2

The Policy Context for Essential Health Benefits

The complexities of implementing Section 1302 of the Patient Protection and Affordable Care Act (ACA) were apparent in presentations and discussion reflecting the perspective of the U.S. Department of Health and Human Services (HHS) on the Institute of Medicine (IOM) committee’s task and Congress’ intent for the EHB package. Dr. Sherry Glied, Assistant Secretary for Planning and Evaluation (ASPE) and study sponsor, reviewed HHS’s objectives for the commissioned study and highlighted several questions on which HHS is seeking guidance. Next, a bipartisan panel of former and current Congressional staff members provided contrasting insights into Congress’ intent in legislating Section 1302. Third, given the ACA’s requirement that the Secretary of Labor conduct a survey of employer-sponsored coverage to inform HHS about the benefits “typically covered by employers,” Department of Labor (DOL) representatives explained the DOL’s survey methodology and approach to gathering information from employers.

PRESENTATION BY DR. SHERRY GLIED, ASSISTANT SECRETARY FOR PLANNING AND EVALUATION (ASPE), HHS

The discussion of the essential health benefits (EHB) in Section 1302 amounts to only a handful of pages of the ACA, but these few pages, Dr. Glied said, “will influence the nature of coverage available to millions of people in the United States.” Dr. Glied began by reviewing the purpose of the IOM study, describing ASPE’s expectations, and clarifying that ASPE does not “expect the committee to identify the individual elements or the detailed provisions of a package of essential health benefits.” Instead, ASPE is asking the committee to develop a framework for considering the EHB. Such a framework would be “logically cohesive, address statutory requirements, and serve HHS now and in the future.”

Dr. Glied reiterated that beginning in 2014, the EHB are required to be offered by qualified health plans participating in health insurance exchanges,1 insurance plans in the individual and small group markets outside the exchange,2 Medicaid benchmark and benchmark equivalent plans,3 and state basic health programs for low-income individuals not eligible for Medicaid.4 In response to an inquiry from committee member Dr. John Santa, Dr. Glied

____________________

1 Patient Protection and Affordable Care Act of 2010 as amended. Public Law 111-148 § 1301(a)(1)(B), 111th Cong., 2d sess.

2 § 1201, amending Public Health Service Act by inserting § 2707(a).

3 § 2001(c).

4 § 1331(b)(2).



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2 The Policy Context for Essential Health Benefits The complexities of implementing Section 1302 of the Patient Protection and Affordable Care Act (ACA) were apparent in presentations and discussion reflecting the perspective of the U.S. Department of Health and Human Services (HHS) on the Institute of Medicine (IOM) committee’s task and Congress’ intent for the EHB package. Dr. Sherry Glied, Assistant Secretary for Planning and Evaluation (ASPE) and study sponsor, reviewed HHS’s objectives for the commissioned study and highlighted several questions on which HHS is seeking guidance. Next, a bipartisan panel of former and current Congressional staff members provided contrasting insights into Congress’ intent in legislating Section 1302. Third, given the ACA’s requirement that the Secretary of Labor conduct a survey of employer-sponsored coverage to inform HHS about the benefits “typically covered by employers,” Department of Labor (DOL) representatives explained the DOL’s survey methodology and approach to gathering information from employers. PRESENTATION BY DR. SHERRY GLIED, ASSISTANT SECRETARY FOR PLANNING AND EVALUATION (ASPE), HHS The discussion of the essential health benefits (EHB) in Section 1302 amounts to only a handful of pages of the ACA, but these few pages, Dr. Glied said, “will influence the nature of coverage available to millions of people in the United States.” Dr. Glied began by reviewing the purpose of the IOM study, describing ASPE’s expectations, and clarifying that ASPE does not “expect the committee to identify the individual elements or the detailed provi - sions of a package of essential health benefits.” Instead, ASPE is asking the committee to develop a framework for considering the EHB. Such a framework would be “logically cohesive, address statutory requirements, and serve HHS now and in the future.” Dr. Glied reiterated that beginning in 2014, the EHB are required to be offered by qualified health plans par- ticipating in health insurance exchanges,1 insurance plans in the individual and small group markets outside the exchange,2 Medicaid benchmark and benchmark equivalent plans,3 and state basic health programs for low-income individuals not eligible for Medicaid.4 In response to an inquiry from committee member Dr. John Santa, Dr. Glied 1 Patient Protection and Affordable Care Act of 2010 as amended. Public Law 111-148 § 1301(a)(1)(B), 111th Cong., 2d sess. 2 § 1201, amending Public Health Service Act by inserting § 2707(a). 3 § 2001(c). 4 § 1331(b)(2). 17

