How will the essential benefits interact with the calculation of actuarial value?
The ACA defines the coverage insurers are required to provide in two different ways, separating the services covered (the essential health benefits) from the amount of cost-sharing enrollees pay (the actuarial value). For individual and small group plans, the ACA defines four tiers of coverage: bronze, silver, gold, and platinum. Patient cost-sharing will vary across the tiers, but all plans selling to individuals and small businesses will have to cover the essential health benefits. The different tiers of coverage in the law are not defined using specific deductibles, copays, and coinsurance. Rather, they are specified using the concept of an "actuarial value" (AV). For example, a silver plan has an actuarial value of 70%, which means that for a standard population, the plan will pay 70% of their health care expenses on average, while the enrollees themselves will pay 30% through some combination of deductibles, copays, and coinsurance. The higher the actuarial value, the less patient cost-sharing the plan will have on average. The percentage a plan pays for any given enrollee will generally be different from the actuarial value, depending upon the health care services used and the total cost of those services. And, the details of the patient cost-sharing will likely vary from plan to plan.
How the actuarial value is calculated which has not been addressed in regulations issued so far by the federal government and was not part of the IOMs charge could have significant implications for what the scope of services covered might be. For example, a recent brief from the American Academy of Actuaries recently suggested that any benefit limits that are not defined specifically in the essential benefits package presumably would be reflected in the numerator of an actuarial value calculation, but the allowed cost of the entire episode(s) would be included in the denominator. This means that a plan imposing benefit limits covering, say, no more than 30 days in a hospital would lower its actuarial value and have to make up the difference somewhere else in the coverage it provides. However, different rules for calculating actuarial value might not penalize plans for limiting benefits, making such limitations more likely.
