The bare essentials
Release of IOM report leaves HHS to determine what should be covered by health benefits packages
For all its complexities, the Institute of Medicine’s report to HHS on essential health benefits last week is based on a simple premise: Find what works already and improve on it over time. Now a task that’s by no means simple falls to HHS, which will develop the proposed and final rules that outline what an essential health benefits package must include and exclude for the sake of making the plans affordable. Those choices are certain to draw new battle lines among providers, insurers, the Obama administration and lawmakers.
The IOM’s nearly 300-page report, Essential Health Benefits: Balancing Coverage and Cost, is a response to HHS’ request for the IOM’s recommendations about the process the HHS secretary should use to define and update the essential health benefits package. Outlined in last year’s Patient Protection and Affordable Care Act, these benefits must be offered to individuals and small groups in state-based exchanges and the existing market. The law requires that plans cover at least 10 general categories of health services (See chart) and be similar to those currently provided by a typical employer. The IOM estimated that more than 68 million people will obtain insurance that must meet the requirements.
Julie Allen, government relations director at Drinker, Biddle & Reath in Washington, said she expects a proposed rule by the end of this year, and that it won’t be overly prescriptive because of the balancing act required. But whatever HHS puts forth will draw a “tremendous amount of reaction,” she said, and there has been talk that a final rule might be pushed back until after the 2012 elections because of the political implications attached to it.
For example, if the rule is very robust, it could make plans too expensive and not meet the law’s goal of coverage and access for all. But if it’s too bare-boned, she said, then the package could be viewed as depriving millions of people of the coverage they need. The administration is at risk of criticism either way. “The problem is state exchanges are supposed to be verified and approved in January 2013 and up and running in 2014,” Allen said. “Your window starts to shrink,” she added. “Some say they aren’t going forward until they understand the rules—and this is a big one.”
Committee members who worked on the report combined perspectives from four areas—economics, ethics, evidence-based practice and population health—to create what the IOM called an “overarching framework” for HHS. The group then used that as a foundation to develop criteria that could help guide HHS in its decisions as it sought to achieve two aims: to provide coverage for a range of Americans, and to ensure the affordability of that coverage.
Christopher Koller, Rhode Island’s health insurance commissioner and a committee member, said members focused on how to build benefits that are based on research and evidence of what already works. This concept is perhaps best seen in the committee’s first of five recommendations, which suggests the HHS secretary should establish (by May 2012) an initial health benefits package that is guided by a national average premium target. To do this, HHS should determine what the national average premium of typical small employer plans would be in 2014 and ensure that the essential health benefits package’s scope doesn’t exceed this amount.
“We considered a number of different ways to characterize cost,” said Elizabeth McGlynn, a committee member and an editor of the report who serves as director for Kaiser Permanente’s Center for Effectiveness & Safety Research. “We landed on premiums because we thought that was most understandable to a wide range of people,” she said, adding that a premium
IOM committee members discussed their essential benefits “framework” at a news briefing in Washington last week, recommending that HHS set a premium target for a health benefits package.