AHIP Exec to Plan Designers: Think Chevy, Not Porsche

The need to be realistic about what plans can offer is especially important, given all of the new limits on deductibles, annual benefits limits and other cost-sharing features that the government intends to impose on health plans and health insurers, Bocchino said.

SECTION 1302

Section 1302 of the Patient Protection and Affordable Care Act (PPACA), a component of the Affordable Care Act, requires the U.S. secretary of Health and Human Services (HHS) to define the essential health benefits that ought to be included in individual and small group health insurance markets.

The definition would be used to create the subsidized health insurance packages that are supposed to be sold through a new system of health insurance exchanges starting in 2014, and the definition also would be used outside the exchange system, Bocchino said.

Republicans in Congress are trying to win passage of H.R. 2, the Repeal of the Patient-Killing Health Care Law Act bill, a bill that would repeal PPACA. The House may vote on the bill Jan. 19. Republicans also are trying to use lawsuits and funding measures to block implementation of the law.

But, if the law takes effect in 2014 as written, Section 1302 will describe 10 general

categories of items and services that should be included in any major medical benefits package.

The HHS secretary also is supposed to ensure that the scope of the essential health benefits is equal to the scope of benefits provided by a typical employer plan.

Once the essential health benefits definition is developed, the health insurance exchanges are supposed to arrange to offer bronze, silve, gold and platinum packages with different benefits values.

The Institute of Medicine will be giving the HHS secretary advice about how to decide what benefits should be included in the essential health benefits package.

BOCCHINO: COST MATTERS

Congress required the HHS secretary to consider affordability and choice as well the scope and value of benefits when making up the list of essential benefits, Bocchino said.

AHIP would like to see HHS follow the lead of the Federal Employees Health Benefits Program and the Massachusetts health insurance exchange system, by making the description of "essential" items and services as flexible and general as Section 1302 permits, Bocchino said.

"There should be no further defining of specific service elements of the benefit package, such as the number and frequency of services that should be covered," Bocchino said.

Regulators also should avoid the temptation to make the benefits packages offered richer – and more expensive – than the packages available today, Bocchino said.

Congress explicitly stated that consumers can buy benefits packages that exceed the essential health benefits requirements, and, "in so doing, made clear that it did not intend for the essential health benefits package to include all possible benefits or to limit choices for consumers," Bocchino said.

Today, for example, AHIP has found that small employers tend to hold premiums below the rates paid by large employers by offering plans that share more costs with consumers, Bocchino said.

The average deductible for small plan coverage appears to be higher than the average deductible for large plan coverage, according to AHIP.

One way regulators can help small employers is to define "typical employer plan" in a way that acknowledges the distinctions between different market segments, such as large groups and small groups, Bocchino said.

Regulators also should keep existing state health benefits mandates out of the essential health benefits package, Bocchino said.

"Currently, there exist more than 2,000 state mandates," Bocchino said. "It would be impossible to include this large number of existing mandates in a national essential benefit package while at the same time providing affordable access to care for consumers."