Thus, the committee thought it wise to step back from the details of the statutory language to consider elaborating on the underpinnings of the approach that the Department of Health and Human Services (HHS) should take in determining what, in fact, is an essential benefit. After all, this is the package of benefits that many individuals will be required to purchase, and the meaning of essential can take on different connotations and result in benefit packages of diverse degrees of comprehensiveness and affordability.
To many, essential in common parlance means basic, a minimum “floor” of benefits, yet others differ, seeing the intent of the ACA for the EHB package to be to provide a robust and comprehensive coverage. To complicate matters, the word essential was often used interchangeably by people providing comments to the committee, but to mean different things.
For example, at the committee’s first workshop, presentations by a bipartisan panel of former and current Senate staff members expressed some disagreement about what the ultimate package would look like—whether the desire was to create a “robust” benefit package vs. a “minimum” benefit package. Mr. David Schwartz said that Congress intended the EHB package to be “meaningful” and comprehensive and thus linked it to the benefits of a typical large employer plan as did Dr. David Bowen (Bowen, 2011; Schwartz, 2011). In contrast, Mr. Mark Hayes pointed out that the ACA uses the term essential because the legislature intended these to be basic, not comprehensive benefits, affordable for small employers (Hayes, 2011). Although the ACA lays out a more comprehensive set of benefits than does the Federal Employees Health Benefits Program (FEHBP) statute, Ms. Katy Spangler emphasized that the committee should “look at the least robust version of the benefit package as meeting” the standard of minimum essential coverage; otherwise, she said, fewer people will be able to afford coverage, thus defeating the purpose of the ACA to expand coverage to those who cannot now afford it (Spangler, 2011). Other presenters and commentators similarly presented diverse visions of the EHB package.1
Previous mandatory coverage requirements have similarly been couched in terms such as “minimum” or “basic,” and these provided floors that could be supplemented at the individual, employer, or plan option. For example, the 1973 Health Maintenance Organization (HMO) Act required “a comprehensive package of basic benefits, including essential preventive services, along with a list of supplemental benefits for which the enrollees would make an extra payment” (The American Presidency Project, 2011; Bergthold, 2010). In 1990, the American Medical Association (AMA) put forward a proposal for a minimum health care benefit package that would have required employers to offer insurance coverage that included a limited set of covered benefits (for example, including no more than a specific number of doctor visits per year), the result of making what the AMA described as difficult choices to provide a degree of benefits to those who previously had no coverage.2 In 1993 with the objective of providing small employers access to affordable health insurance and thus be better able to compete with larger employers, the State of Maryland set standards for all insurance carriers participating in the small employer market, establishing a “floor”—actuarial equivalency to the minimum benefits required to be offered by federally qualified HMOs—and a “ceiling”—the average premium for the standard benefit plan could not exceed 12 percent of Maryland’s average annual wage. Subsequently, this amount was reduced to 10 percent. Approximately 98 percent of those participating in that market add benefits, “buying up” from the basic plan (MHCC, 2007; Sammis, 2011; Wicks, 2002).3 Utah NetCare, which is Utah’s “version of an EHB package,” was designed to be a third less expensive than the average employer-based premium in that market. Although the basic benefit package is currently available and being purchased, “most people purchase benefit packages in excess of the basic requirements.”4 Others pointed to the basic mandatory vs. optional services under Medicaid as an example of
1 See the committee’s workshop publication for further discussion, Perspectives on Essential Health Benefits.
2 This benefit package idea was rescinded as AMA policy in 2005.
3 The Maryland Insurance Association also surveyed the largest carriers in 2008 regarding the top five benefit plans sold to small employers. These results were not published.
4 According to Utah’s largest commercial insurer with about 50 percent of the market, the enrollment or uptake of the minimum NetCare package among their members represents about 0.005 percent of the overall market. Personal communication with James Dunnigan, Utah State Legislature, May 4, 2011.