HHS gives states flexibility on health law’s ‘essential benefits’

United States (KaiserHealth) – States will be given wide latitude to decide what “essential benefits” insurers must offer in policies offered on new health exchanges come 2014, the Obama administration said Friday in a move that pushes off final federal rules on those benefits until sometime next year.

Instead of one national standard, states will be able to design benchmark plans based on one of four choices: The benefits offered in one of the three largest federal employee plans (by enrollment), one of the three largest plans offered to their state employees, one of the three largest small-business plans in the state or the plan offered by the largest HMO in the state.

Those benefits, which must be offered by insurers in most policies sold to individuals and small businesses, are one of the key flash points in the federal health law. Patient advocates have called for a broad national standard covering a wide range of treatments, while business groups say affordability must be a top consideration, even if it means a more limited package.

Because state employee plans and policies sold in the states can vary widely, the move means there will likely not be one national standard benefit package, but rather “benchmark” plans in each state. That gives states the flexibility they had called for, but also means coverage will vary.

Rather than issue a proposed regulation, the administration chose to advise the states through a “pre-rule bulletin,” which does not have the force of law. But neither can it be quashed by Congress, as could a rule. By putting out the choices as a form of guidance, the administration also does not have to provide definitive economic estimates of the proposal or determine its regulatory impact on small businesses.

“Now, no one can say they put out a rule that costs umpteen billion dollars, but they floated something to give states an idea of what to expect’,” said Robert Laszewski, a former insurance executive and head of the consulting firm Health Policy and Strategy Associates in Alexandria, VA.

– Provided by Kaiser Health News.

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