An innovative and potentially far-reaching component of The Patient Protection and Affordable Care Act (ACA) is creation of new state-level health insurance markets referred to as "Exchanges." As of January 1, 2014, U.S. citizens and legal residents who are not eligible for employer-sponsored or public coverage will be able to purchase health insurance through new Exchanges, consolidating and regulating the market for individual insurance. Plans offered through the Exchanges will cover a federally defined "essential benefit package," which includes parity in coverage for mental health care. Premium and cost-sharing subsidies will apply on a sliding scale for individuals and families earning up to 400% of poverty. Extension of Exchange-based insurance to an estimated 24 million people promises to improve access to mental health care, provide financial protection, and integrate low-income groups into the mainstream of health care. A central lesson of economics and mental health in the past 30 years, however, is that competition and choice in private health insurance markets does not meet the needs of persons with mental illness (and other chronic conditions). The danger is: to avoid drawing an "adverse selection" of risks in a private health insurance market, Exchange plans may systematically under provide care for mental and other chronic illnesses. This project proposes to conduct fundamental economic research on the patterns of health care use by persons with mental illness in order to establish the evidence base for sound choices about structuring health insurance markets in the Exchanges. We plan to assess the magnitude of the selection problem among likely Exchange participants, and based on this, identify and evaluate options for correcting incentives to health plans to provide efficient and fair coverage for person with mental illness. In summary, we intend to: 1) Measure the strength of incentives for adverse selection among populations likely to participate in Exchanges using multiple years of nationally representative data from the Medical Expenditure Panel Survey (MEPS), and test whether selection-driven incentives are greater for mental health than other conditions. We will examine selection incentives at the individual and family level. 2) Evaluate the consequences for selection incentives of design choices in health insurance Exchanges, including: risk adjustment, risk-sharing, stop-losses, carve-outs, and limited choice of plans. Compare alternatives quantitatively within a unified theoretical and empirical framework. The goal is to guide policy so as to avoid pitfalls of the past in mental health and individual private health insurance markets. This proposal responds to Frances Collins'call to devote NIH research effort to benefit health care reform.

Public Health Relevance

As of January 1, 2014, US citizens and legal residents who are not eligible for employer- sponsored or public coverage will be able to purchase health insurance through new state-level health insurance markets, referred to as Exchanges. This project proposes to conduct fundamental economic research on the patterns of health care use by persons with mental illness in order to establish the evidence base for sound choices about structuring health insurance markets in the Exchanges. We plan to assess the magnitude of the selection problem among likely Exchange participants, and based on this, identify and evaluate options for correcting incentives to health plans to provide efficient and fair coverage for person with mental illness.

Agency
National Institute of Health (NIH)
Institute
National Institute of Mental Health (NIMH)
Type
Research Project (R01)
Project #
5R01MH094290-02
Application #
8274646
Study Section
Mental Health Services in MH Specialty Settings (SRSP)
Program Officer
Rupp, Agnes
Project Start
2011-07-01
Project End
2014-06-30
Budget Start
2012-07-01
Budget End
2014-06-30
Support Year
2
Fiscal Year
2012
Total Cost
$466,861
Indirect Cost
$190,612
Name
Harvard University
Department
Administration
Type
Schools of Medicine
DUNS #
047006379
City
Boston
State
MA
Country
United States
Zip Code
02115
McGuire, Thomas G; Newhouse, Joseph P; Normand, Sharon-Lise et al. (2014) Assessing incentives for service-level selection in private health insurance exchanges. J Health Econ 35:47-63
Frank, Richard G; Beronio, Kirsten; Glied, Sherry A (2014) Behavioral health parity and the Affordable Care Act. J Soc Work Disabil Rehabil 13:31-43
McGuire, Thomas G; Glazer, Jacob; Newhouse, Joseph P et al. (2013) Integrating risk adjustment and enrollee premiums in health plan payment. J Health Econ 32:1263-77
Glazer, Jacob; McGuire, Thomas G (2012) A Welfare Measure of "Offset Effects" in Health Insurance. J Public Econ 96:520-523