The Essential Benefits Package--An Employer Model

The Affordable Health Care for America Act, H.R. 3962, which the House approved by a narrow margin on Saturday, Nov. 7, eventually requires employer-sponsored health insurance plans to provide, at a minimum, a certain essential benefits package. Abortion services definitely will not be a part of this package, as yesterday’s post indicates. And, since the essential benefits package would be based on the benefits typically covered by employer-sponsored health insurance, it appears that employers need not worry about major adverse effects of this particular health reform bill.

A new Health Benefits Advisory Committee (HBAC), including employer members, would determine the benefits to be covered in the essential benefits package, be “equivalent in its scope of benefits, as certified by Office of the Actuary of the Centers for Medicare & Medicaid Services, to the average prevailing employer-sponsored coverage in Y1.” To that end, the Department of Labor would conduct a survey of employer-sponsored coverage to determine the benefits typically covered and report results to the HBAC and to the Department of Health and Human Services

The minimum services to be covered are those typically covered by employer-sponsored plans: hospitalization, outpatient hospital services, medical services and related supplies, prescription drugs, behavioral health, and so on. Recommended preventive services, including immunizations and well-baby and well-child care must be covered at no cost to the insured. Currently, most employer-sponsored plans require some cost sharing for preventive care services. .

The cost-sharing under the essential benefits package must be designed to provide a level of benefits that is actuarially equivalent to approximately 70% of the full actuarial value of the benefits provided under the reference benefits package with no cost-sharing.

Unlike today, annual and lifetime limits would be prohibited and the network of providers required to be “adequate,” whatever that means.

If current reported experience is any indication (see our earlier post on a related subject), an essential benefits package in health reform that mirrors typical employer-sponsored health insurance will require insureds to pay ever increasing premiums for continually costlier benefits.