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18 PERSPECTIVES ON ESSENTIAL HEALTH BENEFITS said these Medicaid benchmark plans are a “distinct entity” from current Medicaid programs. Benchmark plans may have a scope of coverage different from the usual mandatory Medicaid coverage. Further, Dr. Glied noted, the ACA explicitly permits continuation of utilization management practices in common use at the time of enactment by group health plans and health insurance issuers, and bars the issuance of regulations that would prohibit their use.5 In response to further inquiry from Dr. Santa, Dr. Glied clarified that ASPE does not expect the IOM committee to identify these commonly used utilization management practices, but said that when the Chief Actuary of the Centers for Medicare & Medicaid Services determines the EHB package is equal in scope to that of a typical employer and determines actuarial value, the actuary “will look at what is actually in practice in the world and make estimates on that basis.” Dr. Glied drew attention to several elements of Section 1302, including those pertaining to the need for the EHB to be balanced among categories, be non-discriminatory, and include a scope of benefits equal to the scope of benefits provided under a typical employer plan. In addition, she said the committee could provide ASPE with guidance on the following types of questions: • At what level of specificity should EHB be framed? • What can be learned about plan design, consistency, and fairness from the practices of employers who offer multiple plans? • Assuming that insurers continue to have a role in deciding which services to pay for, what information is needed to monitor the decisions that are made, how should that information be collected, and how should that information be used, if at all, in updating the EHB? What are the roles of exchanges, states, and the federal government in this task? • How are issues of time, duration, frequency, scope, and specific services best addressed? • What defines and distinguishes a medical service from a nonmedical service? How should this distinction be considered and applied in the context of defining EHB? • How can a federal standard for benefit coverage best reconcile existing state and regional variations in practices and benefit coverage patterns, including variations in state-mandated benefits? • How much flexibility should be given to states and/or the exchanges? • What criteria should be used to adjust EHB over time and what should the process be for their modification? How can modifications to EHB remain consistent with the initial benefit design while reflecting evolving science? Committee member Dr. Alan Nelson asked Dr. Glied to further elaborate on ASPE’s request that the committee “define and distinguish a medical service from a nonmedical service.” The EHB package, Dr. Glied responded, is intended to cover “those medical services that are required under essential health benefits.” One of the consider- ations that will logically arise, then, is what actually defines a medical service. While there are “many, many things that contribute to a person’s health,” not all of them are medical services. ASPE envisions the EHB package as including only those components deemed to be “medical,” and that would fall within a typical insurance package. Given the legislative requirement that EHB are equal in scope to the benefits under a typical employer plan, committee chair Dr. John Ball asked Dr. Glied to speak about the potential contradiction between benefits that may be essential vs. those that may be typical. Dr. Glied noted that this contradiction may be particularly apparent around the issue of nondiscrimination. “Thinking through how we develop an essential health benefits plan that meets both the requirements of the law that says ‘typical employer’ and says ‘nondiscriminatory’ is something we would like your advice about,” she said. Committee member Ms. Marjorie Ginsburg noted that other contradictions may arise if “typical” plans include benefits that are not “essential.” Dr. Glied confirmed the truth in this obser- vation, but suggested the committee “focus more on the process than on the content of the plan.” This exchange prompted committee member Dr. Elizabeth McGlynn to ask for more details on what is “typical,” asking, “Should typical reflect the markets that these plans will be issued in” or should it be the “average” typical plan? Because 5 § 1563(d)(1).

