Health insurance plans marketed to individuals and their families have long been difficult to compare. Now, however, U.S. News rates thousands of these plans, which cover some 14 million people and will be purchased by even more consumers as health reform legislation takes full effect, making them timely targets for evaluation. Our goal in evaluating these health plans—as it has been for decades in ranking hospitals, colleges, and other vital service—is to help guide important life decisions, in this case to help consumers find health insurance that provides the coverage they need at a price they can afford.
Broadly, the U.S. News methodology examines the two key elements of any health plan: the scope of covered benefits—for prescription drugs, hospitalization, and other care—and how much plan members will pay for them. The most visible component of cost is the monthly premium, which must be paid whether or not care is provided. But there are many other elements, most notably deductibles, copays, and coinsurance.
The data came from information collected from insurers by the Centers for Medicare and Medicaid Services (CMS) and summarized for individual plans on healthcare.gov. In June, the U.S. Department of Health and Human Services made it possible for anyone with technical knowhow to dig through the CMS data.
Our approach has limitations. For example, CMS did not collect—and U.S. News therefore couldn't evaluate—the specifics of each plan's formulary and physician network. Most plans have a formulary, or defined list of medications that are subject to lower costs than nonformulary medications. Also, many plans impose payment penalties on members who go to physicians outside of the plan's network.
Currently available data also are insufficient for figuring out actuarial value—how well a given individual’s or family’s medical needs over the course of a year will be covered by the plan. Finally, we could assess only the healthcare components that were represented in the database. The CMS data records whether a plan covers preventive care, but offers little detail about the specific preventive services offered, making it difficult to evaluate plans on prevention.
Nonetheless, the database did allow us to broadly evaluate a plan’s coverage and cost. We’ve detailed our approach below.
Scope of Coverage
Based on U.S. News analysis, each plan has a U.S. News Rating of one to five stars—or two separate ratings if it is available to both individuals and families. The rating was based on how thoroughly the plan covers a specific list of benefit categories from hospitalizations to prescription drugs to emergency room visits, and how much of the costs consumers have to pay. A one-star rating generally denotes a plan that either doesn’t cover many products and services or covers only a modest fraction of the costs consumers might incur for them. A five-star plan generally covers a broader array of products and services and pays a higher percentage of total costs. In essence, the U.S. News Rating provides a summary of how much a plan protects you from the possibility of high medical bills if you get really sick. A major purpose of insurance, after all, is to safeguard against catastrophic financial losses in the case of the unexpected. We determined the U.S. News Rating by analyzing 23 benefits of individual plans and 28 of family plans. Each benefit carries a point value, with higher values placed on benefits that do more to protect consumers from potentially ruinous healthcare bills. For example, a hospital stay can cost tens of thousands of dollars, so benefits that cover hospitalizations were given relatively high value. Similarly, prescription drugs can generate significant expenses over time and affect a large proportion of consumers, so drug-coverage benefits were also heavily weighted. Depending on the combination of benefits provided, a plan for individuals could score up to 26 points, and a plan for families could score up to 28.75. For both types of plans, most of the points were awarded based on coverage of essential health benefits, but other factors, such as annual deductible and annual out-of-pocket limit, were also considered. The resulting raw point scores were ultimately converted to star ratings.
Prescription drugs, 6 points
Hospital charges, 3 points
Outpatient surgery charges, 3 points
Emergency services, 2 points
Mental health and substance abuse services, 2 points
Rehabilitation and habilitation services, 1.5 points
Preventive care, 1 point
Medical devices and equipment, 0.5 points
Maternity and newborn care, 2 points
Selected pediatric services, 0.75 points
A cap on out-of-pocket spending of $6,350 for individuals and $12,700 for families (2.5 points). These are the limits imposed by the Internal Revenue Service for 2013 and 2014 for a qualified plan paired with a Health Savings Account.
No cap on the annual payout for benefits (2.5 points). The presence of a cap on how much an insurer will pay on your behalf may not matter if you stay healthy, but it can become a major problem if an unanticipated injury or illness drives your medical bills to staggering heights.
Truth in labeling (2 points). This rewards plans for transparency, giving points to those whose stated out-of-pocket maximum really is the most a consumer would pay for medical services during the year. Plans that exclude deductibles, co-pays, or coinsurance from their stated maximum expose consumers to potentially large unanticipated expenses. Depending on the degree of exclusion, such plans received no more than partial credit.
