HHS To Let States Set Essential Benefits for Insurance Exchanges

TOPIC ALERT:

On Friday, the Obama administration released a "bulletin" saying it would allow states to determine what "essential benefits" health plans will be required to cover in the state insurance exchanges under the federal health reform law, the New York Times reports (Pear, New York Times, 12/16).

Background

Under the federal health reform law, states by January 2014 must create exchanges that provide coverage options for individuals and small businesses. States can choose to administer their own exchanges -- for which they must have some infrastructure in place by January 2013 -- or ask the federal government to run the exchanges for them (California Healthline, 12/2).

The health reform law lists 10 categories of benefits -- such as maternity care, prescription drugs and preventive care -- that must be provided by the plans offered in the exchanges.

Bulletin Details

HHS was charged with determining which services and benefits must be provided within those 10 categories. However, HHS Secretary Kathleen Sebelius said the federal government would give states "the flexibility to design coverage options that meet their unique needs."

Under the guidance, HHS said states could use one of the following health insurance plans as a benchmark:

  • One of the state's three largest small-group plans;
  • One of the state's three largest health plans for state employees;
  • One of the three largest health plans offered under the Federal Employees Health Benefits Plan; or
  • The largest HMO operating in the state's commercial market.

The benefits provided by that plan would be designated as "essential benefits" and all other insurers in the exchange would be required to provide benefits of equal or greater value. Plans could modify coverage within specific benefit categories provided they do not reduce the overall coverage value (New York Times, 12/16).

If a state does not want to select benefits, the default will be the benefits available through the largest small business plan in the state (AP/Washington Post, 12/16).

Next Steps

HHS will accept comments on the proposal until Jan. 31 (Krauskopf, Reuters, 12/16).

While the bulletin is non-binding, it typically indicates regulations the federal government will release in the future (Radnofsky, Wall Street Journal, 12/17). HHS did not specify when the final rule on the benefits would be released (Sanger-Katz, National Journal, 12/18).

Reaction

The move to give states more flexibility to determine essential benefits was widely seen as an attempt by the Obama administration to defuse Republican criticism that the health reform law gives the federal government too much control over the health care system, the Journal reports.

Some Republicans and employer groups said the approach could allow some states to mandate generous benefits packages, noting that the federal employees' benefits plan is one of the country's most unsparing plans. The approach also could lead to wide disparities between states and lead some people to move in order to receive better coverage in another state, according to some observers.

Some disease advocacy groups had hoped health officials would spell out exactly what benefits would be covered.

Carl Schmid, deputy executive director of the AIDS Institute, said the approach "is still going to allow a patchwork of care and that's what I thought we were going to try to get beyond" (Wall Street Journal, 12/17).

Ron Pollack, executive director of Families USA, said HHS would need to provide "strong oversight and enforcement" of the benefit standards during state implementation. "It will be important to ensure that adequate coverage across all 10 required benefit categories is provided -- marking an improvement over many plans offered today," he added (Reuters, 12/16).

John Hessel
HHS seems to have copped out yielding to political concerns, specifically the next presidential election, really sad to see, this move is going cause more confusion and cost in the system. Are human beings really different in California versus Nebraska. Shame on the Obama administration for thinking of themselves first and the citizens health second, we need one national set of medical coverage directives!!! My worst fear about Healthcare Reform is coming true, the politicians are going to manipulate coverage for political ends. One set of essential benefits in the country would remove the state's politicians ability to "grand stand" in their state legislatures. Disappointing.....

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