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19 THE POLICY CONTEXT FOR ESSENTIAL HEALTH BENEFITS the legislation, Dr. Glied noted, “is silent on what is meant exactly by typical,” the committee’s interpretation of this term would be useful to ASPE. ASPE recognizes the need to provide clear direction to the states and insurance industry, understands that the ACA obligates states to pay for benefits they mandate beyond those required by the Secretary, acknowledges the need for flexibility across states, and appreciates the need to provide meaningful coverage while assuring an affordable premium. Above all, she said, HHS “strives to remember the interests of consumers and patients.” When committee member Mr. Leonard Schaeffer asked for guidance as to whether “affordable implies both affordable for the individual and affordable for the government,” Dr. Glied suggested that the IOM committee remain mindful of the cost of coverage as it considers the EHB. In response to an inquiry by committee member Mr. Christopher Koller, she confirmed that the committee’s task “is not about the actuarial value of the benefit. It is about what the scope of the benefit is in terms of the essential health benefits.” Dr. Glied concluded by informing the committee and audience that the IOM and ASPE were currently reviewing over 300 responses to a web-based IOM public comment form (Appendix B). LEGISLATIVE INTENT Mr. Mark Hayes, Ms. Katy Spangler, Mr. David Schwartz, and Dr. David Bowen, all of whom were work - ing for elected officials involved in the evolution of the EHB provision in the ACA, agreed that the legislature intended for the EHB to be a set of benefits constrained by the scope of benefits offered by a typical employer yet reflected at least the 10 categories of care in Section 1302. Disagreement emerged about what employer size should be considered typical and thus the degree of comprehensiveness in the benefit package, but presenters noted the language of Section 1302 was subject to relatively “little debate” in the House or Senate. The presenters agreed that in terms of the degree of specificity on benefits within the bill, the legislative language was more general and was not to reflect the more detailed benefit descriptions that were included in President William Clinton’s Health Security Act.6 Greater detail was expected during implementation at the federal, state, and health plan levels. THE REPUBLICAN PERSPECTIVE The committee first heard testimony from two congressional staff members present during Republican health reform discussions. Mr. Mark Hayes spoke from his experience as the Health Policy Director and Chief Health Counsel for the Senate Finance Committee working under Committee Ranking Member Charles Grassley (R-IA), while Ms. Katy Spangler drew from her experience as a Senior Health Policy Advisor for the Senate Health, Education, Labor, & Pensions (HELP) Committee as well as through her work for Senator Mike Enzi (R-WY). PRESENTATION BY MR. MARK HAYES, GREENBERG TAURIG, LLP Mr. Hayes began by speaking of the origin of Section 1302, explaining that “the basic framework of the benefit structure” originated in the Senate Finance Committee and remained “structurally intact” throughout the various iterations of the bill and ultimately in the law. The ACA uses the term essential, he pointed out, because the leg - islature intended these to be basic not comprehensive benefits. The legislation did not intend for a Medicare- or Medicaid-like prescriptive benefit design. Instead, the Secretary of HHS was intended to define and update the categories of covered treatments, which, in turn, generally results in coverage for the items and services within broad benefit classes, but with “detailed benefit designs defined in the private market.” The Senate Finance Committee, he said, evaluated numerous models when it framed the EHB package. It ultimately rejected fee-for-service (FFS) Medicare because its benefit package is “defined at the federal level in great specificity” and has remained “largely unchanged” since 1965. While Medicare Part C (Medicare Advantage plans) has “additional flexibility for benefit design,” the plans must still cover all of the benefits of traditional fee- for-service Medicare. Medicare supplemental plans are also “very prescriptive and detailed,” as were the benefits 6 Health Security Act of 1993, HR 3600, 103rd Cong., 1st sess., Congressional Record (November 20, 1993).

