify your answers.

The law mandates that each state health insurance exchange must offer at least one "qualified" plan to individuals and small groups.

To enforce the "affordable" aspect of the mandatory requirement to have health insurance, there are provisions in the law for low-income families to qualify for premium credits and/or subsidies.

Which of the following is not an example of an issue left unresolved by PPACA?

Suppose annual premiums for the silver plan in the health insurance exchange in your geographical area will be established at $5,000 in 2014. If your individual income will be $40,000 in 2014 and you will be eligible to buy health insurance through that exchange, you will qualify for a premium credit.

The design of the PPACA legislation uses several historical experiments with innovative healthcare financing as models, because of the positive outcomes observed from those experiences. The generalizability of those outcomes for the entire country, however, is less certain and the actual impact of PPACA legislation may vary greatly from the expected targets.

Which of the following examples of states, plans and programs - which had experimented with different forms of healthcare financing in the past - were not used as models when designing the PPACA legislation?

Income distribution, and thus the ability to afford healthcare, is highly skewed in the U.S. The current nature of income distribution implies that average household income is _______________ median household income.

As of 2014, purchase of health insurance will be mandatory for all citizens, and it will be mandatory for all employers to offer coverage, or face financial penalties.

Suppose annual premiums for the silver and gold plans in the health insurance exchange in your geographical area will be established at $5,000 and $7,000 respectively in 2014, your individual income will be $40,000 in 2014 and you will be eligible to buy health insurance through that exchange. If you decide to buy the gold plan, your contribution to the premium cost will be

All individuals, with no discrimination by age, employment, insurance status, or any other factors, will have the right to purchase a plan through health insurance exchanges.

Listed below are some of the most important new coverage rules under PPACA. Some of them aim to achieve greater efficiency, others aim to achieve greater equity. Which coverage rule from the list below aims to achieve better efficiency?

Use the information below to answer questions 21 through 24 and ultimately make a prediction about which insurance option is likely to be selected by Consultants, Inc., a family-run business with 68 employees, providing anesthesia services on "as-needed" basis to hospitals and ambulatory surgical centers in a large metropolitan area. Consultants, Inc. has been in business for 8 years, offering one generous health insurance plan and sponsoring 60% of premium contribution ($2,900) for each of the 49 employees that chose to participate. Their plan, however, will not meet the minimum essential benefits requirements under the PPACA, and after January 1, 2014 the firm will face the following choices: Option 1: No insurance. The firm will face fines: $2,000 per each employee, starting with the 31st worker Option 2: Better Insurance: purchase a conforming plan through the health benefits exchange. Estimated cost per employee (60% contribution toward the total premium of $6,000) is $3,600, 57 employees are expected by the firm to participate. Option 3: Old insurance Since it is likely that at least one of the workers who cannot afford this insurance will try to obtain it through the exchange, the employer is likely to face the same fines as in Option 1, in addition to paying part of the premiums for participating workers. -What will be the estimated cost of Option 1: not offering insurance at all?

According to CBO projections, employer-sponsored health insurance coverage will be significantly eroded by 2021, as a direct result of PPACA implementation.

Discuss the pros and cons of price transparency policies in the healthcare industry. Should it become a requirement for all medical providers to publish prices for their service on the web, so that patients are fully informed about prices before they actually receive care, not after (as it is usually the case today). Or, do costs outweigh benefits? Justify your answers.

Which population category will be primarily affected by the major changes that PPACA envisions?

Use the information below to answer questions 21 through 24 and ultimately make a prediction about which insurance option is likely to be selected by Consultants, Inc., a family-run business with 68 employees, providing anesthesia services on "as-needed" basis to hospitals and ambulatory surgical centers in a large metropolitan area. Consultants, Inc. has been in business for 8 years, offering one generous health insurance plan and sponsoring 60% of premium contribution ($2,900) for each of the 49 employees that chose to participate. Their plan, however, will not meet the minimum essential benefits requirements under the PPACA, and after January 1, 2014 the firm will face the following choices: Option 1: No insurance. The firm will face fines: $2,000 per each employee, starting with the 31st worker Option 2: Better Insurance: purchase a conforming plan through the health benefits exchange. Estimated cost per employee (60% contribution toward the total premium of $6,000) is $3,600, 57 employees are expected by the firm to participate. Option 3: Old insurance Since it is likely that at least one of the workers who cannot afford this insurance will try to obtain it through the exchange, the employer is likely to face the same fines as in Option 1, in addition to paying part of the premiums for participating workers. -What will be the estimated cost of Option 2: purchasing a conforming plan through the exchange?

Use the information below to answer questions 21 through 24 and ultimately make a prediction about which insurance option is likely to be selected by Consultants, Inc., a family-run business with 68 employees, providing anesthesia services on "as-needed" basis to hospitals and ambulatory surgical centers in a large metropolitan area. Consultants, Inc. has been in business for 8 years, offering one generous health insurance plan and sponsoring 60% of premium contribution ($2,900) for each of the 49 employees that chose to participate. Their plan, however, will not meet the minimum essential benefits requirements under the PPACA, and after January 1, 2014 the firm will face the following choices: Option 1: No insurance. The firm will face fines: $2,000 per each employee, starting with the 31st worker Option 2: Better Insurance: purchase a conforming plan through the health benefits exchange. Estimated cost per employee (60% contribution toward the total premium of $6,000) is $3,600, 57 employees are expected by the firm to participate. Option 3: Old insurance Since it is likely that at least one of the workers who cannot afford this insurance will try to obtain it through the exchange, the employer is likely to face the same fines as in Option 1, in addition to paying part of the premiums for participating workers. -Which option is likely to be selected by Consultants, Inc. in the year 2014?

Use the information below to answer questions 21 through 24 and ultimately make a prediction about which insurance option is likely to be selected by Consultants, Inc., a family-run business with 68 employees, providing anesthesia services on "as-needed" basis to hospitals and ambulatory surgical centers in a large metropolitan area. Consultants, Inc. has been in business for 8 years, offering one generous health insurance plan and sponsoring 60% of premium contribution ($2,900) for each of the 49 employees that chose to participate. Their plan, however, will not meet the minimum essential benefits requirements under the PPACA, and after January 1, 2014 the firm will face the following choices: Option 1: No insurance. The firm will face fines: $2,000 per each employee, starting with the 31st worker Option 2: Better Insurance: purchase a conforming plan through the health benefits exchange. Estimated cost per employee (60% contribution toward the total premium of $6,000) is $3,600, 57 employees are expected by the firm to participate. Option 3: Old insurance Since it is likely that at least one of the workers who cannot afford this insurance will try to obtain it through the exchange, the employer is likely to face the same fines as in Option 1, in addition to paying part of the premiums for participating workers. -What will be the estimated cost of Option 3: staying with the old insurance?

The PPACA legislation can be viewed as an attempt by the US government to provide universal health insurance coverage to all citizens and legal residents in the U.S.