After writing about “Essential Health Benefits” for HealthBeat, I wrote a shorter post for Time.com (the online version of Time magazine), updating what I had written here.
This month, the public will have a chance to weigh in how they think “essential” should be defined. See below for a link to places, times, and dates where “listening sessions” will be held in cities across the nation, as well as information on how to register. Time is of the essence. Insurers are calling for the Secretary of Health and Human Services to spell out the essential benefits that must be included in all policies sold to individuals and small employers by the end of December.
This Time.com post appeared Tuesday. Below, the first half of the post (You can read the full piece on Time.com’s “Moneyland”)
At the end of the excerpt below, I comment on how both tax credits and the state-based Purchasing Exchanges will make insurance more affordable for small employers and individuals who are buying their own policies.
The health reform legislation that President Obama signed in 2010 has been overshadowed by our broad economic problems, and its popularity appears to be hurting even among its supporters. In short, many Americans appear to be losing interest in health reform.
This is grimly ironic, and arguably tragic, because many of the law’s critical details still need to be spelled out, and one of the most important open questions—What “essential services” must all insurance plans cover?—will be answered before the year is up.
In fact, the Department of Health and Human Services (HHS) held the first of ten public “listening sessions” on the issue on Friday in Chicago; two more will be held today in Boston and Philadelphia. (Dates and locations of the rest, and information on how to attend, is here.)
Why is the definition of “essential services” so critical? Because the success of the entire law depends on finding the right balance between how comprehensive required coverage will be and how affordable it will be.
This is crucial to understanding what’s at stake. If, on one hand, the baseline for minimum benefits is set too low, sick patients are likely to fall through the holes of “Swiss cheese” policies that don’t cover things like diabetes care management and hospice care. Wealthier Americans, meanwhile, would likely plug such holes by buying pricier, more comprehensive plans. Thus, as N.C. Aizenman of the Washington Post put it recently, “the market could end up split between cheap, bare-bones plans of use only to the healthy, and exorbitantly priced full coverage plans financially out of reach of many sick people who need them most.”
If, on the other hand, the “essential benefits” package is set too high, small employers and individuals simply might not be able to afford the premiums. The law requires everyone to buy health insurance or pay a penalty. But if the base price is set too high, many healthy young people would likely decide to pay the penalty instead of buying insurance. Meanwhile, chronically ill individuals would pile into the pricey plans, skewing the risk pool and sending premiums even higher.
So how does HHS intend to strike the right balance? The reform legislation listed 10 general categories of health services that should be covered, including mental health and substance use disorder services; oral and vision care for children; and chronic disease management. But it also asked a 19-member Institute of Medicine panel to propose a process for defining what is “medically necessary.”
Let me add that fear-mongers who suggest that a rich and comprehensive package of benefits will push premiums to unaffordable heights ignore the ways that reform legislation lowers the cost of insurance for small businesses and for individual. (Note that under reform legislation, the “essential benefits” rule applies only to small businesses and individuals purchasing their own insurance. Large groups and large employers who self-insure are not required to cover the package of benefits that HHS defines as “essential”)
First, small businesses will receive tax credits to help offset the cost of insurance. Today if an employer has fewer than 25 employees, and pays average annual wages below $50,000, he qualifies for a small business tax credit of up to 35 percent. In 2014, the credit rises to 50 percent.
Moreover, individuals and all small companies with fewer than 100 employees will find premiums lower than they are today because they will be buying insurance in state-based “Purchasing Exchanges,” where they automatically become part of a “large group.” Because the administrative costs of marketing and hand-selling policies to individuals and small firms are so high, small employers now pay 18 percent more than large companies for the same insurance. In the Purchasing Exchanges, both small businesses and individuals will enjoy the advantages of being part of a much larger group of buyers.
Finally, too often, those writing about essential benefits suggest that we have to choose between “Cadillac care” and “bare bones coverage.” This just isn’t true. If we define “essential benefits” as “effective treatments,” and let medical evidence serve as the measure of what is “effective,” we can afford comprehensive, safe care for all Americans.