The Institutes of Medicine (IOM) has released its long-awaited report (previously discussed here)on the essential health benefits package (EHB), which represents the minimum set of benefits that certain insurance plans must cover as required under The Patient Protection and Affordable Care Act of 2010 (ACA). As requested by the Department of Health and Human Services (HHS), the report lays out guidelines for HHS to consider in deciding what to include in the new “essential health benefits package,” how to keep it affordable for small businesses and taxpayers, and also scientifically up-to-date.
One of the goals of the ACA is to help uninsured Americans obtain health insurance. As part of that effort, private health insurance plans will be offered to low- and moderate-income individuals and small business employers through state-based “purchasing exchanges,” often with financial help. To ensure a more consistent level of benefits, the ACA requires that certain insurance plans—including those participating in the state purchasing exchanges—cover a package of at least 10 general categories of diagnostic, preventive, and therapeutic services and products that have been defined as “essential” by HHS, and have benefits similar to those currently provided by a typical employer.
The ACA charged HHS with defining what the EHB package should include. To assist with this, HHS asked the IOM to recommend a process that would help HHS define the benefits that should be included in the EHB, and update the benefits to take into account advances in science, gaps in access, and the effect of any benefit changes on cost. The task of the IOM was not to decide what is covered in the EHB, but rather to propose a set of criteria and methods that should be used in deciding what benefits are most important for coverage.
The expert panel said the government should initially define “typical employer plan” as the type of coverage commonly provided by small employers — not by large or medium-size businesses, which often provide more generous coverage. Moreover, it said, federal officials should determine what the national average premium of typical small employer plans will be in 2014 and ensure that the national average cost of the minimum benefits does not exceed that amount.
HHS officials should gauge potential services and products against a set of criteria, including medical effectiveness, safety, and relative value compared with alternative options, and evaluate whether the package as a whole protects the most vulnerable individuals, promotes services that have proved effective, and addresses the medical concerns of greatest importance to the public, the report says.
The panel stressed that the package has to be affordable or the goal of expanding access to health insurance won’t be met. To make its point, the IOM used the analogy of a shopper at the supermarket. One option is to fill up your cart with all the groceries you want, and find out the cost at the register. “The other option is to walk into the store with a firm idea of what you can spend and to fill the cart carefully, with only enough food to fit within your budget,” the advisers said. “The committee recommends that (the administration) take the latter approach.”
“Costs must be taken into account,” the 18-member panel declared. “Unless we are able to balance the cost with the breadth of benefits, we may never achieve the health care coverage envisioned in the Affordable Care Act. If the benefits are not affordable, fewer individuals will buy insurance.”
The IOM also recommended that policymakers periodically re-evaluate the package of benefits so that it stays in step with inflation and medical advances. As research yields more knowledge, the list of essential health benefits can become more detailed and promote greater value over time, the report notes, and the report’s criteria should continue to be used to evaluate the list.
HHS Secretary Kathleen Sebelius said in a statement that officials would hold “listening sessions” around the country before any final decisions about the benefits package are made. The IOM panel recommended HHS undertake an extensive effort to engage the public.