A couple of months ago, I posted an entry in my blog titled “ObamaCare takes shape.” In the entry I reiterated a major concern about ObamaCare, and then reported on a recent development that had somewhat ameliorated the concern. Now this past week, the Obama administration has given us further good news about its implementation of this controversial program.
My major concern with ObamaCare, in addition to the unconstitutional individual mandate, is that the law appears to require gold-plated coverage for everyone. This concern is based on a provision in the law that requires HHS Secretary Sebelius to define a mandatory package of preventive, diagnostic, and therapeutic services and products called “essential health benefits.” ObamaCare provides that this package of essential benefits should be “equal to the scope of benefits provided under a typical employer plan.” In my blog entry, I described my concern as follows:
- “My concern is that employee health coverage, especially when unions are involved, is often gold-plated, and it is nonsensical to make gold-plated coverage the minimum standard for a welfare-type program like ObamaCare, especially if we are trying to restrain over-utilization.”
And I described the ameliorating development as follows:
- “Today, the NY Times reported that a shocking display of common sense and good judgment may prevent my fears from materializing. According to an article in the Times, the Institute of Medicine (IOM), in providing the Secretary of HHS with a framework for deciding what coverages should be deemed essential, recommended that (1) the cost of providing the coverage should be considered so that the policy remains affordable, and (2) ‘a typical employer plan’ should be that of a small employer, not of medium or large employers, who tend to provide more generous (expensive) coverage.”
So what is the further good news this week? The good news was reported by the Washington Post in an article titled, “Feds would allow states to tailor basic health benefits under Obama’s overhaul.” The article reports that the Obama administration was adopting the IOM’s recommendation regarding small-employer coverage as a minimum or floor:
- “The new proposal would let states pick a benefits package from several federally approved options. Those range from benefits offered to federal and state employees to the most popular small business plans in the state and to a large health maintenance organization, or HMO.
An article in the NY Times took a similar take on this development. In an article titled, “Health Care Law Will Let States Tailor Benefits,” the Times reported:
- “In a major surprise on the politically charged new health care law, the Obama administration said Friday that it would not define a single uniform set of “essential health benefits” that must be provided by insurers for tens of millions of Americans. Instead, it will allow each state to specify the benefits within broad categories.”
Neither article, however, makes it clear how the small-business coverage will be reconciled with the ObamaCare requirement that “the benefits package must include such fundamentals as inpatient and outpatient care, emergency services, maternity and childhood care, prescription drugs, preventive screenings and labs. It must also cover mental health and substance abuse treatment, as well as rehabilitation for physical and cognitive disorders, and dental and vision care for children.” As the Post article noted, “such additional benefits are often not fully covered by frugal plans that are now the best that many small businesses can afford.”
Fortunately, due to the wonders of the internet, we have access to a news release and detailed bulletin issued last Friday by the Department of Health and Human Services, and these documents answer the questions left unanswered by the Times and Post.
According to the news release:
- “Consistent with the law, states must ensure the essential health benefits package covers items and services in at least ten categories of care, including preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs. If a state selects a plan that does not cover all ten categories of care, the state will have the option to examine other benchmark insurance plans, including the Federal Employee Health Benefits Plan, to determine the type of benefits that will be included in the essential health benefits package.”
The bulletin provides even more detailed guidance:
- “Section 1302(b) of the Affordable Care Act directs the Secretary of Health and Human Services (the Secretary) to define essential health benefits (EHB)…. Section 1302(b)(1) provides that EHB include items and services within the following 10 benefit categories: (1) ambulatory patient services, (2) emergency services (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services, including behavioral health treatment, (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care.”
- “The statute distinguishes between a plan’s covered services and the plan’s cost-sharing features, such as deductibles, copayments, and coinsurance. The cost-sharing features will determine the level of actuarial value of the plan, expressed as a “metal level” as specified in statute: bronze at 60 percent actuarial value, silver at 70 percent actuarial value, gold at 80 percent actuarial value, and platinum at 90 percent actuarial value.”
- “Generally, according to this analysis, products in the small group market, State employee plans, and the Federal Employees Health Benefits Program (FEHBP) Blue Cross Blue Shield (BCBS) Standard Option and Government Employees Health Association (GEHA) plans do not differ significantly in the range of services they cover. They differ mainly in cost-sharing provisions, but cost-sharing is not taken into account in determining EHB. Similarly, these plans and products and the small group issuers surveyed by the IOM appear to generally cover health care services in virtually all of the 10 statutory categories.”
- “One of the challenges with the described benchmark plan approach to defining EHB is meeting both the test of a “typical employer plan” and ensuring coverage of all 10 categories of services set forth in section 1302(b)(1) of the Affordable Care Act. Not every benchmark plan includes coverage of all 10 categories of benefits identified in the Affordable Care Act (e.g., some of the benchmark plans do not routinely cover habilitative services or pediatric oral or vision services). The Affordable Care Act requires all issuers subject to the EHB standard in section 1302(a) to cover each of the 10 benefit categories. If a category is missing in the benchmark plan, it must nevertheless be covered by health plans required to offer EHB. In selecting a benchmark plan, a State may need to supplement the benchmark plan to cover each of the 10 categories. We are considering policy options for how a State supplements its benchmark benefits if the selected benchmark is missing a category of benefits. The most commonly non-covered categories of benefits among typical employer plans are habilitative services, pediatric oral services, and pediatric vision services.”
- “Below, we discuss several specific options for habilitative services, pediatric oral care and pediatric vision care. Generally, we intend to propose that if a benchmark is missing other categories of benefits, the State must supplement the missing categories using the benefits from any other benchmark option.”
Thus, it appears that the Obama administration is shifting away from its “one size fits all” strategy and is granting states the flexibility needed to craft an affordable insurance policy that satisfies its needs. The law does not allow flexibility re: gold-plated coverage for habilitative services, pediatric oral services, and pediatric vision services, and perhaps that can be fixed by amendment. Further, the administration still needs to address the issue of cost-sharing (co-insurance, co-pays, deductibles), and state flexibility will be needed there, too. But HHS Secretary Sebelius should be commended for her recent decisions in the implementation of ObamaCare.
p.s., Washington Post columnist Robert Samuelson just came out with a lengthy column suggesting the Sebelius’s action was good politics, but bad policy.