Essential health benefits, for NY.

You may remember some talk about “essential health benefits” (EHBs) under the ACA back in October when the Institute of Medecine released its recommendationsto the US Department of Health and Human Services (HHS).   At that point, it was still unclear what HHS was going to come back with.

Well, in December HHS released a bulletin outlining what it planned to do about EHBs. In a nutshell, the bulletin says that each state will be able to choose an existing plan in their own individual and small group markets that will serve as a benchmark for all other plans operating inside and outside of the forthcoming health insurance exchanges.

This is actually pretty good for New York, and I’ll tell you why.  For one, New York has a pretty robust set of consumer protections in our health insurance market.  This is because the state currently has about 44 mandated insurance benefits.  These are basically benefits that are required to cover the treatment of specific health conditions, certain types of healthcare providers, and some categories of dependents, like kids placed for adoption.  So, if anything, we know that the EHBs will be at least as good as what we have now (which is way better than a lot of other states have).

The second reason is that allowing the state to choose its own benchmark means that the state will be able to have our benefit mandates paid for with federal funds.  See, the ACA says that states will have to pay for any additional benefit mandates on top of those included in the EHBs.  But, if all of the state mandated benefits are included in the definition of the EHBs, well, then you get my drift. Of couse, states don’t exacly have a blank check here either: As of now, only mandated benefits in place by December 31, 2011 will be eligible to be included in the EHBs in 2014

So, this is a pretty good deal for NY.  However, some states with weaker consumer protections may actually be able to take advantage of this benchmark approach to pick a plan with really low benefit standards. In this respect, it’s important for HHS to set a clear and uniform minimum standard to serve as a floor for benefits overall (while maintaining state flexibility to choose plans).

To learn more about EHBs, check out the following docs: