respect to the EHB meets the criteria that the committee outlines later in this chapter. There has been some interest expressed in amending this statutory authority to allow waivers to begin before 2017 (HHS, 2011b; The White House, 2011); because it has not passed, waivers are not yet a viable option at this time.2 As a result, this chapter does not focus on such waivers. Rather, this chapter addresses the ability of the Secretary to approve state-specific variations of the EHB definition that meet each of the requirements set forth in Section 1302.


Although the committee notes the deference given to states as they set up their health insurance exchanges (HHS, 2011a) and proceed with rate review enhancement (HHS, 2010), those situations are not analogous to the EHB determination process. The Secretary’s responsibilities to lead and define the EHB determination process are clearer, greater, and more direct than those the Secretary has with respect to the health insurance exchanges. For establishment and implementation of health insurance exchanges, the ACA is clear that states have primary responsibility,3 and it is only if a state opts out or fails to meet the requirements to establish an exchange that the federal government will become involved.4 Conversely, with respect to defining EHB, the ACA is clear that the Secretary of Health and Human Services (HHS) has sole authority to define the EHB. The authority granted to HHS to define the EHB does not, however, preclude the Secretary from using that authority to approve state-specific variations of the EHB definition.

State Flexibility

The committee believes some state flexibility in defining the EHB package is important from a public policy and practical standpoint. Although informed by clinical evidence and economics, judgments of what constitutes an essential health benefit are social value decisions and reflect, at their core, a set of decisions regarding which medical expenses must be shared within a community. As discussed above, the committee believes that the Secretary has the authority to approve refinements of the EHB definition, and that there will be some circumstances under which the Secretary should approve state-specific EHB definitions that allow states to make their own social value prioritizations and deviate from the federal standard definition of essential health benefits. The committee believes the definition of benefits should become more evidence-based, specific, and value-promoting over time and believes state-based innovation should support these goals, as it charges the Secretary to act (see Recommendation 4a). The committee proposes guiding principles that HHS should consider in determining whether or not to approve a state-specific variation of the federal EHB definition.

The committee’s recommendation focuses solely on guidance for when the Secretary should consider state-specific variations of the national EHB definition. It should be noted that nothing in the committee’s recommendation negates the direction in Section 1302 for inclusion of the 10 categories of care or observance of the required elements for consideration. Furthermore, the committee believes that the Secretary’s approval of a state-specific variation of the EHB definition should be contingent on the state’s developing a package with content that is actuarially equivalent to the national package established by the Secretary during initial definition or updating; otherwise, state-specific variations of EHB could either substantially increase aggregate package costs or significantly reduce the intended scope of packages covered by the EHB.

From a practical standpoint, state-specific EHB developed locally and with a credible, accountable public deliberation process are even more likely to gain sustained state-based public support than a single federal definition with no possibility of state-based innovation. The committee suggests guidelines for public deliberation on priorities in Chapter 6.

2 The White House has indicated its support of state empowerment and innovation under the ACA, including support for bipartisan legislation to make waivers available starting in 2014—the “Empowering States to Innovate Act” (HHS, 2011b; The White House, 2011).

3 Patient Protection and Affordable Care Act of 2010 as amended. § 1311(b), 111th Cong., 2d sess.

4 § 1321(c).

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