Prior to 2014, many health insurers sold “Swiss cheese policies”: insurance filled with loopholes. Even if you tried to read the fine print, you may not have understand all of the exceptions to your coverage – until you became sick. Then, the hole with your name on it opened, like a trap door.
At that point, you’d discover that while your insurance covered surgery, it did not reimburse for the rehabilitation you needed following surgery. Or, that while your policy paid for complications during pregnancy, it wouldn’t reimburse for a normal labor and delivery.
Most large companies with deep pockets were already providing comprehensive coverage for their employees prior to 2014, and federal law has required that they cover pregnancy and childbirth since the late 70s. But policies sold to individuals and small employers were often are riddled with holes in the days before the ACA reformed the health insurance landscape.
As a result, in 2013, only 2 percent of individual plans were providing coverage for all ten of the essential health benefits that are now standard on all plans purchased since January 1, 2014. In particular:
- 66 percent of individual plans did not include coverage for maternity services.
- 46 percent did not cover substance abuse services.
- 39 percent did not cover mental health treatment.
- 18 percent did not cover prescription drugs.
- 15 percent did not include rehabilitation and habilitation coverage.
But under the health reform legislation that President Obama signed in 2010, all individual and small group plans purchased on or after January 1, 2014 (including plans sold through the exchanges and outside the exchanges) must include coverage for these ten essential health benefits with no annual or lifetime dollar limit:
- ambulatory services (visits to doctors and other healthcare professionals and outpatient hospital care);
- emergency services;
- maternity and newborn care;
- services for those suffering from mental health disorders and problems with substance abuse;
- prescription drugs;
- lab tests;
- chronic disease management, “well” services and preventive services recommended by the U.S. Preventive Services Task Force (including blood pressure screening, breast cancer screening, colorectal cancer screening, obesity screening and counseling; tobacco use counseling ad interventions, and breast-feeding counseling);
- pediatric services for children, including dental and vision care (there is some flexibility on the inclusion of pediatric dental if the plan is purchased within the exchange)
- rehabilitative and “habilitative” services which include helping a person keep, learn or improve functioning for daily living. (Examples include therapy for a child who isn’t walking or talking at the expected age physical and occupational therapy, help for those experiencing problems with speech, and treatment for individuals suffering from a variety of disabilities.)
There are still grandmothered and grandfathered plans in force that do not have to include all of the essential health benefits. But every individual and small group policy sold since January 1, 2014 includes essential health benefit coverage. Including both on- and off-exchange plans, more than 20 million people have enrolled in ACA-compliant plans in the individual market in 2015 (many of them also had ACA-compliant plans in 2014). In addition, Medicaid also covers the essential health benefits, and 14.5 million people have gained coverage under Medicaid thanks to the ACA’s expansion of the program.
New rules, and some local flexibility
Reformers believed that if a patient moves from Portland, Oregon to Portland, Maine, he should be confident that his policy still will include these basic benefits. At the same time, they recognize that both patient expectations and the way doctors practice medicine are different in different parts of the country.
As Dr. Donald Berwick, former head of the Centers for Medicare and Medicaid said: “One of the challenges of reform is to create policy that is locally responsive.””
This is why the Department of Health and Human Services (HHS) gave the states the freedom to model their benchmark plan for individuals and businesses on either:
- one of the three small group plans in their state that boast the largest enrollment, or
- one of the three most popular state employee plans, or
- one of the three federal employee health plan options with the largest enrollment in the state, or
- the most popular HMO plan in the state’s commercial market.
But when it comes to those benefits that medical research shows are “essential” for America’s health, HHS did not budge. If the ten categories of services listed above were not included in the state’s benchmark plan, the state had to expand the package to include them.