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20 PERSPECTIVES ON ESSENTIAL HEALTH BENEFITS specified in the Health Security Act.6 Instead, the Finance Committee focused on the Federal Employees Health Benefits Program (FEHBP) and the Massachusetts Health Care Reform Law7 as both programs “define very broad categories of benefits” and rely on an actuarial equivalence standard. As further evidence of the legislature’s intent, Mr. Hayes noted that if Congress intended to have a prescriptive benefit package as detailed as the 61 pages of benefits explicated in the Health Security Act, 6 it would be likely that the 60 percent actuarial package (i.e., the ACA’s bronze plan) would need to have very high cost sharing, which would be “self defeating for the structure of the design.” When committee member Dr. David Guzick asked for more details about determining this actuarial value, Mr. Hayes replied that the actuarial analysis would be governed by accepted standards for actuarial equivalency and will likely be overseen at both the state and federal levels when these packages are implemented. In response to a query by Mr. Koller on guidance from HHS to states, Mr. Hayes noted that the exchanges themselves are “tasked to find affordable choices of health benefit plans” and to grade these plans based on criteria developed by the Secretary of HHS. The ACA, he said, “empowers the exchanges to accept some very specific duties that I think point clearly to what the congressional intent was about how minimally specific the benefit design should be defined at the federal level.” Dr. Guzick noted that the categories in Section 1302 are defined in terms of types of services, but that “another way to think about health benefits is in terms of condition.” How are benefits for particular conditions, he asked, accounted for in the list of benefits? The intent, Mr. Hayes reiterated, “was not to have Congress or the Secretary get to the level of specificity” needed to list condition-specific benefits. These condition-specific decisions “would be made in the marketplace to reflect evolving clinical knowledge, appropriate practices, and appropriate oversight at the state level by insurance commissioners.” In response to an inquiry from committee member Ms. Amy Monahan, Mr. Hayes noted that the Senate Finance Committee considered the role of state mandates, but wanted to avoid the politically difficult task of determining which benefits mandated at the state level should or should not survive at the federal level. Citing state-specific mandates for Lyme disease in Connecticut,8 panelist Mr. David Schwartz supported the notion that state-mandated benefits often “make a lot of sense for certain states and really not as much sense for other states.” The Committee, Mr. Hayes said, avoided the issue by including broad categories rather than specific benefits while specifying that state mandates beyond the federally determined EHB are acceptable and permissible, but that states need to “pay the difference for the additional subsidies required to pay for those additional benefits.” PRESENTATION BY MS. KATY SPANGLER, STAFF, SENATE HEALTH, EDUCATION, LABOR, & PENSIONS (HELP) COMMITTEE Ms. Spangler began by expressing the importance of Section 1302 to members of the HELP Committee and by clarifying that while it is true that the section remained largely unchanged throughout the legislative process, it was “highly debated in both committee markups as well as on the floor” and that it was the “subject of many amendments during all of those processes.” She then expressed the HELP Committee’s “extreme concern about increasing premiums.” This concern, she said, is shared by the President, the Democratic Senate majority, and the Republican minority. Throughout the health reform debate, she noted, the Obama administration “repeatedly said” that the ACA could decrease premiums for families by $2,500 a year (The White House, 2009). Furthermore, Ms. Spangler noted, if the EHB package is “so comprehensive” that small employers and uninsured individuals cannot afford it, the EHB package will run counter to the very premise of the ACA. Notably, the bronze plan’s actuarial value was actually lowered once the bill was reported out of the Finance Committee (from 65 percent to 60 percent), which demonstrates how important it is that Americans have access to plans with lower premiums. Further, after the bill was reported out of the Senate Finance committee, the eligibil - ity criteria for catastrophic plans were expanded to give more Americans access to lower cost catastrophic plans. “We have seen in Massachusetts and with Medicare Part D,” Ms. Spangler said, “that an overwhelming number 7 An Act Providing Access to Affordable, Quality, Accountable Health Care. Chapter 58 of the Acts of 2006 of the Massachusetts General Court (April 12, 2006). 8 Connecticut General Statute, Chapter 700c § 38a-492h.

