An HHS bulletin giving states flexibility in defining minimum health insurance benefits further muddies the water
WASHINGTON – It sounds like such a good idea: essential health benefits, a core set of health services that must be included in any health insurance plans sold in this country and aimed at guaranteeing that health plans sold in the state insurance exchanges aren’t empty promises.
The issue of cost was at the forefront of recommendations made to the U.S. Department of Health and Human Services last fall by the Institute of Medicine. In its report, the IOM committee suggested that in setting the list of EHBs, HHS should endeavor to first set a budget¬ – or premium target – for what the total package would cost, then essentially go shopping for the benefits without breaking the bank.
The first signs of discord appeared during the comment period and open forums held by HHS that were designed to provide further guidance for what it should include in the EHB package. In late November, HHS received a letter from more than 2,400 physicians objecting to both the IOM committee’s recommendations and to the composition of the committee itself. According to the letter, distributed with the aid of the Physicians for a National Health Program, creating a premium target would lead to a stripped down set of health benefits.
“The IOM proposal would base the required coverage on the benefits typical of plans currently offered by small businesses – enshrining these skimpy plans as the new standard,” the letter stated. “These bare-bones policies come with a long list of uncovered services and saddle enrollees with unaffordable co-payments and deductibles.”
In mid-December, HHS distributed an informational bulletin that set forth its plan for EHB determination. In it, HHS empowers each state to determine the basic benefits using a benchmarking approach and allow the states to choose a benchmark insurance plan from a range that includes:
• 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.
But there was a hitch. HHS also published a list of 10 health services that must be covered. If the benchmark plan does not included one of the services, it must be added.
Just after the new year, HHS Secretary Kathleen Sebelius took to the media to defend her agency’s approach noting it would “ensure that all plans offered in this marketplace are comprehensive, without the gaps in coverage that too many consumers have faced.”
While giving the states more control seemed to be a nod to Republican concerns that such policies not be created at the federal level, Republican members of Congress have nonetheless called foul.
In a letter sent to Sebelius in January, Senators Michael Enzi and Orrin Hatch, and Representatives Dave Kamp, Fred Upton and John Kline objected to the very approach of issuing the proposal information bulletin, as opposed to a proposed rule.
“By issuing a ‘bulletin’ rather than a proposed rule, the Administration has sidestepped the requirement to publish a cost benefit analysis estimating the impact these mandates will have on health insurance premiums and the increased costs to the federal government,” the letter stated.
Meanwhile, states and insurers are left hanging. Many anticipated the federal government would issue an EHBs benchmark for the entire country. By deferring this decision to the states, the administration has conceded that healthcare markets vary widely across the country. At the same time, it did still leave too many unanswered questions and further muddied the water on the question of EHBs.