Healthcare / Uncategorized

Another Burden on the States

October 1st is quickly approaching, as it signifies another deadline in the long list of regulatory requirements for the Affordable Care Act. As mandated by HHS, all states must submit a list of “essential health benefits” that will be  required to be included in all individual and small group market plans within and separate of the new insurance exchanges. The federal government has required that these benefits include coverage in the following categories:

  1. Ambulatory patient services
  2. Emergency services
  3. Hospitalization
  4. Maternity and newborn care
  5. Mental health and substance use disorder services
  6. Prescription drugs
  7. Rehabilitative and habilitative services and devices
  8. Laboratory services
  9. Preventative and wellness services
  10. Pediatric services, including oral and vision care

But beyond that list, HHS has given states the power to make the tough decisions of what is covered. In addition, HHS has also given the states the jurisdiction of how these essential categories are covered, by basing their essential health benefits package off of a benchmark plan that is already instituted in their state. States can choose from the following options as their benchmark plan:

  • The largest plan, based on enrollment, in one of the state’s three largest small group insurance products
  • Any of the three largest state employee plans
  • Any of the three largest national Federal Employees Health Benefits Program plans
  • The largest non-Medicaid HMO in a state

After states choose which plan best supports their idea of necessary healthcare, they can alter the plan by adding anything that needs to meet the 10 categories established by the HHS. It is also necessary to eliminate any discriminatory practices and annual or lifetime dollar limits on coverage.  If states do not submit a benchmark plan to the federal government, their default option will be the largest small group plan in the state. It’s not unrealistic that some states will not choose their own benchmark plan, since it is an extremely daunting task to choose the “standard” for the entire state insurance landscape. And as it turns out, it can come down to small details that will vary from state to state, such as acupuncture, chiropractor services, and fertility treatments. In a perfect world, every state would want to give their residents as many services as they want in their benefits package, but they must consider costs. If the benchmark plan established includes elite benefits, then those costs will be passed down to consumers in the form of premium increases. With such severe consequences, is this too heavy a burden for states to bear? Or is it a good decentralizing tool, allowing states to cater to their specific population?  What we do know is that the determination of essential health benefits is one of the first tests to see if states can perform a delicate balancing act, which will be necessary if they hope to implement effective insurance exchanges in the future.