Dr Michael E. Chernew Discusses Underinsurance and How to Address It

The Affordable Care Act has helped reduce uninsurance, but has replaced it with underinsurance. Michael E. Chernew, PhD, the Leonard D. Schaeffer Professor of Health Care Policy and director of the Healthcare Markets and Regulation Lab in the Department of Health Care Policy at Harvard Medical School, explains how to address this new problem

Transcript

What are the challenges of underinsurance in the United States and what strategies can be used to reduce it?

So we've struggled a lot with uninsurance in the United States and the Affordable Care Act was meant to address that and it has made great stride, although it has certainly not eliminated uninsurance in the United States, but in many ways it has replaced uninsurance with underinsurance, which is a situation where people have insurance but there are considerable cost sharing. Even the silver plan in the Affordable Care Act, which is the benchmark plan for people on the exchanges, has what is known as a 70% actuarial value, which means the health plan pays 70% of the medical expenses. Leaving the beneficiary to pay, on average, 30%. That's an awful lot of cost sharing for people who are typically on the lower end of the income distribution.

The challenge that we face with that situation is, it's easy to want to fill all the cost sharing holes, but that comes at a fiscal consequence. So one strategy to address the underinsurance problem is to try and target your efforts toward those high-value services. And a number of us have been thinking through different ways to work with exchanges and other entities that are designing plans to figure out how you can build a plan that has a 70% actuarial value, but has better coverage for the most important services.