Essential Health BenefitsAmy MonahanUniversity of Minnesota Law School

Presentation to the Health & Human Services Reform Committee

February 8, 2012

IOM Study Background• The Institute of Medicine (IOM) was commissioned by

HHS to develop policy foundations, criteria, and methods for defining and updating Essential Health Benefits (EHB)

• Over the course of 9 months, the committee:• Held two public workshops where we heard from 59 speakers• Solicited public input online• Conducted research and analysis• Held 4 in-person committee meetings

Key Issues that Emerged• Setting a balance between comprehensiveness and

affordability

• Defining what “typical” should mean

• Determining whether state mandates should be automatically included

• Deciding whether state variation might be allowable

Key Conclusions and Recommendations• Incorporate consideration of cost

• Initial package should be guided by a national average premium target

• EHB package should be actuarially equivalent to the average premium that would have been paid by small employers in 2014 for a comparable population with a typical benefit design.

• Role for a public deliberative process in weighing tradeoffs

Key Conclusions and Recommendations• Provide states with the ability to apply for approval of

a state-specific EHB definition• For states administering their own exchanges, provided:

• Statutory criteria met• Package is actuarially equivalent to national package• State has adopted a process that has included meaningful public input

• State mandates would not receive preferential treatment• “Because state mandates are not typically subject to a rigorous

evidence-based review or cost analysis, cornerstones of the committee’s criteria, the committee does not believe that state-mandated benefits should receive any special treatment in the definition of the EHB.”

Key Conclusions and Recommendations• Better data

• Independent advisors – National Benefits Advisory Council

• Continue to incorporate cost into updates

• Goal for EHBs to become more fully evidence-based, specific, and value-promoting over time

HHS Bulletin• “HHS aims to balance comprehensiveness, affordability,

and State flexibility”

• States may choose one of four benchmark plans for 2014 and 2015• At least two of which incorporate state mandates (one of the three

largest small group plans and largest non-Medicaid HMO)• One of which will not incorporate state mandates (one of the three

largest national FEHBP plan options)

HHS Bulletin• Benchmark plan will need to be adjusted to cover the 10

categories of care specified in the statute• Habilitative services and pediatric oral and vision care likely to

require adjustments• Mental health and substance abuse benefit parity

• Benchmark choice will influence whether state must pay the “additional cost” associated with state mandates in excess of the EHBs

• HHS has indicated that beginning in 2016, some state mandates may be excluded from the EHB package

Reconciling the IOM and HHS Recommendations from a State Perspective• Lack of cost constraint on state choice

• Allows states to have their mandated benefits federally subsidized• Selecting too generous a benchmark may result in unaffordable

insurance• How high a priority to place on existing mandates?

• What role for a public deliberative process?

• Creates significant uncertainty going forward• How to plan for 2016 and beyond?