Health Affairs

Essential Health Benefits

Bethesda, MD --A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation looks at essential health benefits--the core packages of benefits that so-called "qualified" health insurance plans must provide beginning in 2014.

The Affordable Care Act of 2010 requires that health insurance plans sold to individuals and small businesses provide a minimum package of services in 10 categories, including hospitalization, maternity and newborn care, ambulatory care, and prescription drugs. Depending on how states decide to proceed, these benefits may be required of all health insurance plans in the state as well.

Last December, the Department of Health and Human Services (HHS) announced that rather than setting a national standard, each state can choose from a set of plans to determine its own minimum standard. HHS's decision has been criticized by consumer advocates and some provider groups who would have preferred a national standard. However, the decision was applauded by state governments and the business community for affording flexibility and maintaining the existing pattern of state regulation of benefits and insurance plans.

This policy brief explains the background for HHS's decision and outlines its policy implications. Some of the points covered include:

• Deciding what's required. HHS has asked each state to set its own definition of essential benefits for 2014 and 2015 by designating a benchmark state plan among a specific list of plan options (for example, one of the three largest small group plans in the state by enrollment). The same benchmark plan would apply to both individual and small business markets.
  
  
• What are the issues? In addition to concerns from consumer and health care groups over HHS's decision not to set a national standard, other matters have yet to be resolved. Some critics feel that by selecting existing insurance plans as benchmarks, gaps in current coverage will not be addressed. There are also other questions, such whether certain benefit designs could discourage sicker beneficiaries from enrolling.
  
  
• What's next? The policy focus will now move to the states, which must decide what benchmark plan to select. As these benchmark plans are chosen, HHS must establish a process to evaluate whether the plans meet all the essential benefit requirements.

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically and health policy briefs published twice monthly at www.healthaffairs.org. Read daily perspectives on Health Affairs Blog. Download weekly Narrative Matters podcasts on iTunes.