A highly anticipated Institute of Medicine report released late Thursday recommends that the healthcare law’s guaranteed benefits reflect “the scope and design of packages offered by small employers today” rather than an exhaustive list of benefits.
The law requires healthcare plans to offer a package of “essential health benefits” — EHBs — if they wish to compete on federally subsidized state health exchanges starting in 2014. The law left it up to the Health and Human Services secretary to determine what are and are not EHBs, however — with input from the IOM.
John Ball, chairman of the IOM committee that wrote the report, said in a news release: “This report offers guidance for developing a package of essential health benefits that will achieve two equally important goals: to provide coverage for a range of Americans’ health needs and to ensure the affordability of coverage, particularly for small employers and individuals who must buy their own insurance.”
Instead of setting a level of benefits and worrying about price later, the report takes the opposite approach.
“To ensure affordability and to protect the intent of the [healthcare law],” the IOM said in the report, “the committee concluded that costs must be considered both in the determination of the initial EHB package and in its updating. Thus, the cost of the initial EHB package resulting from the previous steps should be compared to a premium target, defined by the committee as what small employers would have paid, on average, in 2014.”
The insurance industry embraced the report.
“With this thoughtful report, the IOM is urging policymakers to strike a balance between the affordability of coverage and the comprehensiveness of coverage,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans. “We agree that this balance is critical to ensuring that individuals, working families and small employers can afford health insurance. The recommendation that the initial EHB package reflect the scope of benefits and design provided under a typical small-employer plan is an important step toward maintaining affordability.”
The report urges HHS to gauge potential services and products against a set of criteria before deciding whether they should be covered. The criteria include “medical effectiveness, safety and relative value compared with alternative options.”
And it urges the department to seek public input to make needed adjustments as needed while offering each state the flexibility to offer a different benefit design on its exchange as long as it meets the law’s standard.
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“I appreciate the work of the Institute of Medicine that led to today’s report on a process for determining essential health benefits,” she said in a news release. “I have heard from states, insurers, patients, providers and employers on this topic and I look forward to reviewing these recommendations and proposing options for the essential health benefits package soon.
“But before we put forward a proposal, it is critical that we hear from the American people. To accomplish this goal, HHS will initiate a series of listening sessions where Americans from across the country will have the chance to share their thoughts on these issues. These conversations will help us ensure that every American can access quality, affordable health coverage they can rely on.”