Health Reform WK-EDGE Private insurance covers, at minimum, 'high-cost medical events and various services'
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Tuesday, May 29, 2018

Private insurance covers, at minimum, 'high-cost medical events and various services'

By: David Yucht, J.D.

The Congressional Budget Office (CBO) released a report explaining how it defines and estimates health insurance coverage for people under the age of 65. Besides describing how CBO defines health insurance coverage, this report explains how the agency estimates how many individuals are insured or uninsured and describes where it obtains the data it uses for its estimates (CBO Report, May 15, 2018).

Reason for report. The federal government subsidizes private and public insurance coverage through various tax preferences and programs. Because subsidies affect the budget in many ways, defining what constitutes coverage and estimating health insurance coverage are important for preparing budget projections. The CBO indicated that this report was prepared to enhance transparency of this process.

Private health insurance. The CBO defines private health insurance coverage as policies that, at a minimum, cover high-cost medical events and various services, including those provided by physicians and hospitals, often referred to as comprehensive major medical coverage. This definition encompasses most private health insurance plans but excludes, among other things. mini-med plans, some policies that do not provide comprehensive major medical coverage, policies that cover only specific diseases, and supplemental plans that pay for expenses primary plans do not cover. The CBO also takes into account specific requirements established in law, such as the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), to determine what policies count as private insurance coverage.

Public insurance coverage. CBO defines as publicly insured people who receive full Medicaid or CHIP benefits but not people who receive partial Medicaid benefits—such as women who receive only family planning services. Moreover, CBO defines as publicly insured as disabled adults under age 65 who are covered by Medicare, TRICARE policyholders, and people who use the Indian Health Service (IHS) or the Veterans Health Administration (VHA). Lastly, CBO defines other miscellaneous sources of coverage, including student health plans and coverage from foreign sources, as health insurance.

Data. To estimate the number of people with and without health insurance coverage, the CBO combines data from household and employer surveys with administrative data. The CBO currently uses survey data as the basis for estimating employment-based private insurance coverage. The agency also uses survey data to estimate the number of people without coverage. The report noted the difficulty in collecting correct data including the potential for error by respondents in reporting their insurance coverage in household surveys and misreporting by people with coverage through Medicaid and CHIP.

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