Monday, October 10, 2011

Essential health benefits: Affordability is key criteria (part 1)

An influential expert panel has released its recommendations to the Department of Health and Human Services regarding the criteria and methods HHS should use to decide which benefits to include in the "essential health benefits" (EHB) package mandated by the ACA. HHS is expected to publish draft proposals in 2012.

Here's the key takeaway of "Essential Health Benefits: Balancing Coverage and Cost," issued by the Institute of Medicine of the National Academies: HHS should keep the affordability of coverage at the forefront as it designs the EHB. If coverage is not affordable, the panel warns, then even with government help "many people would not be able to obtain it," thus conflicting with a key goal of the ACA.

So, what does this mean?

First, here's a quick refresher on the relevant ACA provisions. Under the ACA, private insurance plans will be offered to low- and moderate-income persons and small employers through the state exchanges (often with financial help). Plans offered via the exchanges must cover a package of diagnostic, preventive and therapeutic services and products that have been defined by HHS as "essential."

We'll explore the report's recommendations for defining the EHBs in greater detail in the next couple of posts here at Health Reform Talk, but here are other key take-aways.

Typical employer? Recall that the ACA asks HHS to consider benefit packages offered by a "typical employer" when designing the EHB. The IOM report narrows that approach by suggesting that packages of typical "small" employers be the focus.

Impact of current state mandates. Current state insurance mandates should not be automatically included in the EHB, but should be evaluated in the same way as other benefits. That said, HHS's design for the EHB should be flexible enough to encourage innovation at the state level.

Public participation. To encourage public involvement in designing the package, small group meetings around the country should supplement the normal notice and comment process.

Annual updating. HHS should update the EHB package annually beginning in 2016. The updating process should consider both 1) credible data on treatment effectiveness and 2) the cost of the current package and medical inflation.

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.


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