Wednesday, November 21, 2012

Fwd: qotd: AHIP response to new rules on essential health benefits

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: AHIP response to new rules on essential health benefits
Date: Wed, 21 Nov 2012 12:03:16 -0800
From: Don McCanne <>
To: Quote-of-the-Day <> (HHS)
November 20, 2012
Essential Health Benefits, Actuarial Value, and Accreditation Standards:
Ensuring Meaningful, Affordable Coverage

On November 20, 2012, the Department of Health and Human Services (HHS)
published a proposed rule that helps consumers shop for and compare
non-grandfathered private health insurance options in the individual and
small group markets by promoting consistency across plans, and
protecting consumers by ensuring that plans cover a core package of
items and services.

Specifically, this rule outlines health insurance issuer standards
related to the coverage of essential health benefits (EHB) and the
determination of actuarial value (AV), while providing significant
flexibility to states to shape how EHB are defined.

The Affordable Care Act sets forth that EHB be equal in scope to
benefits offered by a "typical employer plan." To meet this requirement
in every state, the proposed rule defines EHB based on a state-specific
benchmark plan, including the largest small group health plan in the
state. The rule proposes that states select a benchmark plan from among
several options identified in the proposed rule, and that all plans that
cover EHB must offer benefits that are substantially equal to the
benefits offered by the benchmark plan. This approach balances
consumers' desires for an affordable and comprehensive benefit package,
our legal requirement to reflect the current marketplace, and issuer
flexibility to offer innovative benefit designs and a choice of health


America's Health Insurance Plans (AHIP)
November 20, 2012
AHIP Statement on ACA Implementation

America's Health Insurance Plans (AHIP) President and CEO Karen Ignagni
released the following statement on proposed rules released today by the
U.S. Department of Health and Human Services on implementation of the
Affordable Care Act (ACA):

"As implementation of the ACA moves forward, the focus needs to be on
affordability for consumers and employers.

"For health insurance exchanges and new insurance market rules to work,
coverage needs to be affordable and there needs to be broad
participation in the system. While additional flexibility on essential
health benefits (EHB) is a positive step, we remain concerned that many
families and small businesses will be required to purchase coverage that
is more costly than they have today. It also is important to recognize
that the new EHB requirements will coincide with the new restrictions in
age rating rules that also go into effect on January 1, 2014. Both of
these provisions may incentivize young, healthy people to wait to
purchase insurance until they are sick or injured, driving up costs for
everyone with insurance."

Comment: The Department of Health and Human Services has provided
states with considerable flexibility in establishing essential health
benefits (EHB) in the individual and small group insurance markets. The
states will not have to require benefits that are typical of large
employer health benefit programs, but rather the benefits will
correspond to existing small group plans, as long as some services in
each of ten required categories are included. These plans will be
inadequate for those who require benefits that are not covered, not to
mention the limitations of excess cost sharing and insufficient provider

Yet the insurance lobby group, AHIP, complains that many families and
small businesses would have to purchase coverage that is more costly
than they have today. The reason that plans with the minimal essential
benefits would be more costly is that the current individual and small
group market is saturated with plans that are so substandard that they
fail to provide adequate financial security in the face of medical need.
With the new essential health benefits requirement, the insurance
industry would lose the right to sell these highly profitable, but
substandard plans. They will have to raise their standards to the level
of mediocrity, as required by the new EHB rule.

Once again they state that "coverage needs to be affordable." They have
previously stated that health care costs need to be controlled, but, in
the absence of any truly effective method of doing that, they need to be
able to use innovative product design to keep their premiums competitive
in the insurance market. The new EHB rule along with the actuarial value
rule allows them the flexibility to be quite innovative. The bottom line
is that in the conflict between affordable insurance premiums and
adequate protection for patients, they will always choose to protect
their market rather than protect patients.

The insurance industry understandably is interested in its own welfare.
If that means compromising the adequacy of their plans, then so be it.
But does that mean that we have to accept compromise in our health and
in our financial security? We wouldn't if we dismissed the private
insurers and established our own improved Medicare program for everyone.

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