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HHS Punts on Essential Health Benefits Decision

Margaret Dick Tocknell, for HealthLeaders Media, December 28, 2011

What criteria and methods should the Department of Health and Human Services use in deciding the list of diagnostic, therapeutic, and preventive healthcare services which constitute the so-called essential benefits that private insurance companies must offer low- and moderate-income uninsured Americans?

That was the question the Institute of Medicine set out to determine in January.  In October, it issued a 300-page report, Essential Health Benefits: Balancing Coverage and Cost, which set out the methods and criteria that the IOM recommended be used to develop a list of essential health benefits, as mandated by the Patient Protection and Affordable Care Act.

Those benefits must be offered?beginning in 2014?by health insurance exchanges, and individual and small group health insurance policies. PPACAcharges HHSwith making the final call after getting input from the Department of Labor and the independent Institute of Medicine.

Two weeks ago, HHS boiled the IOM report down to a 15-page bulletin that can be summarized in five words: Let the states do it.

The move caught almost everyone by surprise. Consumer groups quickly released critical statements noting that 50 states would mean 50 different interpretations of essential health benefits. Political observers were more pragmatic, suggesting that HHS punted the essential benefits decision to the states in an attempt to blunt potential Supreme Court case arguments that the federal government was taking over the country's healthcare system.

At the IOM, reaction to the HHS bulletin was critical, but hopeful. John Ball, who chaired the IOM committee, told me in a telephone conversation that the committee looked at essential benefits in terms of how to offer the most comprehensive, medically effective benefits at a cost that could be managed by employers and employees. "Our plan emphasized paying for care that is medically effective. I don't see that in the HHS bulletin."

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