About Half the States Chose Benchmark Plans Offering Essential Health Benefits

A study sponsored by the Commonwealth Fund examined the states’ actions on the selection of a benchmark benefit plan to serve as the standard against which qualified health plans will be measured as part of the implementation of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) at the state level. The District of Columbia and 24 of the 50 states chose benchmark plans. The other 26 states will default to the small group plan with the largest enrollment in the state. The authors examined the choices made and studied the decision making processes of 10 states in more detail.

The entity that chose the benchmark plan and the degree to which the public participated varied considerably. The state Department of Insurance (DOI) usually played a role analyzing the options or briefing the decision makers. California and Washington enacted legislation to select their benchmark plans. Utah legislators directed a Health Reform Task Force to make a recommendation to the insurance commissioner, who was required to choose the benchmark plan by publishing a regulation. In Arizona and Connecticut, the governor chose the benchmark plan. Insurance regulators chose the plan in Arkansas, Mississippi and North Dakota. Montana and North Carolina did not choose a benchmark plan

In the states that did not choose a benchmark plan, the benchmark will be the small group plan with the highest enrollment in the state. Thus, in all but five states, a plan that already is marketed will be the benchmark.

Public Input

Eight of the ten states studied obtained some form of input from the public in their selection processes, including public meetings. Six also solicited comments from the public. Some conducted outreach to stakeholders; others convened advisory groups. Of the ten states studied in detail, all but Montana conducted or commissioned analyses of the benchmark options. Mississippi was the only state of the nine that did not make the analyses available to the public. Montana and North Carolina did not obtain any public input; neither state adopted a benchmark plan.

Balancing Competing Concerns

All states were concerned with maintaining a balance between the comprehensiveness of coverage and the costs. States that already mandated specific benefits for small group plans usually wanted to retain them. However, the law provides that where state mandates exceed the federal requirements, states must pay the difference. This question was resolved when HHS announced that mandated benefits that were enacted before December 31, 2011, would not result in a requirement that states pay the difference in premiums. In Arkansas, the three small group plans with the largest enrollment were one preferred provider organizations (PPO) and two HMOs. State law required PPOs, but not HMOs, to cover in vitro fertilization. The choice of benchmark plan would determine whether the benefit was mandated or not. Ultimately, the state chose an HMO, but the mandate for PPOs remains. Currently, the states’ benchmarks will be effective from 2014 through 2016. The authors suggested that if HHS continues to allow states to set the benchmarks for qualified health plans, the agency should establish minimum requirements for the process to assure openness and public participation.