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21 THE POLICY CONTEXT FOR ESSENTIAL HEALTH BENEFITS of enrollees choose the lower cost plans even if that means the benefit packages are not as rich” (HHS, 2007; MA Health Connector, 2011). Choice, she reiterated, is important for Americans. In response to Ms. Spangler’s com - ment, Ms. Ginsburg asked whether exchanges should be required to offer at least one plan that is “just the floor” to ensure an affordable plan is always available. The marketplace, Ms. Spangler responded, “will continue to demand those types of plans,” and commissioners in the states “should ensure” that these affordable plans are available. Echoing a point made by Mr. Hayes, the “buckets of care” included in the ACA, she said, were “intentionally left vague so that details of what plans would cover could be left to the marketplace.” She also confirmed that while Congress looked to the FEHBP statute “as a model,” the FEHBP benefits required in its authorizing statute are much less comprehensive than those that were included in the ACA. She cautioned the IOM committee against recommending that the EHB plan be “too” comprehensive: “the more regulations are published and more require - ments are enacted, premiums will continue to increase, which will likely lead small employers to drop coverage.” “A lot rides on” the definition of EHB, Ms. Spangler warned. “In the post-2014 world,” all new plans sold in the individual and small group markets must provide the EHB, and employers wanting to avoid a tax will have to provide qualified plans to employees. “It is critical,” she advised, “that HHS not overreach in defining essential health benefits. Doing so would increase premiums and decrease choices to such an extent that fewer people will be able to afford health insurance.” She concluded by reiterating the importance of an affordable benefit package: if the benefit package is too comprehensive and thus too costly, more people will receive exemptions from the individual mandate, due to the premium exceeding a set percentage of their income. Mr. Hayes concurred, noting the penalties for not complying with the individual mandate are relatively light compared to expected premiums. THE DEMOCRATIC PERSPECTIVE Following presentations by Mr. Hayes and Ms. Spangler, the IOM committee gained additional insight into the congressional intent behind Section 1302 from those present during Democratic discussions, hearing testimony by Mr. David Schwartz, Acting Chief Health Counsel for the Senate Finance Committee and Dr. David Bowen, former Staff Director for Health Policy for the Senate HELP Committee. PRESENTATION BY MR. DAVID SCHWARTZ, STAFF, SENATE FINANCE COMMITTEE Mr. Schwartz expanded on the points raised by Ms. Spangler, including that the Senate Finance Com mittee aimed to ensure Congress did not “overreach.” In 1993, for instance, the Health Security Act included “very specific, very detailed” provisions for the benefit package. Conversely, he said, in “crafting” the ACA, “Congress showed what its proper role is”: to define large categories of care, and then allow the executive branch to “do its job implementing the law and dealing with the specific details.” Congress intended, he said, “meaningful benefits so that when people get insurance, it will mean that they would really have access to health care.” To ensure the scope of the benefits would be “big enough so that people who get insurance through the exchange” have a meaningful package, the Senate Finance Committee “decided to link” the EHB standard to what is offered in typical employer plans. “It seems like a very reasonable concept,” Mr. Schwartz said, “that there are millions and millions of Americans getting ESI [employer-sponsored insurance] and so let’s use that as sort of a guardrail.” Such a guardrail also helped ensure the EHB were both affordable and flexible. A second principle is that benefit packages have to allow for innovation, including advances in technology and treatments. The “approach” put in place in the ACA, he said, allows for the Secretary of HHS to design EHB that are both affordable and flexible. When Mr. Schaeffer asked Mr. Schwartz to describe the legislative intent behind affordable (i.e., “Does it mean affordable to the individual who is covered or affordable to the government?”), Mr. Schwartz replied: “Our intent was to make it affordable from the perspective of an individual.” Mr. Hayes added that members debated whether they meant affordability from the standpoint of the federal government and taxpayers, from the standpoint of low-income individuals, or from the standpoint of an average person. All of those standpoints, Mr. Hayes said, “are built into that one word.”

