COMMENTARY

Medicare Overpayment; Older Doctors Sued; Health Benefits

Wayne J. Guglielmo, MA

Disclosures

March 16, 2012

In This Article

Is It a Bad Idea for Each State to Determine Its Own Essential Health Benefits?

A pair of opinion pieces in the February 23 issue of New England Journal of Medicine raises a crucial question about the implementation of the Patient Protection and Affordable Care Act (PPACA): Did the Obama administration create a sound and fair public policy when it had HHS Secretary Sebelius announce in December that states would now have the right to determine what constituted essential health benefits (EHBs)?

Alan Weil, executive director of the Washington, DC-based National Academy for State Health Policy,[3] argued in the affirmative. Invoking the historical principles of federalism, Weil cites 3 main benefits for permitting states to make their own EHB determinations.

First, in the realm of health insurance, as in so many other areas, states are ideally suited to discover what works and what doesn't. "Allowing for variation, particularly with regard to the boundaries of coverage, is an excellent way to learn both the value and cost of that coverage," he explains.

The second reason to give states greater freedom in determining EHBs, Weil says, "is to match policy to the local context and conditions." This greater freedom increases the likelihood that people who have coverage will be able to retain it unchanged, and that people who don't have coverage will end up with something similar to their neighbor's, he says.

Moreover, permitting states to gauge EHBs "in terms of one of the dominant plans already in place within their jurisdiction," which the rules require, makes it more likely that any EHB package selected will have "already met a market test of affordability."

Finally, says Weil, this approach to determining EHBs creates a "better match" between policy and local values: "Fundamentally, decisions regarding the scope and scale of the EHBs are decisions regarding the portion of healthcare costs that should be shared rather than borne by the individual. A national compromise on this matter is likely to disappoint everyone."

Weil acknowledges that the federalist approach has at least 1 major drawback: It may not be the most efficient "use of resources to have 50 states analyze the relative merits of 10 different options for EHBs" -- the number set out in PPACA -- while they also ponder the fiscal impact of these options.

Still, says Weil, PPACA rules governing EHB composition make extreme variations among states unlikely and more likely to be related to cost-sharing than to the choice of essential services.

The Flip Side Says It's Negative

But Jennifer Prah Ruger, PhD, of Yale School of Public Health and Yale School of Medicine, disagrees. In her New England Journal of Medicine opinion piece, she argues that giving states flexibility to select plans that serve as "benchmarks" for others will inevitably lead to inequities.[4]

"Health plans will be allowed to change the makeup of specific benefits and set their own quantitative limits," she argues. When this happens, "where one lives will be a key determinant of the benefits one receives." And things could become even worse, she adds, if HHS decides to permit substitution across benefit categories; in this case, she says, there's a real danger that some services or benefits in specific categories "could be eliminated altogether."

Ruger also worries that "a state-by-state approach carries the potential for discrimination against patients with rare, severe, or costly health conditions." A uniform national benefits package might also preclude "rare or costly health conditions," she acknowledges, but "it would at least avoid the troubling arbitrariness of state-based variation in coverage." And if that uniform set of EHBs proved inadequate, she adds, it would be easier to fix than "dozens of different state plans."

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