In most states, premiums vary widely, even for a single plan, depending on the age, health status, gender, place of residence, and other characteristics of individual applicants. There are two ways in which Best Health Insurance Plans provides users with premium information. U.S. News users who input their ZIP code, date of birth, gender, and smoking status (including family members who would be covered) can find out the minimum monthly premium the insurer has reported to the federal government that a consumer with similar characteristics would be charged for that plan. Until 2014, insurers can charge consumers more than this “base rate” if, for example, an applicant has a preexisting health condition.
Broadly, the U.S. News methodology examines the two key elements of any health plan: the scope of covered benefits—for prescription drugs, hospitalization, and other care—and how much plan members will pay for them. The most visible component of cost is the monthly premium, which must be paid whether or not care is provided. But there are many other elements, most notably deductibles, copays, and coinsurance.
The data came from information collected from insurers by the Centers for Medicare and Medicaid Services (CMS) and summarized for individual plans on healthcare.gov. In June, the U.S. Department of Health and Human Services made it possible for anyone with technical knowhow to dig through the CMS data.
Our approach has limitations. For example, CMS did not collect—and U.S. News therefore couldn't evaluate—the specifics of each plan's formulary and physician network. Most plans have a formulary, or defined list of medications that are subject to lower costs than nonformulary medications. Also, many plans impose payment penalties on members who go to physicians outside of the plan's network.
Currently available data also are insufficient for figuring out actuarial value—how well a given individual’s or family’s medical needs over the course of a year will be covered by the plan. Finally, we could assess only the healthcare components that were represented in the database. The CMS data records whether a plan covers preventive care, but offers little detail about the specific preventive services offered, making it difficult to evaluate plans on prevention.
Nonetheless, the database did allow us to broadly evaluate a plan’s coverage and cost. We’ve detailed our approach below.
Scope of Coverage
Based on U.S. News analysis, each plan has a U.S. News Rating of one to five stars—or two separate ratings if it is available to both individuals and families. The rating was based on how thoroughly the plan covers a specific list of benefit categories from hospitalizations to prescription drugs to emergency room visits, and how much of the costs consumers have to pay. A one-star rating generally denotes a plan that either doesn’t cover many products and services or covers only a modest fraction of the costs consumers might incur for them. A five-star plan generally covers a broader array of products and services and pays a higher percentage of total costs. In essence, the U.S. News Rating provides a summary of how much a plan protects you from the possibility of high medical bills if you get really sick. A major purpose of insurance, after all, is to safeguard against catastrophic financial losses in the case of the unexpected. We determined the U.S. News Rating by analyzing 23 benefits of individual plans and 28 of family plans. Each benefit carries a point value, with higher values placed on benefits that do more to protect consumers from potentially ruinous healthcare bills. For example, a hospital stay can cost tens of thousands of dollars, so benefits that cover hospitalizations were given relatively high value. Similarly, prescription drugs can generate significant expenses over time and affect a large proportion of consumers, so drug-coverage benefits were also heavily weighted. Depending on the combination of benefits provided, a plan for individuals could score up to 26 points, and a plan for families could score up to 28.75. For both types of plans, most of the points were awarded based on coverage of essential health benefits, but other factors, such as annual deductible and annual out-of-pocket limit, were also considered. The resulting raw point scores were ultimately converted to star ratings.
Essential health benefits (maximum score 19 points for individual plans, 21.75 points for family plans). U.S. News focused on 10 categories of “essential health benefits” considered high priority by leading institutions such as the Institute of Medicine, a branch of the nonprofit National Academies of Science that conducts health research to address requests from Congress and federal agencies. These 10 benefits will become mandated features for all plans starting in 2014, under a provision of the Affordable Care Act.
The Affordable Care Act only loosely defines the essential health benefits. States will have broad latitude to determine the specific services covered. Our definitions were derived from literature reviews and interviews with health insurance experts.
Here is a summary of the broad categories of benefits factored into the U.S. News Ratings and maximum number of points a plan could earn for each:
The final two benefits were factored into the rating of family plans only. Plans for individuals did not earn points for these benefits.
