1. Policy and Regulatory Framework for Private Health Insurance
Gary Claxton
Vice President, Kaiser Family Foundation
April, 16, 2010

2. Market Segments Private health insurance (PHI) has distinct segments:
Direct purchase coverage (nongroup and some associations)
Employer-sponsored coverage
Small group
Larger group
Insured
Self-funded
Supplemental and limited benefit coverage
Segments are regulated differently
State and federal roles vary by segment
HIPAA and ERISA
Other federal laws (e.g., ADA) may apply to aspects of employer-provided coverage

3. Benefit standards
States generally establish the minimum levels of required benefits for PHI
Offer or provide
Vary by state and by market segment
State laws do not affect self-funded plans
About ½ of people with PHI are in self-funded plans
Federal law can (and sometimes does) set standards for PHI
Benefits in self-funded plans are determined by federal law
Most federal standards aimed at process and ensuring that plans sponsors deliver what they promise
Very few federal standards regarding benefits that must be provided
Health reform bills would give the federal government a substantial role in determining benefits that would be offered by PHI

4. Some Policy Considerations
Purpose for covering a benefit
Financial protection
Encourage use
Insurance v. direct subsidy
Permit cost-sharing?
Insurers generally have significant discretion in how they provide a covered benefit
Network
Reimbursement
Management of use