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22 PERSPECTIVES ON ESSENTIAL HEALTH BENEFITS PRESENTATION BY DR. DAVID BOWEN, THE BILL & MELINDA GATES FOUNDATION Dr. Bowen echoed the comments of the previous speakers, saying that the language in Section 1302 is delib - erately “very pared down” in terms of describing the benefit package. The HELP Committee, he said, made an early decision that “less is more” when describing EHB in the bill. In winter 2009, the HELP Committee staff convened a group of stakeholders from the Chamber of Commerce, Families USA, the American Medical Associa - tion (AMA), and labor unions to “talk about what the benefits package should look like” using four models: the few lines of text in the Massachusetts Health Care Reform Law,9 two amendments promulgated by the Common- wealth of Massachusetts to flesh out the essential benefits defined in that law, 10 and the many pages in the Clinton reform bill.11 These models provided two extremes: the Massachusetts law, he said, is “very, very brief” whereas the Clinton bill involved an enormous amount of detail. The committee intended, he said, for the EHB package description to be “somewhere in the middle.” After these discussions with stakeholders, Dr. Bowen “went away and wrote up something that was midway between” Massachusetts’ first and second set of regulations; this text, he said, was “added to and modified a bit.” However, he agreed with the earlier panelists that the text has “survived largely intact,” though it includes several “important additions,” including habilitative services. Although the legislation does not say whether the “typical employer plan” should be for a small or large employer, “the general understanding that members [of Congress] had was this was a relatively generous pack - age” that is “more typical of a relatively generous” large employer plan that contains “at least” the 10 categories of care. Similarly, Mr. Schwartz said the congressional committees identified “categories of care that we thought would lead to a robust benefit package and that would provide meaningful access to all kinds of care.” When committee member Dr. Joe Selby asked if the HELP Committee had considered how to more discretely specify the EHB or how to define medical necessity, Dr. Bowen noted that the HELP Committee purposely chose not to “sub-define” too many issues, as it would have “bogged” down the legislative process. He further stated that the HELP Committee did not make a distinction between medical and nonmedical services. CONTRASTING VIEWS Committee member Dr. Sam Ho pointed out the potential dichotomy between what Dr. Bowen and Mr. Schwartz described as a robust benefit package, and what Mr. Hayes and Ms. Spangler described as a minimum benefit pack- age that was not intended to be comprehensive. Mr. Schwartz confirmed that the EHB package is intended to be meaningful, offering a “floor not a ceiling,” while Ms. Spangler disagreed, noting that “I would just urge you again to look at the least robust version of the benefit package as meeting” the standard of minimum essential coverage. When Mr. Schaeffer called attention to Mr. Hayes and Ms. Spangler indicating that “typical” meant a “small group, low cost” plan, Dr. Bowen said that he disagreed: the Senate did not intend for a the EHB package to be a “skimpy plan.” While the EHB package is a minimum standard, Dr. Bowen reiterated that Congress intended this minimum to be consistent with a relatively generous large employer plan. Dr. Santa noted that the list of catego - ries included in the ACA includes oral care, which is not included in “typical employer benefit plans.” Mr. Hayes agreed that pediatric oral care is not generally covered under the FEHBP; this benefit, he said, was added during the amendment process. DEPARTMENT OF LABOR (DOL) SURVEYS ON EMPLOYER-SPONSORED INSURANCE Section 1302 requires the Secretary of Labor to conduct a survey of employer-sponsored coverage to determine the benefits typically covered by employers. Two representatives from the DOL, Joseph Piacentini, Office Direc - tor and Chief Economist, Office of Policy and Research, the Employee Benefits Security Administration (EBSA) 9 An Act Providing Access to Affordable, Quality, Accountable Health Care. Chapter 58 of the Acts of 2006 of the Massachusetts General Court (April 12, 2006). 10 956 CMR: Commonwealth Health Insurance Connector Authority (July 1, 2007). 11 Health Security Act of 1993, HR 3600, 103rd Cong., 1st sess., Congressional Record (November 20, 1993).

