Benefit Standards Broadly Defined
The Affordable Care Act (ACA) was purposefully broad when it addressed the array of services that a plan must cover in order to be eligible to participate an exchange. The law required that the scope of benefits be "equal to the scope of benefits provided by a typical employer plan" and include at least the following: Ambulatory Patient Services; Emergency Services; Hospitalization; Maternity and Newborn Care; Mental Health and Substance Abuse Disorder Services (including Behavioral Health Treatment); Prescription Drugs; Rehabilitative Services and Devices; Laboratory Services; Preventive and Wellness Services; Chronic Disease Management; and Pediatric Services (including Oral and Vision Care for children).
Essential Health Benefits
The ACA instructs the Secretary of the Department of Health and Human Services (HHS) to develop the full definition of essential benefits, and to list all other services and benefits that participating plans must cover. It was expected that Department of Health and Human Services (HHS) regulations would further specify essential benefits at the federal level, but in mid-December 2011 HHS announced that it was passing the responsibility for defining essential benefits to the states. The HHS guidance says states can define their own set of essential benefits by using an existing major health benefit plan in the state as a benchmark. Covered California has chosen to use the Kaiser Permanente HMO 30 Plan - the largest small-group employee health benefit plan by enrollment in the state.
Enhancements at the State Level Could be Costly
If the Exchange Board feels that the HHS definition does not include benefits it wants to guarantee to California consumers , they may require that a qualified health plan offered in Covered California provides benefits in addition to the essential health benefits. In that case, however, California must assume the full cost of the additional benefits, either by paying the individual directly for the marginal cost of the state‐added benefits, or by paying the plan. In this way, if California wants to ensure some benefit (adult dental or vision, for instance) is covered by the Covered California plans, yet is not included in the federal definition, it will have to use state funds and subscriber premiums to pay the additional costs.
Current Benefit Standards
The Exchange will group health insurance plans into 4 categories by actuarial value to make it easier for consumers to compare across options. In addition, the Echange web site and brochures will make plan comparison documents available that highlight differences in key plan features such as deductibles, co-pays, and benefit limits.
The 4 Plan Levels
- Platinum -- Covers 90 percent of actuarial value with consumer cost-sharing of 10 percent.
- Gold -- Covers 80 percent of actuarial value with consumer cost-sharing of 20 percent.
- Silver - Covers 70 percent of actuarial value with consumer cost-sharing of 30 percent.
- Bronze - Covers 60 percent of actuarial value with consumer cost-sharing of 40 percent.
Additionally, a catastrophic plan will be available to individuals under the age of 30 or those who otherwise qualify for a unaffordable exemption. It would have a deductible equal to the out-of-pocket maximum established under federal law for HSA qualified high deductible plans. For 2011, that amount is $6,150 for a family and will be slightly higher in 2014.
Consumer cost-sharing includes things such as deductibles, copayments and coinsurance. Plans offering the most coverage, such as Platinum and Gold plans, will have higher premiums and a lower level of consumer cost-sharing. Bronze and Silver plans will be cheaper to buy, but will expose you to substantial cost-sharing over time.
Out-of-Pocket Spending Caps
The ACA places caps on how much money insured people will have to spend out of their own pockets for health care services that are covered in the new law's essential benefits package. The out-of-pocket spending caps will follow a sliding scale: Those with lower and middle incomes will pay less out of pocket than those with higher incomes. The new caps guarantee that consumers will not have to pay more than a set amount annually in out-of-pocket expenses for covered services.
Benefit Standards and Adverse Selection
Minimum coverage standards will help prevent adverse selection. For example, if all policies must cover the same set of benefits, consumers will be less likely to gravitate toward policies based on their risk status. California law establishing the Exchange specifies that any carrier participating in the Exchange must offer at least one plan at each level of coverage - Catastrophic, Bronze, Silver, Gold, and Platinum - both inside and outside the Exchange for the individual health insurance or small business market, or both, if that carrier participates in both. This precludes a health plan from participating only at the Bronze level - where presumably the unsubsidized healthy people will be.
Monitoring the Effects of Standardized Benefits
Whatever standard for minimum coverage may be adopted, the Exchange can monitor the impact of coverage standards. Measurements of uncompensated care, medical debt, and other indications of underinsurance can be developed and implemented, with findings reported periodically. The Exchange could adjust minimum coverage standards in response to these measures.