For this study, we use an approach that estimates the average expense coverage of groups of ESHI plans.
To estimate the paid expenses of each plan, we generate microsimulations of claim payments from health expenses of a standardized population of healthcare users covered by ESHI plans.
For instance, ESHI plans cover largely the population at or under the age of 65, and so the artificial population should consist mainly, if not exclusively, of individuals at or under 65.
To give some perspective to the size of actuarial values, we note that the Internal Revenue Service reported that approximately 98 percent of individuals covered under an ESHI plan are enrolled in plans that pay at least 60 percent of covered healthcare expenses.
With a sketch of the actuarial-value calculator and the expected sizes of actuarial values, we now turn to the two sources of data for the study before we describe the claim payment program that will estimate the actuarial values of ESHI plans.
This study evaluates only medical plans with drug coverage because its purpose is to assess the ability of the NCS survey to estimate generosity of ESHI plans that cover, in large part, the main components of medical-care goods and services; these components include outpatient drugs, as prescribed by the ACA requirements.
The MEPS-HC survey data with its demographic information, insurance coverage indicators, and usage and expense amounts provide the necessary set of data to construct a standardized population of healthcare users enrolled in ESHI plans.
These usage and expenditure categories align well with the NCS ESHI plan data with which they must be paired for us to estimate the actuarial values.
In an effort to construct the standardized population to closely resemble the healthcare usage and spending patterns of ESHI plan enrollees, MEPS-HC individual records are selected based on several criteria.
Essentially, the model estimates the percentage of MEPS HIEU expenditures that would be paid by health insurance had those HIEUs been enrolled in the ESHI plans similar to those gathered from the NCS.
According to health insurance incidence statistics available from the BLS Employee Benefit Survey (EBS) annual bulletin, 82 percent of private industry workers who participate in ESHI enrolled in FFS plans; the remaining workers enrolled in HMO plans.