Understanding Obamacare’s Essential Health Benefits for MA: Square Peg in a Round Hole?
The Affordable Care Act (ACA) requires insurers to provide an essential health benefits package (EHB). ACA legislation identifies ten general categories of mandated coverage (see right hand side below). A recent HHS informational bulletin outlined the scope of EHB in any given state must be equal to:
- 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 plan options by enrollment;
- The largest HMO plan offered in the state’s commercial market by enrollment.
States will need to spend a significant amount of time deciding what “benchmark typical employer plan” they would like to use, or HHS will select the small group plan with the largest enrollment in the state as a default. Michael Ramlet and Nicole Fisher at the American Action Forum recently released a brief outlining the many procedural red flags surrounding the EHB informational bulletin.
Table 1 is a comparison of Massachusetts’ (MCC) for plans sold in the Connector and ACA’s Essential Health Benefits:
Table 1: MCC vs EHB
|Massachusetts Minimum Credible Coverage (MCC)||
ACA: Essential Health Benefits (EHB)
|MCC compliant plans must provide coverage for a broad range of medical services. There must be some level of coverage for:
||Essential Health Benefits must include items and services within at least the following 10 categories:
While EHB appears to cover a wide variety of health care needs, there still remains ambiguity as to how current state mandates will be affected by federal requirements. Some Massachusetts mandates align with EHB. However, many do not fall within any of the EHB categories, or it is unclear if they will overlap. For instance, Massachusetts MCC regulations give a robust definition of maternity and newborn care, whereas the ACA does not provide details.
What will EHB Cost?
Below is an attempt to evaluate how Massachusetts’ state mandates will overlap with EHB. The left column includes specific Massachusetts health mandates that we anticipate will fall under the EHB. The right column lists many Massachusetts mandates that we anticipate will fall outside the EHB. Section 1311(d) (3) (B) of the Affordable Care Act discusses the additional costs that states will be required to fund for care beyond the federal EHB mandates.
Policymakers will have many decisions to make and will have to weigh the costs and benefits of additional state mandates. States and consumers will have to pay 100% of costs from mandates outside of EHB in the form of higher premiums.
Table 2**: What Mandates will be covered?
Anticipation of Overlap with Federal EHB
Uncovered Additional State Mandates
|(EHB 4) Maternity Care
(EHB 5) Mental health care ($79.56/year)
(EHB 7) Rehabilitative services:
(EHB 8) Lab services:
(EHB 9) Preventative Treatments:
|Cancer related services:
Fertility and Contraceptive Services:
Other diseases & disorders:
Various care services:
Providers Mandated Coverage:
**Prices from the 2004-2005 Massachusetts Estimated Annual Spending on Mandated Benefits (Claims + Administration). The report estimated the cost of mandates to be roughly $1,320,000,000 for 04-05. At least eight additional mandates have been enacted since 2005.
The only state based report we found evaluating the ambiguities between federal and state mandates was a January 2011 study compiled by the California Health Benefits Review Program (CHBRP). Policy analysts evaluated five areas for federal and state policymakers to consider: maternity and newborn care, mental health services, substance use disorder services, prescription drugs, and pediatric services, including oral and vision care. Within these categories, there is significant confusion of overlap between current insurance provisions and the new mandate. For example, under California law, there is no overarching statewide mandate for maternity care; however State Managed Health Care Plans must cover maternity and pregnancy-related care under emergency and urgent care. The authors conclude that further clarification of federal requirements is needed for states to know the fiscal impact of EHB mandates, and the same appears to be true in Massachusetts.
The question of how to transition to EHB for states is a latent issue buried under the mountains of other policy decisions that must be made under the ACA. Since HHS decided to invent an informational bulletin, states are left with greater uncertainty to the future rulemaking process. Additionally, as Ramlet and Fisher point out, states must move forward lacking the benefit of a cost impact analysis, having uncertainty because of conflicting details between the bulletin & the ACA, and dealing with vagueness about the flexibility left to insurers to offer new innovative plan designs.
(This post was written with Alyssa Baker)