In the coming days, the U.S. Supreme Court is expected to announce a landmark decision that will ultimately decide the fate of the Affordable Care Act–President Obama’s health care reform package.
Many legal scholars believe the law is in danger of being overturned, with the mandate that citizens must purchase some form of health insurance likely to be overturned. In the wake of this historic decision, legislators will be anxious to look for ways to address health care reform in a more piecemeal fashion. Below are some of the issues and strategies that are likely to be part of the debate.
Over the next few days, we will delve a bit deeper into each of these options to look at possible benefits they offer as well as costs. But I thought it would be helpful to outline the overarching terms and issues first.
High Risk Insurance Pools
A High Risk Insurance Pool, as the term suggests, is a pool of high risk–normally because they have preexisting medical conditions– customers combined under a single insurance plan. As you might expect, high-risk pools minimize risk by spreading what those with a preexisting condition face individually over a larger base of contributors.
Reinsurance is a mechanism allowing an insurance company to insure themselves, potentially through some sort of subsidy, in situations involving high benefit obligations. In health care reform reinsurance would be used as a hedge allowing insurance companies to enroll those with preexisting conditions while minimizing financial risk.
A prominent part of the debate is likely to focus on decoupling the provision of insurance from employment; typically by offering a tax credit for those who purchase insurance individually rather than through their employer. This returns that focus to the consumer, gives individuals greater flexibility and choice and drives competition as insurance companies adapt to meet demand.
Managed Medicaid and Medicare differs from traditional Medicaid and Medicare in that it operates on payment of prepaid rates which cover the range of medical services performed, instead of the fee-for-service system. Under the traditional fee-for-service system, services are paid for individually. A number of states have already switched to managed-care for Medicaid because of the predictability it offers when budgeting.