Navigating the Complex US Health Insurance Landscape
Health insurance in the US varies significantly in cost, coverage, care sites, provider networks, eligibility, and governing policies. To understand this complex landscape, it’s helpful to categorize insurance as either publicly or privately funded.
Publicly funded plans include:
- Medicare – for the elderly and disabled
- Medicaid – for the low income uninsured
- Children’s Health Insurance Plan (CHIP) – for children of lower incomes with no other coverage
- Veterans Affairs (VA)/Department of Defense (DoD) – for veterans and employees of the Department of Defense
Privately funded plans are also referred to as commercial plans. These can be:
- Employer-sponsored – covering about 60%, or 165 million US residents in 2023
- Affordable Care Act (ACA) marketplace plans – covering about 20 million people in 2023
- Individual market – covering 18 million people in 2023
Employer-Sponsored Insurance
Employer-sponsored insurance is an important part of the insurance ecosystem. Large employers often self-fund and provide benefits under the federal ERISA law—the Employee Retirement Income Security Act of 1979. ERISA sets minimum standards for most voluntarily established pension and health plans in private industry. Under ERISA, the employer sponsor bears the costs of the plan enrollees—thus the term self-insured.
ERISA employers are not subject to state insurance law requirements. Some examples of insurance mandates that may exist at the state level but do not apply to ERISA plans include coverage of hearing aids and coverage for diagnostic genetic testing. Some employers may choose to cover state-required services to create a competitive advantage over other employers or to better serve the needs of their employees. The ACA does require ERISA plans to cover federally identified preventive services at no cost to patients, but these self-funded plans may not cover 100% of the services required to be covered by state-regulated plans.
Small and large group plans are used by smaller employers—usually 1 to 50 employees. These plans are state-regulated, and employers can choose from different levels of coverage, cost, and services. All plans are required to offer the 10 essential health benefit categories required by the ACA as well as other state-mandated services.
The ACA Marketplace
The Affordable Care Act (ACA) marketplace plans filled a gap and lowered the uninsured population. In 2010, the ACA established marketplace plans to improve insurance affordability and increase standardization of covered services, with a goal of creating competition between similar plans and reducing the number of uninsured Americans. The marketplace helps people shop for and enroll in affordable health insurance and can be either state-operated or federal. Toward the goal of standardization, every ACA plan must cover 10 essential health benefits, including but not limited to prescription drugs, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, and pediatric services.
The ACA created a sliding scale federally funded premium assistance benefit for individuals and families with incomes between 136% and 400% of the federal poverty level (FPL). ACA plans are required to identify with a level of actuarial benefit provided to enrollees. While services covered, networks, premiums, and cost-sharing differ between plans within a state and between state and federal exchange plans, the value of the benefits provided by each level of plan are consistent within the marketplace.
What are Individual Healthcare Plans?
Individual plans are traditional state-regulated insurance plans that were quite common prior to the ACA and remain important to higher income uninsured. Enrollees tend to be people who do not qualify for the ACA premium subsidies, such as contractors and self-employed persons above 400% of FPL, low income uninsured in states that have not expanded Medicaid, and young adults without access to employer-sponsored benefits. These plans must meet the coverage requirements of the ACA and must provide state-mandated services.
Why Doesn’t the US have Universal Healthcare?
The US is the only major industrialized country that does not have a system of universal healthcare. While there has long been talk of creating a universal healthcare system in the US, even the basic information provided in this document alerts us to the fact that to do so would require significant unwinding of existing programs, as well as changes in other parts of the system. Private entities that reap significant financial benefit from the existing system tend to vehemently oppose the idea of a switch to universal healthcare, while some patients and employers are more receptive to the changes it would bring. Factors that may ultimately lead to universal coverage include the fact that the US spends more per capita and as a percent of gross domestic product on healthcare than 38 Organization for Economic Cooperation and Development (OECD) countries yet has the highest maternal and infant mortality and lowest life expectancy at birth.
Navigate the Complex US Health Insurance Payer Landscape with Confidence
Understanding the intricacies of the US health insurance system is essential for achieving successful market access and ensuring your products reach the right patients. From private payers to government programs, navigating these complexities requires expert insights and strategic planning. Contact us today to discover how we can help you optimize your market access strategy, tailor your value propositions, and successfully engage with key payers in the US healthcare market.