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US states to weigh in on basic health coverage

Fri, 16 Dec 2011 23:40 GMT

Source: reuters // Reuters

(Adds AHIP, expert comments)

By Lewis Krauskopf

Dec 16 (Reuters) - U.S. health officials will allow states to select the basic set of medical benefits that must be offered by insurance plans participating in new exchanges mandated by the federal healthcare overhaul, the U.S. government said on Friday.

The Department of Health and Human Services announcement relates to the so-called essential health benefits for millions of Americans who would qualify for coverage sold through state-based insurance exchanges beginning in 2014.

The proposed plan is the latest move by the federal government that gives states more control over implementation of President Barack Obama's signature healthcare law.

"The coverage that works in Florida may not work in Nebraska," HHS Secretary Kathleen Sebelius told reporters.

But while some say such an approach is giving states the wanted flexibility to adjust the law to local needs, others see it as putting even more pressure on the states and creating extra uncertainty around the 2014 deadline.

"They punted (the essential benefit determination) to the states and in doing so clarified nothing and multiplied by 50 the uncertainty that is presented to people," said Douglas Holtz-Eakin, president of the center-right American Action Forum and former Congressional Budget Office director.

Under the approach announced on Friday, states can select an existing health plan to set the benchmark for services included in the essential health benefits package.

As benchmarks, states would be able to choose either: One of the three largest small employer plans in the state; one of the three largest state employee health plans; one of the three largest federal employee health plan options; or the largest health maintenance organization plan offered in the state's commercial market.

As set out in the law, states must ensure the essential benefits package covers services in at least 10 categories of care, among them preventive care, emergency services, maternity care and prescription drugs.

America's Health Insurance Plans, the insurers' trade group, urged all decisions to consider whether the sets of essential benefits developed by states would be affordable. Such an approach was also encouraged by the Institute of Medicine in its recommendation on the matter in October.

"The bulletin leaves unanswered the question of affordability in the states," said Neil Trautwein, chairman of the Essential Health Benefits Coalition and vice president at the National Retail Federation, in a statement.

"HHS should continue to work to develop a rule that balances state-selected and reasonably comprehensive benefits with affordability for employers and individuals."

Ron Pollack, executive directore of healthcare advocacy group Families USA, said that HHS also needed to provide "strong oversight and enforcement" of the benefit standards as they are implemented in the states.

"It will be important to ensure that adequate coverage across all ten required benefit categories is provided - marking an improvement over many plans offered today," Pollack said.

HHS said it would take comments on the proposal until Jan. 31. The announcement on Friday addressed only the services and items covered by a health plan, not cost sharing, such as deductibles, co-payments, and co-insurance. HHS plans to address cost in a future announcement.

The insurance exchanges are designed to create easy access to an open marketplace of plans and to allow uninsured people and small businesses to band together to negotiate cheaper rates for healthcare coverage, as well as automatically be considered for government subsidies.

HHS has been subject to intense lobbying over the rule as virtually the entire U.S. healthcare system, including insurers such as Aetna Inc and WellPoint Inc, could be affected by it.

The Institute of Medicine, an advisory group to U.S. policymakers, recommended in October that essential benefits stay in line with the cost of insurance in a typical small employer plan, in step with inflation and medical advances.

The healthcare overhaul is designed to extend coverage to an estimated 32 million Americans who are now uninsured. (Additional reporting by Anna Yukhananov and Alina Selyukh in Washington; Editing by Lisa Von Ahn, Gunna Dickson, Gary Hill)