To help make coverage more comprehensive, the Affordable Care Act (ACA) requires insurers to cover a minimum set of health insurance benefits, known as “essential health benefits.” Consumers are already benefitting from this new protection: beginning in 2010, the ACA prohibits insurers from imposing lifetime or annual limits on essential health benefits. And, beginning in 2014, insurers must cover essential health benefits for all consumers purchasing coverage as individuals or through a small business.
What are “essential health benefits”? State legislators, regulators, and policymakers across the country are grappling with this very question as they weigh the options for which benefits should be covered.
The essential health benefits package was designed to establish a single federal standard for coverage, and the ACA requires insurers to cover—at a minimum—ten categories of critical benefits such as emergency services; maternity and newborn care; prescription drugs; and rehabilitative and habilitative services and devices. Yet, instead of a uniform federal standard, HHS released guidance allowing states to choose their own essential health benefits standard—known as a “benchmark plan”—from among ten existing plans in each state (e.g., the state employee plan or the largest HMO plan). This benchmark plan will then serve as a reference point for the state’s essential health benefits package. For states that fail to identify their own benchmark plan, the state’s benchmark will be the largest plan in its small group market.
Since its initial guidance, HHS released a list of the largest three small group market products by state, answers to frequently asked questions, and a rule on data collection standards to support the definition of essential health benefits. According to HHS’ guidance, states must identify a benchmark plan by the end of the third quarter of 2012 – in other words, September 30, 2012. However, recent rumors of a new “soft deadline” for states have surfaced, and HHS has yet to issue regulations further defining the essential health benefits requirements.
Where do states stand? States have adopted different approaches towards selecting a benchmark plan. While only one state has made an official decision, others have made recommendations that must still be adopted by another decision-maker such as the governor or the exchange board. Some states are still studying their options and holding public meetings while others have deferred action until further federal guidance is issued. Finally, some states have taken little or no action and are likely to have their benchmark plan defined by the federal government.
To date, only one state—Washington—has officially identified its benchmark plan. In March 2012, Washington passed legislation, HB 2319, designating the largest plan in its small group market—Regence Blue Cross BlueShield’s Innova—as its benchmark. The state also issued expedited regulations to implement the new requirements.
Policymakers in six states—California, Connecticut, Oregon, Utah, Virginia, and Vermont—have publicly issued recommendations on the state’s benchmark plan, but these recommendations have not yet been finalized. Here’s what you need to know about these states:
- California: California legislators are considering new legislation, SB 951, that would establish the Kaiser Foundation Health Plan Group HMO 30 Plan as the state’s benchmark plan. To date, the legislation passed the Senate and is awaiting final passage by the Assembly. California’s legislature adjourns on August 31, so expect some closure on this within the next week.
- Connecticut: The state’s Health Insurance Exchange Advisory Committee recommended to the exchange board that it designate the state’s largest commercial HMO plan, the ConnectiCare HMO plan, as the state’s benchmark. The Committee presented its recommendation to the exchange board which adopted a proposed policy on the essential health benefits and has requested comments on the policy until September 7, 2012.
- Oregon: The Oregon Health Insurance Exchange Board and the Oregon Health Policy Board jointly charted the state’s Essential Health Benefits Workgroup, which recommended the state’s third largest small group plan, the PacificSource Preferred CoDeduct plan, as its benchmark. Once the recommendation is endorsed by the two Boards, it will be forwarded to the governor for communication to HHS.
- Utah: The state passed legislation, HB 144, to authorize the legislature’s Health System Reform Task Force to make a benchmark recommendation. The Task Force will make this recommendation to the Insurance Commissioner, who will adopt an emergency regulation designating the benchmark plan. On August 16, the Task Force recommended that the Commissioner adopt PEHP’s Utah Basic Plus state employee health insurance plan as the benchmark.
- Vermont: The Vermont Department of Health Access, tasked with recommending a benchmark plan to the Green Mountain Care Board, recommended that the Board adopt the Blue Cross Blue Shield Vermont HMO plan as the benchmark. The Board is expected to review the recommendation, seek public input, and approve the essential health benefits package in September.
- Virginia: In June 2012, the Health Reform Initiative Advisory Council received a recommendation from its Essential Health Benefit Package Subcommittee that the Anthem small group PPO plan be the state’s benchmark. If it accepts this recommendation, the Advisory Council would make a similar recommendation to the governor for adoption.
Although few states have officially identified their benchmark plan, our research and discussions with state regulators suggest that states are actively considering their options and have, for example, held public meetings and published studies that compare their options. Alabama, for example, conducted a webinar on the essential health benefits and requested public comments on the plans and process going forward. Arizona similarly held a public comment period and published an analysis of its benchmark plan options. Arkansas’ Benefits Exchange Steering Committee has voted to recommend any of the state’s three small group plans, with the Insurance Commissioner expected to make a final decision.
What does it mean for consumers? Consumers have much to gain from the coverage of essential health benefits, in part because this new requirement will make the promise of access to comprehensive coverage a reality for individuals, families, employees, and employers across the country. Consumers also have the opportunity to become involved in shaping how and which plan is selected as the state’s benchmark. Many states have allowed public participation via meetings, public comment periods, and analyses of the options. If there are benefits that are important to you, your family, and your neighbors, you should participate in these meetings and help shape the future of your coverage.
Because states are likely to continue this varied approach to selecting a benchmark plan (and because many have not yet done so), you can count on CHIR researchers to track and analyze state action as it happens! Be sure to look for our upcoming issue brief (funded by the Commonwealth Fund) on the decisions made by all 50 states and the District of Columbia on their essential health benefits benchmark plan and keep up with our other posts tracking state action in our “State of the States” blog series.