The principal intent of the Patient Protection and Affordable Care Act (ACA) is to enable previously uninsured Americans to obtain health insurance. To accomplish this, in part, subsidized plans will be offered to low- and moderate-income individuals and small employers through health insurance exchanges. Plans qualified to be offered through exchanges must at minimum include “essential health benefits” (EHB). The ACA is not very specific on the definition of the EHB, except that such benefits shall include at least 10 enumerated general categories and that the scope of the EHB shall be equal to the scope of benefits provided under a typical employer plan. The ACA requires the Secretary of the Department of Health and Human Services to define the essential health benefits.
The Institute of Medicine (IOM) was asked by the Secretary to make recommendations on the methods for determining and updating the EHB. Notably, the request was to focus on criteria and policy foundations for the determination of the EHB, not to develop the list of benefits. The IOM formed a committee of volunteers with varied perspectives and professional backgrounds; the committee held four face-to-face meetings and numerous conference calls. Broad public input was obtained. In two open workshops, the committee heard from more than 50 witnesses, and 345 comments were received in response to questions posted on the Web. The consensus report then underwent rigorous external review in accordance with procedures established by the Report Review Committee of the National Research Council.
As the committee examined its charge, it saw two main questions for the Secretary: (1) how to determine the initial EHB package and (2) how to update the EHB package.
Defining the initial EHB package. In considering how to determine the initial EHB package, the committee was struck by two compelling facts: (1) if the purpose of the ACA is to provide access to health insurance coverage, then that coverage has to be affordable; and (2) the more expansive the benefit package is, the more it will likely cost and the less affordable it will be. How to balance the competing goals of comprehensiveness of coverage and affordability was key.
The committee concluded that it is best to begin simply by defining the EHB package as reflecting the scope and design of packages offered by small employers today, modified to include the 10 required categories. This package would then be assessed by criteria and within a defined cost target recommended by the committee. The committee considered how four policy domains—economics, ethics, population-based health, and evidence-based practice—could guide the Secretary in determining the EHB package in general. From these policy foundations, the committee recommends: criteria to guide the aggregate EHB package; criteria to guide specific EHB inclusions and exclusions; and criteria to guide methods for defining and updating the EHB.
To ensure affordability and to protect the intent of the ACA, 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. Committee members believe that absent a premium target, there would be no capacity to acknowledge the realities of limited resources and the ongoing need for affordability of the package. The EHB package should be modified as necessary to meet this estimated premium, including using a structured public deliberative process. In addition, the committee recommends that states operating their own exchanges be able to design a variant of the EHB package if certain standards are met.
Updating the EHB package. Both medical science and our understanding of how best to design insurance products will change over time. Thus, the committee recommends creating a framework and infrastructure for collecting data and analyzing implementation of the initial EHB; a National Benefits Advisory Council is recommended to give the Secretary advice on the research plan and on updates to the EHB package. The committee believes that the EHB package should become more fully evidence-based, specific, and value-based over time. In addition, as with the initial package, costs must be taken into account so that any service added to the package should be offset by savings, such as through the elimination of inappropriate or outmoded services.
Finally, the committee noted that even with the use of a premium target, the affordability of the EHB package is threatened by overall rising medical costs in the United States and recommends that the Secretary, in collaboration with others, develop a strategy to reduce health care spending growth across all sectors.
