State of the states: insurance exchanges

Understanding health insurance exchange's "essential benefits": What will they mean for you?

By Maggie Mahar
healthinsurance.org™ contributor

Today, many health insurers sell "Swiss cheese policies": insurance filled with loopholes. Even if you try to read the fine print, you may not understand all of the exceptions to your coverage – until you become sick. Then, the hole with your name on it opens, like a trap door.

This is when you discover that while your insurance covers surgery, it does not reimburse for the rehabilitation you will need following surgery. Or, that while your policy pays for complications during pregnancy, it won't reimburse for a normal labor and delivery.

Large companies with deep pockets usually provide comprehensive coverage for their employees, and federal law requires that they cover pregnancy and childbirth. But policies sold to individuals and small employers often are riddled with holes.

As a result, in 2011:

• 62 percent of Americans who purchase their own insurance were not covered for maternity services.
• 34 percent of enrollees were not covered for substance abuse services.
• 18 percent of enrollees lacked coverage for mental health services.
• 9 percent of enrollees had no coverage for prescription drugs.

But under the health reform legislation that President Obama signed in 2010, those who purchase insurance in state-run exchanges – also known as health insurance marketplaces – won't have to worry. Beginning in 2014, all policies sold in the exchanges – whether to individuals or to small firms with fewer than 100 employees – must cover what physicians and consumer advocates call "essential health benefits":

1. hospitalization;
2. ambulatory services (visits to doctors and other healthcare professionals and outpatient hospital care);
3. emergency services;
4. maternity and newborn care;
5. services for those suffering from mental health disorders and problems with substance abuse;
6. prescription drugs;
7. lab tests;
8. 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);
9. pediatric services for children, including dental and vision care;
10. 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.)

Thanks to these rules, in 2014:

• 8.7 million Americans will gain maternity coverage,
• 4.8 million Americans will gain substance abuse coverage,
• 2.3 million Americans will gain mental health coverage, and
• 1.3 million Americans will gain prescription drug coverage.

Reformers believe 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 told me not long ago: "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) is giving 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 is not budging. If the ten categories of services listed above are not included in the state's benchmark plan, the state will have to expand the package to include them.

In a final rule published on March 12, HHS underlined its commitment, emphasizing that health plans must "maintain provider networks that "include sufficient numbers and types of providers, including providers that specialize in mental health and substance abuse, to ensure access to all essential benefits … particularly in low-income and underserved communities."

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