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23 THE POLICY CONTEXT FOR ESSENTIAL HEALTH BENEFITS and William Wiatrowski, Associate Commissioner for Compensation and Working Conditions, Bureau of Labor Statistics (BLS), provided the IOM committee with background and a progress update on the survey, the results of which were later made available in April 2011.12 PRESENTATION BY DR. JOSEPH PIACENTINI, EBSA, AND MR. WILLIAM WIATROWSKI, BLS Dr. Piacentini began by describing the role of the EBSA in administering employee benefits laws. In his role overseeing the agency’s economic research, aspects of the ACA that address research projects, studies, and surveys related to job-based health benefits are under his aegis. While acknowledging that the survey of employer-based benefits “is a major undertaking,” the DOL, he said, is utilizing its “very deep and rich data capabilities.” Mr. Wiatrowski then described the agency for which he works—the BLS—as the statistical arm of the DOL. The BLS provides nonpartisan economic data, and limits its role to providing data and analysis. The BLS, Mr. Wiatrowski reiterated, refers all policy issues to EBSA. Survey Methodology In conjunction with colleagues at HHS and EBSA, BLS identified the existing components of the National Compensation Survey (NCS) as appropriate to meet the ACA requirements for determining the benefits typically covered by employer-sponsored plans. For the past 30 years, the NCS has sampled small, medium, and large employers from the private sector, as well as state and local governments to collect data on benefit cost, incidence, and provisions. The data on government workers has been more limited than that collected for the private sector, but BLS is expanding that area.13 Like other surveys conducted by BLS, the survey is voluntary and some employers, Mr. Wiatrowski said, choose not to participate. The NCS has a response rate of approximately 75 percent and uses standard statistical techniques to adjust for nonresponse. Professional field economists employed by BLS contact each selected establishment to sample occupations, capture data on wages and benefits, and obtain copies of plan documents for health and retirement benefits. BLS then analyzes this information to obtain detailed provisions related to health and retirement benefits. Box 2-1 provides additional details. Respondents to the survey are asked to provide cost and participation data for each offered benefit plan and the actual plan documents. Mr. Wiatrowski said the latter are used to identify whether their plan participants are subject to limits and, if so, for details on these limits (e.g., specific services, deductible, and co-insurance). Data are captured for all types of plans, including Employee Retirement Income Security Act (ERISA) plans and self- insured plans. While the multi-employer plans specifically mentioned in the ACA are captured by the survey, they are not identified separately in data outputs. Multi-employer plans, Dr. Piacentini said in response to a question from Mr. Schaeffer, are plans that are jointly sponsored by two or more employers and a labor organization. The benefits and the employer contributions are generally subject to collective bargaining and determined in advance. These large plans often include “very small” employers. Health benefit plan documents range from formal, legal plan descriptions to brief comparison charts that describe multiple plans on a single page. BLS uses these documents to extract information on covered health care services and limits imposed by the plan. These results are presented as a percent of workers who participate in health care plans that cover these services and impose these limits. Dr. Ho asked if NCS’s sample size allows for analysis by employer size, including employers with fewer than 50 employees. The data, Wiatrowski answered, are presented by employer size categories. In summer 2010, HHS asked BLS for data related to the categories of services identified as essential in the ACA. BLS has used the plan documents from its most recent survey to develop information on 12 additional ser- vices and the limits imposed on those services (these data will not be sorted by size of employer). 12 The report can be accessed on the BLS website: http://www.bls.gov/ncs/ebs/sp/selmedbensreport.pdf (accessed April 19, 2011). The testimony does not reflect the findings of the April report. 13 BLS later released, covered services and limits in health benefit plans for state and local government workers, March 2011 available at: http://www.bls.gov/ncs/ebs/sp/smb_slgov.pdf (accessed April 19, 2011).

