U.S. Department of Health & Human Services
December 16, 2011
On December 16, 2011, the Department of Health and Human Services issued a bulletin outlining proposed policies that will give States more flexibility and freedom to implement the Affordable Care Act.
Intended Approach: Comprehensive and Flexible
HHS intends to propose that essential health benefits are defined using a benchmark approach. Under the Department’s intended approach announced today, states would have the flexibility to select a benchmark plan that reflects the scope of services offered by a “typical employer plan.” This approach would give states the flexibility to select a plan that would best meet the needs of their citizens.
States would choose one of the following benchmark health insurance plans:
* One of the three largest small group plans in the state by enrollment;
* One of the three largest state employee health plans by enrollment;
* One of the three largest federal employee health plan options by enrollment;
* The largest HMO plan offered in the state’s commercial market by enrollment.
If states choose not to select a benchmark, HHS intends to propose that the default benchmark will be the small group plan with the largest enrollment in the state.
The benefits and services included in the benchmark health insurance plan selected by the state would be the essential health benefits package. Plans could modify coverage within a benefit category so long as they do not reduce the value of coverage.
To prevent federal dollars going to state benefit mandates, the health reform law requires states to defray the cost of benefits required by state law in excess of essential health benefits for individuals enrolled in any plan offered through an Exchange.
These benchmarks are generally regulated by the state and would be subject to state mandates applicable to the small group market. Thus, those mandates would be included in the state essential health benefits package if the state elected one of the three largest small group plans in that state as its benchmark.
This approach would provide maximum flexibility to states, employers and issuers while providing quality, comprehensive, coverage for consumers.
Coverage
Essential health benefits must include coverage of services and items in all 10 statutory categories. Based on our research, we believe that these benchmarks will cover most of the essential health benefits outlined by the Affordable Care Act. These categories include preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs.
Allowing Plans Flexibility to Innovate and Consumers Greater Choice
To meet the EHB coverage standard, HHS intends to require that a health plan offer benefits that are “substantially equal” to the benchmark plan selected by the state and modified as necessary to reflect the 10 coverage categories. Health plans also would have flexibility to adjust benefits, including both the specific services covered and any quantitative limits, provided they continue to offer coverage for all 10 statutory EHB categories and the coverage has the same value. Permitting flexibility will provide greater choice to consumers, promoting plan innovation through coverage and design options, while ensuring that plans providing EHBs offer a certain level of benefits.
Fact sheet:
http://www.healthcare.gov/news/factsheets/2011/12/essential-health-benefits12162011a.html
Essential Health Benefits Bulletin (15 pages):
http://cciio.cms.gov/resources/files/Files2/12162011/essential_health_benefits_bulletin.pdf
Comment:
By Don McCanne, MD
It looks like Health and Human Services has decided that the new standard for health insurance to be offered under the Affordable Care Act will be the cheapest of the three largest small group plans offered in any given state. There will be no national standard. Although they would allow states more generous options other than the skimpy small group plans, with today’s concerns over high health care costs, the cheapest option certainly will be selected by the state stewards.
There is a requirement that 10 categories of health benefits must be included, but the specific services covered within each category will be determined by the insurers. The insurers will retain the flexibility to adjust both the specific services and the amount of those services (quantitative limits). HHS claims that this benefits us by providing greater choice for consumers and by providing insurers with the opportunity to innovate. Why they should deem that to be beneficial is astonishing when considering that insurer innovation means having to choose between various plans that take away, to varying degrees, choices of providers, benefits, and amount of financial security.
The essential health benefits do not define the cost sharing features of the plans such as deductibles, copayments and coinsurance. Guidance on that will be forthcoming, but we already know that the least expensive plan will be the bronze plan with an actuarial value of 60 percent (the plan pays 60 percent of only the covered health care services). Again, because of our high insurance premiums, most people will select the cheapest actuarial-value plan.
Can you think of anything worse than having cash-starved states selecting the cheapest private plans with the most spartan selection of benefits allowable – benefits selected by the private insurance industry – and offering those plans to struggling middle-income Americans who will be mandated to purchase these plans when many of them will not be able to afford even the bottom bronze plans in spite of the subsidies? And don’t even think about how they’re going to pay the high out-of-pocket expenses when they actually need health care.
Dissecting out each individual policy perhaps can make them easier to understand, but when you patch them together, just try to explain the resulting health care financing infrastructure to the average individual who just wants health care when needed. Most individuals may not be able to understand the complexities of health policy, but once they’ve been exposed to the new standard, they certainly will understand what is meant by UNAFFORDABLE UNDER-INSURANCE.
Try this thought experiment. Since the common defect in these Quote of the Day policy messages seems to be the dominance of the private insurers, try constructing a health care financing system without the private insurers being included. Wow! That was easy!
All we need now is to elect leaders who are willing to dismiss the insurers so that we can get on with building a system that works for all of us.