Short Takes On News & Events

Important New Understanding About Essential Benefits? Not Everyone Thinks So

By Marilyn Werber Serafini

January 25th, 2012, 3:00 PM

The Department of Health and Human Services today released a document intended to preview the kinds of benefits most health plans must offer starting in 2014. But one consumer advocate said it does not provide nearly enough information to be helpful.

The federal government in December¬ gave states significant leeway to decide what ‚Äúessential benefits‚ÄĚ must be included in coverage sold to individuals or small businesses under the 2010 health law. The law mandates coverage within 10 benefit categories; it‚Äôs up to each state to decide specifics, such as how many doctors’ visits or what drug services the plans will be required to offer. States can use several options to base those benefit requirements, including what some existing health plans in the state¬†offer.

Today, HHS released a list of some insurance products in each state that could serve as models, but while the document included names of plans, it did not indicate what benefits are covered by those plans or what benefits it would like to see in future plans.

It‚Äôs a problem not to have the details about what is in the plans, said Stephen Finan, senior director of policy at the¬†American Cancer Society-Cancer Action Network. While some benefit specifics can be found online, Finan said that without the whole package,¬†‚Äúwe remain completely in the dark.‚ÄĚ

In December, the Cancer Society signed onto a letter with other consumer groups asking HHS to identify which health plans states could choose as benchmarks. Finan says that today’s list is helpful, but that it will be difficult to get detailed benefit information.

‚ÄúWe know a little more than we knew yesterday, but we still do not have basic documents to see if the plans are good or not so good for cancer patients, or any other kind of patient,‚ÄĚ he said. Consumer groups, he said, are ‚Äúvery concerned that some of these plans may be inadequate, particularly in small states. The second or third largest plan might not be any good at all. Until we can look at the document, there‚Äôs no way of knowing.‚ÄĚ

The HHS document lists the insurance products in each state with the three largest enrollments in the small group market. It also provides a list of the three nationally available health plans with the largest enrollments that are available to federal employees.¬†¬†‚ÄúUnder the state‚Äôs intended approach, states would have the flexibility to select an existing health plan to set the ‚Äėbenchmark‚Äô for the items and services included,‚ÄĚ according to the document.¬† If it does not cover benefits in all of the federally-defined categories, then¬†the state¬†would¬†have to¬†supplement to the benchmark.

States could select a benchmark from four types of health plans:

  • An insurance product in a state that has one of the three largest enrollments in the small group market.
  • Any of the three state employee plans with the largest enrollment.
  • Any of the three federal employee plans with the largest enrollment.
  • The largest commercial non-Medicaid HMO in the state

Finan said his group has been advocating for transparency, but that this is a “perfect example of where it‚Äôs not happening. Collectively, states and citizens are being asked to decide what the benchmark is. But how can anyone make informed decision until they know what the benefits are in each plan?”

2 Responses to “Important New Understanding About Essential Benefits? Not Everyone Thinks So”

  1. Spring Texan says:

    This whole thing is immensely discouraging and looks more and more as though people will be forced to buy insurance coverage that may provide some payment to providers but which will NOT protect those insured from financial ruin if they become sick. Reform?

    We desperately need single-payer or at least all-payer. But when HHS says states can choose a small group plan as the model, I fall into complete despair and figure the “reformers” are not on the right side.

  2. Selvoy M. Fillerup, MD, MSPH, FACS says:

    As a researcher, lecturer and author on the subject of healthcare systems, I’d like to share these comments regarding essential health benefits.
    The notion of a uniform minimum benefits package (aka, essential benefits package) is not new. An standardized, uniform minimum benefits package is one of five policies shared by a small group of nations with solvent, uniform enrollment healthcare systems without prolonged waiting times for elective medical services. (The list of countries that have accomplished this is actually quite short.) The five policies shared by these countries include: 1) Choice – (people are held accountable for choosing their own health insurance coverage and therefore vote with their own money where they find value in a health insurance plan), 2) Universal enrollment – (free riders are not allowed; no one is permitted to shift the cost of their medical care onto the government or onto other people who do pay for health insurance; everyone is enrolled) 3) Community rating – (insurers are not permitted to price-discriminate against people with pre-existing medical conditions), 4) Guaranteed issue – (insurers may ot deny coverage to people with pre-existing conditions), 5) a Standardized uniform minimum benefits package (essential benefits package) or a short menu of standardized plans.
    A Standardized minimum benefits package accomplished two things: first, it sets a floor for medical care below which none may fall, second, (and of real importance in lowering the cost of health insurance) when every insurer offers the same benefits package (or the same short menu of benefits packages) people looking for insurance may now shop for insurance based on price rather than on selecting from an endless array of plans. When customers can shop based on price, insurers who want a larger portion of market share must compete based on price. In order to lower the price of premiums, insurers must become administratively more efficient. A standardized set of essential benefits thus has an effect on lowering health insurance premiums.
    With that information in hand, I am not particularly concerned about what is actually included in the initial essential benefits package. The package will assuredly change over time. With the development of new technologies, some benefits will be added and others will become cheaper. But I am assuredly in favor of defining some set of essential benefits. Doing so will improve health by define a level of medical care below which no one will fall, and will drive the cost of health insurance premiums downward by compelling insurers to become administratively more efficient in order to compete based on price.