By Sabrina Corlette and Kevin Lucia

The Affordable Care Act (ACA) gets a lot of attention for expanding coverage to the uninsured, and it’s deserved. We’re now at historic low rates of uninsurance – down to 8.6 percent in 2016. The ACA’s provisions to improve the adequacy of health insurance coverage have received less attention. But these provisions – establishing a set of essential health benefits, capping consumers’ annual out-of-pocket costs, setting a minimum actuarial value, and prohibiting discriminatory benefit design – are just as important to improving people’s health outcomes and financial security as coverage expansion.

Unlike coverage expansion, however, the success of the ACA’s provisions to improve coverage adequacy is harder to judge. The implementation of one provision in particular – the ban on discriminatory benefit design – has been challenging for state and federal insurance regulators. The law prohibits benefit designs that discriminate against enrollees based on age, disability, or expected length of life, and the government must ensure that benefits account for the health care needs of a diverse population.* This protection was slated to go into effect in January 2014. (For a great overview of the ACA’s non-discrimination protections and their implementation, watch this webinar, sponsored by the National Academy for State Health Policy).

In 2013, a Georgetown CHIR paper laid out some of the challenges state insurance regulators faced in implementing this provision:

• Lack of a clear standard for identifying a benefit design as discriminatory;
• Lack of clinical expertise among insurance regulators;
• Lack of access to comprehensive information from insurers about their plans’ benefit designs; and
• Lack of a regulatory infrastructure for ongoing oversight, such as monitoring consumer complaints.

Three years later, many of these same challenges remain.

Regulating discriminatory benefit design – where are we today?

In the fall of 2016, state and federal regulators have had almost three full years to review plan benefits and monitor the experience of consumers in ACA-compliant plans. We at CHIR wondered what they’ve learned in the process, so we reached out to five states – two that run their own health insurance marketplaces and three that have a federally run marketplace. We learned that these states have diverse approaches to assessing health plans’ benefit designs, and all continue to face challenges.

• Reviews range from comprehensive to cursory. One state, noting that it has no state laws addressing discriminatory benefit design, simply uses software tools supplied by the federal government to assess plans’ designs. The other four states conduct a more comprehensive review, examining not just the items and services listed in the plan but also the full policy contract form.
• States have developed their own tools to catch discriminatory designs. One state has developed standardized plan contract language that all insurers must use. Regulators there believe it has dramatically reduced the potential for discriminatory conduct. Two other states have developed their own plan review tools, in addition to those provided by the federal government, to better ensure they catch potential problems in plan designs.
• States have found – and demanded changes to – discriminatory designs. While none of the five states has, to date, formally rejected a plan because of a discriminatory benefit design, all have identified areas of concern and required insurers to make changes.
• Prescription drug formularies and mental health are problem areas. State regulators have found that drug formularies and mental health coverage are the most common sources of potential discrimination.
• Lack of clinical expertise hinders efforts to ensure compliance. None of our five states has pharmaceutical or medical expertise on staff, and four out of the five state regulators felt that the lack of expertise made it more difficult for them to identify and respond to potentially discriminatory designs.

All of the state regulators with whom we spoke felt that the ban on discriminatory benefit design was an important consumer protection. However, three years in, they still struggle with a lack of clarity about what is and is not discriminatory as well as a lack of resources, including clinical expertise, to conduct a robust, comprehensive assessment of each plan’s benefit design. Going forward, state regulators believe clear and timely guidance from federal regulators, more training for state reviewers, more resources for staff and expertise, and the development of a state “learning community” on discriminatory benefit design would all enable more effective enforcement.

*Another provision of the ACA, Section 1557, further establishes civil rights protections for consumers of health care services by prohibiting discrimination, exclusion from participation, or denial of benefits on the basis of race, color, national origin, sex, age or disability. These protections apply to any health program or activity that receives federal financial assistance, including insurers receiving premium tax credits under the ACA.