Prior to 2014, the coverage available in the major medical health insurance market ran the gamut from robust to terrible. While there were plenty of solid plans with comprehensive coverage, there were also policies that were riddled with exclusions, even for things most of us would consider essential, like maternity care, rehabilitation following an injury, or even prescription drugs.
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 sometimes of poor quality and littered with gaps in coverage in the days before the Affordable Care Act reformed the health insurance landscape.
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 drug;
- 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 and 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 17 million people have enrolled in Obamacare-compliant plans in the individual market in 2016. In addition, Medicaid also covers the essential health benefits, and 14 million people have gained coverage under Medicaid thanks to the ACA’s expansion of the program (including people who are newly-eligible along with people who were already eligible but only signed up after expansion took effect).
State flexibility in setting benchmark plans
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.
This is why the Department of Health and Human Services (HHS) gave the states the freedom to model their benchmark plan (ie, the plan that serves as a minimum standard on which all new plans are modeled) 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.
Although states have flexibility in determining their benchmark plan, the essential health benefits must be incorporated. For coverage sold in 2014, 2015, and 2016, the benchmark plan was a policy that was sold in 2012. Since the benchmark plans were high-quality, commercial plans, they tended to be much more robust than what was being sold in the individual market in 2012. But 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.
For 2017 and beyond, the benchmark plans are being redetermined, and plans that were sold in 2014 are being used. The ACA’s essential health benefits rules do not apply to the large group market (with the exception of preventive care, which applies across the board), but again, the employer-sponsored plans from which states can pick their benchmark plan tend to be high-quality. But as was the case with the first round of benchmark plans, a state must supplement the benchmark plan to bring it up to scratch if it’s lacking in any of the essential health benefit categories.