The Affordable Care Act—‘Balancing Comprehensiveness and Affordability’

E-newsletter Issue #87 | March 1, 2012

The U.S. Department of Health and Human Services is trying to “balance comprehensiveness and affordability” with the type of coverage insurers must offer under the Affordable Care Act, Sherry Glied, assistant secretary for Planning and Evaluation, said.

Glied spoke at The Council of State Governments’ webinar “Essential Health Benefits: An Overview for State Legislators” Tuesday.

Beginning in 2014, the Affordable Care Act requires individual and small group health insurance plans sold inside and outside of state health insurance exchanges to provide coverage in 10 categories:

  • Ambulatory patient services,
  • Emergency services,
  • Hospitalization,
  • Maternity and newborn care,
  • Mental health and substance use services, including behavioral health treatment,
  • Prescription drugs,
  • Rehabilitative and habilitative services and devices,
  • Laboratory services,
  • Preventive and wellness services, as well as chronic disease management, and
  • Pediatric services, including oral and vision care.

Glied said for the most part, these kinds of services already are being offered widely in health insurance plans.

“The plans cost very different amounts,” she said. “Most of the difference in terms of the cost of the plan comes from cost sharing and how much they pay, not what’s covered. … Those cost-sharing components are not addressed in essential health benefits at all.”

Instead, cost-sharing for the plans will be set by the so-called metal levels of plans included in the Affordable Care Act—bronze, silver, gold or platinum—that set the actuarial level of the full package of essential health benefits. For instance, at the bronze level, 60 percent of costs are covered on an actuarial basis.

Glied said instead of mandating the types of coverage that must be included in each category, states have the option of choosing a “benchmark plan,” which will provide the basis of coverage. Any of the mandated coverage categories not included in the benchmark plan will have to be added.

Policymakers can choose one of the three largest small group plans in their state, one of the three largest state employee plans, one of the three largest federal employee plans or the largest HMO plan offered in the state’s commercial market.

“States select the benchmark, the set of benefits included in one of those plans,” Glied said. “All applicable plans have to provide them for 2014 and 2015. If the selected benchmark plan includes 10 physical therapy visits, then the essential health benefits plan includes 10 physical therapy visits.”

Glied said the department has received a lot of questions from state policymakers about benefits mandated by state law. Under the Affordable Care Act, states must pay for the costs of any benefits required by state law that go above and beyond the essential health benefits package. One policymaker listening to the webinar asked how states can keep insurance affordable if they have many state mandates.

“We did a lot of analysis when we started this,” Glied said. “… Lots and lots of the mandates are pieces that have already been taken on by large employer-sponsored packages anyway. … I think that’s one thing to keep in mind about mandates.

“The basic benefits that are required—hospital, physicians, prescription drug benefits and lab—account for about 95 percent of the cost of the health plan. Other parts (such as behavioral health or dental coverage for children) are quite small. That’s one thing to keep in mind.”

Each state will be able to pick its benchmark plan “by whatever process and through whatever state entity is appropriate under state law,” according to a Frequently Asked Questions released by the Department of Health and Human Services. The federal agency expects the administrative branch to make the designation, but recognizes that legislative action may be required in some states.

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