Essential Health Benefits, Actuarial Value, and Accreditation Standards: Ensuring Meaningful, Affordable Coverage

HealthCare.gov (HHS)
November 20, 2012

On November 20, 2012, the Department of Health and Human Services (HHS) published a proposed rule that helps consumers shop for and compare non-grandfathered private health insurance options in the individual and small group markets by promoting consistency across plans, and protecting consumers by ensuring that plans cover a core package of items and services.

Specifically, this rule outlines health insurance issuer standards related to the coverage of essential health benefits (EHB) and the determination of actuarial value (AV), while providing significant flexibility to states to shape how EHB are defined.

The Affordable Care Act sets forth that EHB be equal in scope to benefits offered by a “typical employer plan.”  To meet this requirement in every state, the proposed rule defines EHB based on a state-specific benchmark plan, including the largest small group health plan in the state. The rule proposes that states select a benchmark plan from among several options identified in the proposed rule, and that all plans that cover EHB must offer benefits that are substantially equal to the benefits offered by the benchmark plan. This approach balances consumers’ desires for an affordable and comprehensive benefit package, our legal requirement to reflect the current marketplace, and issuer flexibility to offer innovative benefit designs and a choice of health plans.

http://www.healthcare.gov/news/factsheets/2012/11/ehb11202012a.html

And…

AHIP Statement on ACA Implementation

America’s Health Insurance Plans (AHIP)
November 20, 2012

America’s Health Insurance Plans (AHIP) President and CEO Karen Ignagni released the following statement on proposed rules released today by the U.S. Department of Health and Human Services on implementation of the Affordable Care Act (ACA):

“As implementation of the ACA moves forward, the focus needs to be on affordability for consumers and employers.

“For health insurance exchanges and new insurance market rules to work, coverage needs to be affordable and there needs to be broad participation in the system.  While additional flexibility on essential health benefits (EHB) is a positive step, we remain concerned that many families and small businesses will be required to purchase coverage that is more costly than they have today.  It also is important to recognize that the new EHB requirements will coincide with the new restrictions in age rating rules that also go into effect on January 1, 2014.  Both of these provisions may incentivize young, healthy people to wait to purchase insurance until they are sick or injured, driving up costs for everyone with insurance.”

http://www.ahipcoverage.com/2012/11/20/ahip-statement-on-aca-implementat…

The Department of Health and Human Services has provided states with considerable flexibility in establishing essential health benefits (EHB) in the individual and small group insurance markets. The states will not have to require benefits that are typical of large employer health benefit programs, but rather the benefits will correspond to existing small group plans, as long as some services in each of ten required categories are included. These plans will be inadequate for those who require benefits that are not covered, not to mention the limitations of excess cost sharing and insufficient provider networks.

Yet the insurance lobby group, AHIP, complains that many families and small businesses would have to purchase coverage that is more costly than they have today. The reason that plans with the minimal essential benefits would be more costly is that the current individual and small group market is saturated with plans that are so substandard that they fail to provide adequate financial security in the face of medical need. With the new essential health benefits requirement, the insurance industry would lose the right to sell these highly profitable, but substandard plans. They will have to raise their standards to the level of mediocrity, as required by the new EHB rule.

Once again they state that “coverage needs to be affordable.” They have previously stated that health care costs need to be controlled, but, in the absence of any truly effective method of doing that, they need to be able to use innovative product design to keep their premiums competitive in the insurance market. The new EHB rule along with the actuarial value rule allows them the flexibility to be quite innovative. The bottom line is that in the conflict between affordable insurance premiums and adequate protection for patients, they will always choose to protect their market rather than protect patients.

The insurance industry understandably is interested in its own welfare. If that means compromising the adequacy of their plans, then so be it. But does that mean that we have to accept compromise in our health and in our financial security? We wouldn’t if we dismissed the private insurers and established our own improved Medicare program for everyone.