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24 PERSPECTIVES ON ESSENTIAL HEALTH BENEFITS BOX 2-1 Characteristics of the National Compensation Survey • Sample size: Total: ~36,000 establishments—Current Data Run: ~3,200 establishments • Provides data on: o employer costs for wages and benefits o occupational wages by location o benefit availability o detailed benefit provisions of health and retirement benefits • In the case of health care benefits, respondents are asked to: o identify each plan offered to each of the occupations o provide cost and participation data by plan o provide a copy of the plan description • Unit of observation: occupation • Data subsets o worker characteristics (occupational group, union status, full-time/part-time status) o establishment characteristics (industry, employment size, regional location) SOURCE: Wiatrowski, 2011. Survey Capabilities At the time of presentation, BLS was in the “final stages of extracting and tabulating” data for HHS, reported Mr. Wiatrowski. In lieu of that data, he provided the following results from the 2008 NCS (additional information, he said, is available on the BLS website14): • 99 percent of plan participants had coverage for hospital room and board charges • 67 percent of plan participants had coverage for hospice care The median deductible was $500 per individual per year15 • • The median co-payment for a physician office visit was $20 for a fee-for-service plan and $15 for health maintenance organization (HMO) Results showed considerable variation in the incidence16 and cost of health benefits, particularly based on industry and establishment size. In contrast, there was little variation in covered health services and plan limits. Dr. Selby asked Mr. Wiatrowski and Dr. Piacentini to clarify the variance in cost of health benefits. Mr. Wiatrowski noted that cost of benefits is both a function of the percentage of workers who are covered and the generosity in 14 U.S. Bureau of Labor Statistics. National Compensation Survey available at http://www.bls.gov/ncs/ (accessed February 8, 2011). 15 In plans that impose an overall plan deductible (where the deductible varied based on the provider, the median was $350 for preferred providers and $750 for out-of-network providers). 16 That is, who has the health insurance available to them from their employer and what percentage of workers who have it available actually participate in the plan.

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25 THE POLICY CONTEXT FOR ESSENTIAL HEALTH BENEFITS terms of covered benefits, and Dr. Piacentini added that their research shows a wide dispersion in premiums yet a similarity in actuarial value of plans. Although they have not investigated in sufficient detail to be able to attribute the differences to specific factors, he expects geography, and the risk characteristics of the employed group to be contributors. Data Limitations Mr. Wiatrowski acknowledged that capturing data from plan documents provided on a voluntary basis limits the information BLS can provide to HHS. Of the categories of additional services HHS asked BLS to investigate, “a number” of these, Mr. Wiatrowski said, could not be reviewed because the plan documents contained insuf - ficient information. Mr. Wiatrowski said, though, that BLS is interested in whether the approach of abstracting from plan docu - ments adequately meets the IOM committee’s needs for assessment of what is “typical” for employers or if different data would assist in updating the EHB. REFERENCES HHS (Department of Health and Human Services). 2007. Projected Medicare Part D costs drop by 30 Percent: $96 billion reduction due to competition and lower prescription drug plan bids; average national monthly premium declines to $22. http://www.hhs.gov/news/ press/2007pres/01/20070108a.html (accessed May 3, 2011). MA Health Connector. 2011. Monthly Health Connector summary report—April 2011. https://www.mahealthconnector.org/portal/binary/ com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/About%2520Us/Publications%2520and%2520Reports/2011/2011-4- 14/8%2520-%2520Final%2520-%2520Connector%2520Summary%2520Report%2520-%2520April%25202011%2520%25282%2529. pdf (accessed May 3, 2011). The White House. 2009. Statement by the President after meeting with House Democratic Leadership. http://www.whitehouse.gov/the_press_ office/Statement-by-the-President-after-meeting-with-House-Democratic-leadership/ (accessed April 19, 2011). Wiatrowski, W. 2011. Testimony to the IOM Committee on the Determination of Essential Health Benefits by William J. Wiatrowski, Associate Commissioner, U.S. Bureau of Labor Statistics, Washington, DC, January 13.

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