We assigned the highest point values to benefits that were the most common and the most expensive. Prescription drug coverage, for example, includes four components, each worth 1.5 points: generics, brand-name drugs on a plan’s “preferred” list, nonpreferred brand-name drugs, and specialty drugs. Similarly, the 2 points for emergency services are based on emergency room charges (1 point), ambulance services (0.5 point), and urgent care coverage (0.5 point). Maternity and newborn care takes in labor and delivery (1 point) and prenatal/postnatal care (1 point), and selected pediatric services (0.75 points) is equally divided between coverage of dental checkups, eye exams, and glasses.
Points received by a plan in any benefit category also were dictated by how completely the plan covered the benefit. Completeness of coverage was gauged by the size of the copay (the flat-rate fee charged for, say, a doctor visit) or coinsurance (the percentage of the medical bill you have to pay). A plan that offered full coverage (no cost to you) for a given benefit received all points available for that benefit. Plans offering no coverage at all for that feature got zero points. Plans that offer coverage but shift some of the cost to you received partial credit, with those featuring copays awarded more points than those featuring coinsurance. If the plan offered a copay/coinsurance lower than the median amount of the copay/coinsurance for all plans U.S. News rated, it received more credit than if the plan’s copay/coinsurance was higher than the median value. In this way, all plans were scored relative to all other plans for which we found federal data.
Other cost-sharing plan features (maximum 7 points). Besides the essential health benefits, the U.S. News methodology took into consideration three important elements of any health insurance plan:
Star ratings. Plans with raw point scores in the top 20 percent nationally received a 5-star U.S. News Rating. These plans often boast higher monthly premiums than plans with narrower scopes of benefits, but that doesn’t necessarily mean they’ll cost you more over time. Plans with lower premiums may sport higher deductibles, co-pays, and coinsurance, and these cost-sharing components can significantly drive up your out-of-pocket expenses.
U.S. News has not directly evaluated each plan’s quality or value as measured by patient satisfaction or by how well its roster of covered services meet subscribers’ health care needs. Reliable metrics are unavailable to people seeking individual and family plans. That will change, to an extent still to be determined, in 2014 when the states launch insurance exchanges as a key provision of the Affordable Care Act. Each state will be required to to assign each plan a value based on the percentage of a person’s predicted medical needs that the plan will cover.
Monthly Premium
In most states, premiums vary widely, even for a single plan, depending on the age, health status, gender, place of residence, and other characteristics of individual applicants. There are two ways in which Best Health Insurance Plans provides users with premium information. U.S. News users who input their ZIP code, date of birth, gender, and smoking status (including family members who would be covered) can find out the minimum monthly premium the insurer has reported to the federal government that a consumer with similar characteristics would be charged for that plan. Until 2014, insurers can charge consumers more than this “base rate” if, for example, an applicant has a preexisting health condition.
Even without providing personal data, users can quickly place each plan's premium on a scale from least to most costly. The range, divided into price segments—lowest, low, moderate, high, and highest—offers a snapshot of a plan's relative premium expense across a range of consumers. These calculations, which is unrelated to the plan’s U.S. News Rating, are based on an average of the premiums paid by consumers nationally.
Dollar ratings were calculated using 30 hypothetical consumers of different ages and family composition. These 30 archetypes included single males and females in each decade of adult life up to Medicare age, smokers and nonsmokers, young and middle-aged couples with and without children, and empty-nesters. If a plan is available to both families and individuals, it will have two monthly premium ratings, as well as two U.S. News Ratings.
The best way to assess a health plan’s premium is to use our search tool to identify plans available in your location to someone of your age and family composition. If you follow through and apply for coverage, you shouldn’t be surprised if the premium you’re quoted by the health insurer differs, perhaps dramatically, from the figure shown in our analysis or elsewhere. Many plans charge a significant percentage of applicants premiums that are higher than the amount the insurer provided to the government as the “base rate.” For each rated plan, U.S. News reports the percentage of applicants charged more than the base amount.
We leave it to users to determine the combination of cost and coverage that best meets their needs. The U.S. News Ratings, which are based on data collected by the Centers for Medicare and Medicaid Services, are provided for informational purposes only. A U.S. News Rating isn’t a recommendation to buy a particular health insurance plan and is not intended to substitute for professional advice. Your unique insurance needs cannot be summed up in a single rating, and you should carefully review the terms of any insurance policy before you purchase it.
Article Credit : USA News
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