Employers and consumer groups are tracking state efforts to craft insurance benefit packages for individuals and small businesses as required under the federal health care reform law.
The scope and cost of these benefit packages could have ramifications for years to come, and employers are seeking flexibility in their design.
Some states are starting to consider the scope and cost of health benefit packages to be sold in the health insurance exchanges, which are required to go online in January 2014.
The 2010 Patient Protection and Affordable Care Act requires that health plans sold to individuals and small businesses starting in 2014 offer minimum services in 10 categories of "essential health benefits." The 10 categories are inpatient care; emergency services; maternity and newborn care; mental health; prescriptions; rehabilitation; laboratory services; prevention; and wellness and outpatient care.
Large and small employers have banded together to form the Essential Health Benefits Coalition to voice concerns in Washington and statehouses across the country on the issue. Members include the National Retail Federation, the U.S. Chamber of Commerce, National Federation of Independent Business, the Blue Cross and Blue Shield Association, America's Health Insurance Plans and the Pharmaceutical Care Management Association.
"Employers want to make sure the benefits aren't so expensive that they can't cover the cost," says Brendan Daly, spokesman for the Essential Health Benefits Coalition.
The requirement doesn't apply to large employers, self-insured health plans or grandfathered plans (those operating before the passage of the health care law). However, it does apply to individual and small-group plans sold both inside and outside the exchanges. And states can open their exchanges to large employers starting in 2017, where plans must offer these minimum benefit packages.
Last December, the U.S. Department of Health and Human Services announced that instead of a national definition for essential health benefits, each state could craft their own benchmarks within certain parameters.
Many consumer and provider groups preferred a national standard, but many employers said they liked the flexibility of a state-based approach.
Still, questions remain. For employers with workforces in multiple states, it's unclear which benefit packages they must provide, Daly says.
"There's apprehension about it," he says.
Many state officials are waiting for a verdict from the U.S. Supreme Court on the constitutionality of the health reform law, which is expected in June, before starting to craft essential health benefit packages. But a few states, notably California and Oregon, are moving ahead. In Oregon, Gov. John Kitzhaber appointed a working group to make recommendations by September on the state's benchmark plan for essential health benefits.
As defined by HHS, states can set a benchmark plan that "reflects the scope of services covered by a typical employer plan." States can choose among the following options for their benchmark: one of the three largest small-group plans in the state by enrollment; one of the three largest state employee health plans by enrollment; one of the three largest federal employee health plans or the largest HMO plan offered in the state, according to HHS.
"It's even more complicated than setting up the exchanges," says Erin Reidy, associate policy director for the American Cancer Society's Cancer Action Network.
That's because states must look at the coverage options among the largest plans and their comparable costs. This can mean sifting though hundreds of pages of plan documents, Reidy says.
HHS is expected to help in this process by providing data it collects from health plans to determine the top three group plans in each state, sources say.
Employers are also concerned about how much leeway they will have to shift some of the costs of coverage to workers if they are too expensive. The benchmark plans will be subject to various state coverage mandates, which have made health benefits unaffordable for many businesses, according to the Essential Health Benefits Coalition.
HHS has not issued a final rule on the matter. Stakeholders were invited to submit comments to the agency earlier this year.
Rebecca Vesely is a freelance writer based in San Francisco. Please comment below.
