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State Insurance Commissioners: Essential Benefits May Be More Uniform over Time

By Jane Norman, CQ HealthBeat Associate Editor

February 28, 2012 -- Two state insurance commissioners recently said despite the latitude the Obama administration is giving states in developing initial essential health benefits, they expect eventually the packages will be more uniform throughout the country.

Kansas Commissioner of Insurance Sandy Praeger and Rhode Island Health Insurance Commissioner Christopher Koller praised the administration for giving states flexibility in prescribing benefits for individual and small group plans that will be sold through health insurance exchanges. Department of Health and Human Services officials have said that in 2016 they will re-evaluate the process for putting together the benefits packages.

The decision to at first give flexibility to the states was a "prudent one from a time standpoint," said Praeger, a former head of the National Association of Insurance Commissioners. But as time goes on, "from a fairness standpoint we want all Americans to have access to the same level of benefits. That's the balanced federalism approach."

For right now, what's most important to HHS leaders is getting the health care overhaul law on its way to full implementation by 2014, said Praeger. "In the political environment that we're in, they just want to get a law enacted and create as few pressure points in the public debate as possible," she said.

Koller called the move by HHS Secretary Kathleen Sebelius a "brilliant political decision."

Both also encouraged patient advocates—worried that benefits might be uneven from state to state—to continue to closely monitor regulatory activities at the state level, as well as local insurance industry lobbying. Insurance regulators are having trouble with finding common definitions for the benefits to be offered, they said.

Praeger and Koller spoke on a panel at a forum on essential health benefits organized by the American Cancer Society Cancer Action Network, along with Karen Pollitz, a senior fellow at the Kaiser Family Foundation and a former top HHS official, and Joel Ario, managing director of Manatt Health Solutions and former director of the office of exchanges for HHS.

The health care law (PL 111-148, PL 111-152) includes a list of 10 categories of benefits that must be included in the individual and small-group plans that will be sold through exchanges in the states.

However, HHS has come under some criticism for issuing a bulletin in which the department proposes to allow states to choose among existing plans on which to model their benefit packages. Those benchmark plans could be the largest plan by enrollment in any of the three largest small group insurance products in the state's small group market, any of the largest three state employee health benefit plans by enrollment, any of the three largest national Federal Employees Health Benefits plans by enrollment or the largest commercial non-Medicaid Health Maintenance Organization in the state.

Plans Do Differ by State

Pollitz said most benchmark plans are "pretty solid" but there are variations state to state that are already apparent when the details are examined. Plans in some states cover only generic prescription drugs but not name brands, for example. In other states there are limits on coverage for injectable drugs, which is important for cancer patients. There are limits on specific services, such as transplants covered only up to set dollar amounts.

"I think it is going to be very important for states' decision makers to really take a hard look," she said. Insurers also can modify their own policies as long as policies overall provide the same value, and it's going to be important for states to oversee and regulate those changes, she said.

Appearing earlier at the forum, Sebelius said health insurance traditionally is sold, marketed and regulated by states, so it made sense to let states develop the benefits packages. She said she understands advocates' fears that some states will offer richer packages than others. "I have to tell you, having looked at thousands of plans, that isn't what we're finding," she said, adding that the benefits don't vary so much as do the co-pays and cost sharing.

"We will be watching very closely to make sure the right consumer safeguards are in place," she said. But she said that states also will be able to get plans up and running by 2014 that already have been scrutinized by regulators and sold in the marketplace, "and that's very important as opposed to people starting from scratch with something they've never seen and trying to figure out how to get that working in an exchange," Sebelius said.

Plans must cover all the benefits mandated by the law and "no plan can provide coverage that protects one group and leaves another out in the cold," she said.

Public comment will continue to be solicited on the benefits packages. Sebelius told reporters after her remarks that a proposed rule will be issued yet this year though she said she couldn't pinpoint a specific date.

Praeger, a Republican elected official, indicated she is having a rough time with implementation of the health care law in her GOP-controlled state, joking she is regarded as a "RINO"—the nickname for a "Republican In Name Only."

One question that's not yet been answered is who will decide which benchmark is picked, she said. "I am in one of those 26 states that is challenging the law," Praeger said. "Our legislature is in denial in terms of moving the ball forward. Our governor is not willing to come to the table. At some point before the November election, by the way, they are going to have to at least make some decisions around implementing the Affordable Care Act."

If the state refuses to develop its own health benefits exchange, the federal government will step in and do so, she pointed out, and state leaders would be giving up control of it. "The same folks that are so opposed would also be the same folks that would not want to give up control at the state level," she said. "It's a bit of an irony."

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