IOM Health Plan Report Points to Premium Targets
The Institute of Medicine's nearly 300-page report is a response to Department of Health and Human Services' request for the IOM's recommendations about the process the HHS secretary should use to define and update essential health benefits.
The Department of Health and Human Services should establish an essential health benefits package that is guided by a national average health plan premium target, the Institute of Medicine recommended in a highly anticipated report.
The IOM's nearly 300-page report is a response to HHS' request for the IOM's recommendations about the process the HHS secretary should use to define and update essential health benefits. Outlined in the health care reform law, essential benefits must be offered to individuals and small groups in state-based exchanges and the existing market. More than 68 million people will obtain insurance that must meet essential health benefit requirements, the report noted.
Committee members who worked on the report combined perspectives from four areas—economics, ethics, evidence-based practice and population health—to create what the IOM called an "overarching framework" for HHS. The committee then used that as a foundation to develop criteria that could help guide HHS in its decisions and sought to achieve two goals: to provide coverage for a range of Americans and to ensure the affordability of that coverage.
Defining a premium target became a "central tenet" of the committee because, the committee concluded, if cost is not taken into account, the essential health benefits package will become increasingly unaffordable for both individuals and small businesses. If that happens, the overriding purpose of the Patient Protection and Affordable Care Act—enabling people to buy insurance—will not be achieved. Determining just how to consider cost was a large task for the committee, which ultimately recommended that HHS determine what the national average premium of typical small employer plans would be in 2014 and then ensure that the package's benefits does not exceed that amount.
"This 'premium target' should be updated annually, based on medical inflation," the report said. "Since, however, this does little to stem health care cost increases, and since the committee did not believe the DHHS secretary had the authority to mandate premium (or other cost) targets, the committee recommends a concerted and expeditious attempt by all stakeholders to address the problem of health care cost inflation."
America's Health Insurance Plans commended the IOM for its recommendations, particularly the one on a premium target.
"With this thoughtful report, the IOM is urging policymakers to strike a balance between the affordability of coverage and the comprehensiveness of coverage," AHIP president and CEO Karen Ignagni said in a news release. "We agree that this balance is critical to ensuring that individuals, working families and small employers can afford health insurance. The recommendation that the initial EHB package reflect the scope of benefits and design provided under a typical small employer plan is an important step toward maintaining affordability."
The IOM also recommended that for those states administering their own exchanges that wish to adopt a variant of the federal essential health benefits package, the HHS secretary grant those requests—provided that they produce a package that is "actuarially equivalent" to the national package. To achieve this, the report noted, the HHS secretary should encourage what it called a "public deliberative process" that it described in the report. It also suggested that beginning in 2015, for implementation in 2016 and every year after that, the HHS secretary should update the essential health benefits package with the goal that it become more fully evidenced-based, specific and value-promoting.
In an emailed statement, HHS Secretary Kathleen Sebelius said she appreciated the IOM's work and looks forward to reviewing the recommendations.
"But before we forward a proposal, it is critical that we hear from the American people," Sebelius said in the statement. "To accomplish this goal, HHS will initiate a series of listening sessions where Americans from across the country will have the chance to share their thoughts on these issues."