Reasonable Goals for Health Insurance Coverage and Defining Medical Necessity

November 8, 2011
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Health care should be a right but it needs to be paired with some responsibility – some share of the cost, especially for routine care, and some attention to maintaining a reasonably healthy life style. To do so will not only lead to better health but reduced expenses overall – positive outcomes for all.

Health care should be a right but it needs to be paired with some responsibility – some share of the cost, especially for routine care, and some attention to maintaining a reasonably healthy life style. To do so will not only lead to better health but reduced expenses overall – positive outcomes for all.
One of the major goals of the Affordable Care Act is to reduce the number of uninsured from the current about 50 million people (or 16+% of the US population) by both offering Medicaid to many more individuals and creating state-based insurance exchanges for individuals who cannot obtain insurance at their worksite. Medicaid will be available for those at <133% of the federal poverty rate (currently $22,050). The insurance exchanges will be available to everyone but those with income below 400% of the poverty level ($88,200 for a family of four) will be eligible for tax credits based on actual income. Unlike Medicaid which has essentially no cost sharing by the individual, insurance from the exchanges will be purchased at one of four levels – 60, 70, 80 or 90% of the approved covered expenses will be paid by the insurance; the remainder will be the individuals’ responsibility. Higher deductibles will likely correspond to lower premiums.

The Institute of Medicine (IOM), at the request of the Department of Health and Human Services, formed a committee to consider the process for defining “essential health benefits” which ultimately will translate into what is covered or not by the insurance from the exchanges. The IOM, wisely in my opinion, emphasized he need for affordability rather than just comprehensiveness. They argued that coverage should be “evidence-based, specific and value promoting over time.” They proposed that medical necessity should be based upon clinical appropriateness, best scientific evidence and a likelihood of providing an “increased health benefit…that justifies an added cost.” [For a fuller discussion of the IOM recommendations, see John Iglehart’s article in the New England Journal of Medicine, Oct 20, 2011]

These seem like wise and sensible proposals. Too often there has been a “push” to insist on very comprehensive coverage, little attention to evidence-based criteria and little or not cost sharing by the patient.

My own hope is to see insurance that carries high deductibles to encourage each of us to personally monitor our health expenditures. When we have our own money at stake, we are more likely to ask our physician if that MRI, procedure or specialist visit is really needed of if it is “just to be complete.” That high deductible may also encourage us to maintain a better life style and maintain our health. That is good for us and reduces the overall costs further.

My new book discusses these topics in detail – “The Future of Health Care Delivery, Why It Must Change and How It Will Affect You” will be published in Feb, 2012 by Potomac Books

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