ESSENTIAL BENEFITS: WHAT ESSENTIAL BENEFITS?

Last week’s announcement from the Obama administration that it would not now define a single uniform set of “essential health benefits” to be provided by all insurers undoubtedly took most health care policy observers by surprise.

The Department of Health and Human Services’ decision to allow individual states to specify benefits within broad categories means that there could be significant variations across the nation, and smacks more of election year political pandering than practical policy. Although criticism of the decision was relatively muted, it may be one that leaves both consumers and employers unhappy.

Implications of the state-by-state approach include the possibility that a state eager to please consumer and provider groups could create a benefit package so comprehensive that coverage would be prohibitively expensive for many employers, while other states might interpret “minimum benefits” so narrowly as to subvert the intent of the drafters of the Affordable Care Act. For example, under the latter scenario, a state could comply with the letter of the law by including just one or two mental health or maternity care visits—far less than advocacy groups recommend, but at lower cost.

Allowing states to use an existing major health plan as a benchmark, as the DHS announcement indicates, is likely to result in very different benefits between say, Massachusetts and Mississippi. Supporters of the DHS decision argue that this is a reasonable reflection of state residents’ and their employers’ ability to pay for coverage.

One detail of the DHS decision seems particularly likely to rankle conservative health care experts: existing state-mandated benefits, such a s chiropractic care or in-vitro fertilization, will essentially be grandfathered into the minimum benefits packages, since inevitably they are part of the plans that may be adopted as benchmarks.

Even allowing for some fairly significant state-to-state variations, the DHS interpretation of the ACA minimum benefits provision should move the nation a little closer to a single standard. For example, all those subject to the minimum benefits provision will have some level of prescription drug and maternity care coverage, benefits that millions currently lack.

On the other hand, while passing the buck to states may somewhat reduce conservative states’ resistance to the ACA, there will now be fifty-two potential battles between states and lobbyists of varying hues, while multi-state employers will continue to be faced with different regulations and standards in every state in which they do business.

And if the reaction to the announcement seemed somewhat muted, it may have been because the focus of both ACA advocates and opponents is now on the Supreme Court, whose summer 2012 ruling could make the entire issue moot.