Feds Say States Will Decide What Health Insurers Must Cover

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Health reform advocates are still sorting out the implications of the shocker of an announcement that came out of the Dept. of Health and Human Services this Friday. In a move that could be a blessing for some consumers and a curse for others, HHS punted to the states the most anxiously-anticipated rule in the federal health reform law: the minimum benefits insurance companies must include in every health plan.

This essential health benefits package is meant to ensure that a consumer with health insurance can count on that insurance covering the necessary treatment when he gets sick. No more buying insurance, only to discover once you get to the emergency room that it doesn't pay for overnight hospital stays. Comprehensive coverage – an end to junk insurance – was a central promise of health reform.

Rather than define a national minimum benefit list, HHS has decided to hand the reins to the states. Every state will choose its own minimum benefits package from one of four benchmark plans currently existing in the state: either a small group, managed care, state or federal employee health benefit plan.

Leaving the whole question to the states may preserve some hard-won consumer protections. It may also lock in place the status quo — a patchwork quilt of insurance coverage that varies across the country. It certainly turned one of the central questions of heath reform over to the states, including the 28 that are actively pursuing court challenges to overturn the health reform law in its entirety.

The Affordable Care Act set some guidelines directly, by listing 10 categories of care that must be covered, including: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, including behavioral health treatment, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services, including oral and vision care. emergency services, mental health care, and chronic disease management.

HHS was expected to issue some guidance on the specific benefits those categories should include. Patient advocates pressed for detailed lists of benefits; insurers argued for leeway to change benefits as they choose. States pushed for flexibility too, and feared they would be required to pay for any state-mandated protections the federal definition left out. 

The good news is that states with strong existing consumer protections will not see those benefits automatically eliminated. States may choose a benchmark essential benefits plan that includes all state mandates — for example, preserving the requirement in 29 states that insurers cover Applied Behavioral Analysis as a benefit for autistic children.

Consumers who get their insurance on the individual market will also see broad new required benefits, because many individual plans don’t cover the 10 benefit areas written into the ACA. For example, a majority of individual plans don’t cover maternity care, and many don’t cover prescription drugs. But those states with regulators and politicians hostile to health reform are likely to choose the least comprehensive plan possible, undermining the law’s promise of comprehensive benefits for all Americans.

Consumers in states like California may breath a tentative sigh of relief, in the hopes that state regulators and legislators who generally support the health law can also be counted on to require a comprehensive benefit package under the law. But consumers in states like Indiana where politicians have taken every step possible to undermine the ACA will find yet another health reform promise, this time for comprehensive health care, on the line.

Download the HHS bulletin, or read Tim Jost at Health Affairs for more detail.

Carmen Balber
Carmen Balber
Consumer Watchdog executive director Carmen Balber has been with the organization for nearly two decades. She spent four years directing the group’s Washington, D.C. office where she advocated for key health insurance market reforms that were ultimately enacted into law as part of the Affordable Care Act.

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