Question

Instructions

Impact of Moral Hazard (Level 5 - Evaluating) Student Workbook Advanced Exercise 1.

In March 31, 2016, HHS-Operated Risk Adjustment Methodology Meeting Discussion Paper (March 24, 2016) discussed the concept of varying cost-sharing levels. In the HHS-HCC risk adjustment model, diverse levels of cost-sharing have been incorporated into the insurance plans. The Affordable Care Act (ACA) established four health plan tiers which are referred to as “metal levels.” The levels are:

• Platinum 90/10 plan
• Gold 80/20 plan
• Silver 70/30 plan
• Bronze 60/40 plan

Examine this structure from the viewpoint of moral hazard. How would members in the different metal levels make decisions about healthcare services? Do you think four levels of cost-sharing meet the needs of the US healthcare market? Justify your position.

Answer 1

The 4 ( Platinum, Gold, Silver, Bronze) metal levels of Affordable Care Act also called as Health Insurance Marketplace plans. These plans mainly denotes how much the consumer have to pay premiums,deductibles and copays) and how much pay they get from the plan for any care they receive. (For Premium, 90% of the expected costs will be paid by the coverage  and only 10% consumer have to pay. Gold - 80% paid by the coverage plan, 20% consumer have to pay. Silver - 70% paid by the coverage and 30% by the consumer. Bronze - 60% by the plan and 40% by the consumer).

In general, the lower your health insurance plan out-of pocket expenditure is high, on the other side, higher your monthly premium and out-of expenditure is less. Before choosing a plan from these metal levels, one have to look for these followings

a) If you go to consult the doctor often or need regular prescriptions, a gold or platinum is better option because it pays more of the cost for seeking the healthcare services but cost of the plans are more.

b) In contrast, if you are not a frequent visitor or u do not need of any regular prescriptions, then silver or bronze is a good plan to consider. The plan costs is less for a month in premiums but also pays to utilize the benefits. Moreover, the consumer have to pay (out-of pocket expenditure) for seeking the medical care.  

c) Check out for the doctors and hospitals availability incase to rule out any chronic conditions

d) Silver plans can be considered if the consumers are looking to maximize tax credits or any other subsidies. This plan is consider as better for this choice.

e) Bronze plan is mainly chosen by those who have with limited incomes. In such cases, the consumer have to more from their pocket and less benefited by the plan. So, they have to think twice before choosing the lowest premiums.

f) Additional benefits can be obtained in the form of supplemental health insurance with the money that is saved on the premium for any illnesses or in case of any accidents.

From my point of view, US healthcare needs much more insurance services or healthcare system than these 4 metal levels of insurance plan. In these ACA metal insurance plan, either they have to pay more on premiums or they have to spend more from their own (out-of pocket) for seeking medical services. In addition to this, insurance coverage cost includes only premium and deductible in all the 4 metal levels, but the costs have nothing to do with the quality of care. People in the US are paying more on healthcare system but comparing to other countries, the overall health ranking is low. An universal access to health insurance is pivotal in US healthcare system to benefits everyone without any age or social status discrimination.