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On the Third Hand: EHB

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The essential health benefits (EHB) package — the big, scary edifice glowing like a politically radioactive potato at the heart of the Patient Protection and Affordable Care Act (PPACA) — is starting to heat up.

Starting in 2014, PPACA is set to require insured, non-grandfathered individual and small group medical plans to offer EHB package benefits, to help buyers shop for coverage on an apples-to-apples basis and discourage benefits-package-based antiselection.

Acupuncturists are fighting for acupuncture benefits.

Parents of children with developmental problems are fighting for rich benefits for children with developmental problems.

The Essential Health Benefits Coalition — a group that represents organizations such as America’s Health Insurance Plans, the Blue Cross and Blue Shield Association and the National Retail Federation –is trying, politely, to discuss the idea that, to keep coverage as affordable as possible, the EHB package ought to be as short and practical as possible.

If there’s any flexibility, it ought to help plans use any available cost-management tools, such as any available annual or lifetime benefits limits, reduce costs, the coalition told regulators in a comment letter sent to the U.S. Department of Health and Human Services (HHS) in December 2012.

HHS should not use any flexibility to give states more authority to heap ever more benefits mandates on plans, the coalition said.

The drafters of PPACA created a list of 10 categories of benefits an EHB ought to include, then left the rest of the politically sensitive EHB creation work to HHS.

HHS officials developed a list of types of plans that state regulators ought to look at when creating their states’ EHB packages, then handed the EHB work off to any state that was willing to take the potato.

Now, as HHS develops the final version of the EHB standards, and as state exchanges, the federal exchange program and insurers prepare to put the EHB standards into actual use, everyone is noticing that the radioactive EHB potato has creepy, radioactive, googly eyes.

The EHB package could determine if your sweet, wonderful 2-year-old who is not talking properly gets the therapy that, in your view, could determine whether that child ends up with the ability to live a typical life.

The package could also determine whether Jane Doe, the owner of Jane Doe’s Pancake House Restaurants, thinks the EHB package in the small group plan she is sponsoring is a good value, under the circumstances, or a jewel-encrusted rip-off that enriches quacks and leeches and threatens her ability to keep her chain of restaurants in business.

And it looks as if HHS, state regulators, patient advocates, and employers and insurers could end up going round and round in cycles of increasingly arcane tinkering with the EHB package.

On the one hand: This is obviously the situation you get yourself into when you substitute government control for the invisible hands of the market. The basic idea of the EHB package may be so reasonable and so necessary for having the kind of competitive, easy-to-understand, guaranteed-issue, mostly community-rated exchange system contemplated by the PPACA drafters that just about anyone other than a very pure free-market purist would have come up with the EHB idea.

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The Medicare supplement insurance market already has sets of EHB packages at its core.

In practice, state regulators and the market have created the equivalent of EHB packages, anyway, even in the existing commercial major medical market. Except in the area of benefits for children with developmental disorders and benefits for services such as acupuncture, EHB package designers and analysts have generally not found huge differences between EHB benchmark plan candidates. 

But, any time the government tries to describe and mandate just about anything, no matter how simple that thing seems to be, it’s easy for statute and regulation drafters to end up having to translate a simple, three-sentence idea into 200 pages of fine print.

On the other hand, in practice, some equivalent to the EHB package system is probably a necessary evil, in just about any health insurance system, because the only consumers who really know what benefits they need are consumers who have serious problems. Only consumers who are very smart and very unlucky can be truly well-informed health care consumers. Healthy consumers can barely tell the difference between an MRI and an X-ray, let alone what kind of radiological benefits they need.

On the third hand: The reason consumers have brokers and advisors of any kind, whether those advisors are home buyers’ brokers, financial planners or insurance brokers, is that consumers know they need a big, scary, well-informed gorilla in their corner.

In the short run: The EHB system that PPACA created seems to be cast in statutory stone and can’t be changed. 

In the medium run, no matter PPACA says on paper, whether the PPACA exchange system and the EHB package system survive at all will depend on how well they do in the market of life. Either consumers, employers, insurers, regulators and all other players involved like the exchanges and the EHB package well enough that the concepts survive, or they’ll go away.

In the long run, if the exchange system and the EHB package do continue to exist (Medicare supplement insurance still exists; Medicare Advantage plans still exist. Why not PPACA plans?), then I think Congress and regulators have to figure out how to move the EHB package system away from depending on a regulator-driven design system and toward negotiation system based on dickering between buyers’ brokers and sellers’ brokers.

Maybe consumers could pick their brokers by voting for their brokers through the health insurance exchange system, or by having their actual health insurance brokers act as electors and take charge of choosing the top-level EHB package buyers’ brokers. 

Patient groups should be able to shape the EHB package by having quick, convenient conversations with their buyers’ brokers, not by having to work through some kind of rigid, slow, annoying, 25-part rulemaking process.

Similarly, if employers and insurers think the EHB package is more cumbersome than it has to be, they ought to be able to have their sellers’ brokers duke it out with the buyers’ brokers, the way a big employer or a big insurer would handle benefits package negotiations today.

Regulators should simply decide whether the buyers’ brokers and the sellers’ brokers are sincerely representing their clients’ interests and coming up with the EHB package through armslength negotiations. Regulators should get themselves out of the business of drafting 2,000-page EHB regulations.

If the powers that be decide that certain kinds of consumers, such as very sick consumers, or parents of children with disabilities, need extra representation, then give them their own brokers.

But the goal should be to have a negotiation-driven benefits package design system, instead of a system based on officials in Washington doing their best to wade through 10,000 draft EHB regulation comments without falling sound asleep.

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