Health & wellness

Health providers, advocates criticize Institute of Medicine on insurance recommendations

More than 2,400 health care providers and advocates sent a letter to Secretary of Health and Human Services Kathleen Sebelius today objecting to recommendations made by a panel of the Institute of Medicine regarding what benefits must be covered in state health insurance marketplaces developed under the Affordable Care Act.

States are required by the federal law to create insurance exchanges for individuals and small businesses, similar to the one Massachusetts started in 2006.

The panel was charged with creating a framework for the essential health benefits that must be covered based on a “typical” plan available today. The critics objected to the group’s decision to start with a typical small business plan rather than a more comprehensive plan offered by larger employers.

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Michael Chernew, a professor of health care policy at Harvard Medical School and a member of the institute’s panel, said the critique was “completely unfair.”

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The authors said that “enshrining these skimpy plans as the new standard” will threaten the health of Americans and the country’s finances as people faced with high out-of-pocket costs forgo necessary care.

Here’s an excerpt from the letter, circulated by the Physicians for a National Health Program, with leadership from several Boston-area physicians including Dr. Danny McCormick, an internist and assistant professor at Harvard Medical School and a former Institute of Medicine fellow:

The inadequate coverage the IOM recommends would shift costs from corporate and government payers onto families already burdened by illness. Yet this strategy will not lower costs. Delaying care often creates even higher costs. Steadily rising co-payments and deductibles over the past two decades have failed to stem skyrocketing medical inflation. And nations that assure comprehensive coverage – with out-of-pocket costs a fraction of those in the United States – have experienced both slower cost growth and greater health gains than our country.

Our patients urgently need what people in these other nations already enjoy: universal and comprehensive coverage in a nonprofit system that prioritizes human need over corporate profit.

The authors went on to say they believed the panel that drafted that Institute of Medicine recommendations was “riddled with conflicts of interest” because it included executives from health insurers and consulting firms with ties to the health industry.

Chernew said the panel decided to base its recommendations on a typical small business plan because the exchanges primarily will be used by individuals and small businesses. However, he said, that choice won’t have a large impact on the plans.

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The essential benefits covered under small and large business plans don’t differ dramatically, Chernew said. Where those plans do diverge is on the amount of costs left to the consumer. But, Chernew said, those coverage guidelines, already laid out under the Affordable Care Act, were not within the panel’s purview.

Chernew said he can understand why people might criticize the panel’s decision to include costs as a factor in the recommendations, but it was necessary.

“The entire system runs the risk of collapsing if it just becomes too expensive,” he said.

As for the charge of a conflict of interest, Chernew said, “I don’t find that particularly credible.”

Insurance executives could benefit more if the plans sold in the exchanges cost more, he said, because their profits under the federal law are calculated as a percentage of total costs.

Chelsea Conaboy can be reached at cconaboy@boston.com. Follow her on Twitter @cconaboy.