State Options Blog Series: Federal Regulators May Weaken ACA Essential Health Benefits Requirements, Creating Need for States to Protect Consumers

A proposed regulation is currently under review at the White House’s Office of Management and Budget that could have big implications for the health plan benefit standards established by the Affordable Care Act (ACA). Prior to the ACA, health insurance sold on the individual market often excluded coverage of critical services such as maternity, prescription drugs, mental health, and substance use treatment. The ACA’s Essential Health Benefits (EHB) requirement aims to make health insurance more comprehensive and access to care more affordable.

The Obama administration gave states the flexibility to define the services within each EHB category by selecting a local “benchmark” plan. There is some expectation that the current administration may re-write the EHB rules, potentially through the pending regulation, to allow insurers to cover fewer treatments or services within the EHB categories. While this could lower premiums for some individuals, consumers who need high cost health services could be left with the financial risk.

Issues for consumers and plan enrollees

If HHS changes the EHB requirements, for example by providing insurers greater flexibility to cover fewer treatments or services within the ten coverage categories, insurers could use that flexibility to design products that exclude coverage of certain health services, effectively deterring enrollment among consumers who need those services. Although diluting coverage for services such as hospitalization or prescription drugs could lower prices for some individuals, consumers who still need comprehensive coverage for services in that EHB category will face fewer options and higher prices.

State options

State Departments of Insurance (DOIs) are the primary entities that work directly with insurers to ensure compliance with federal and state standards through state laws, regulations, and interpretive guidance. States can respond to a potential relaxation of EHB standards in several ways:

  1. Codify EHBs into state law. States can codify the current EHB categories into state statute or regulations. During their 2017 legislative sessions, Hawaii passed and Rhode Island and Nevada introduced bills that would make the 10 EHB categories part of state law; New York has developed regulations with the same intent.
  1. Codify the benchmark standard into state law. To ensure the EHB categories continue to be defined comprehensively, as under current regulations, states can codify the existing EHB definitions into statute by requiring insurers to offer policies equivalent to the state benchmark plan, as Washington and California have done.
  1. Use regulatory authority to fill in coverage gaps. Even without legislative action, state insurance regulators can use their authority to fill in gaps in the federal requirements and ensure that benefit designs meet the needs of enrollees.

Editor’s Note: This is the third in a blog series about state options in the wake of federal actions to roll back or relax ACA regulation and oversight. They are based on an issue brief and fact sheet series funded by the Robert Wood Johnson Foundation, available here.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.