News

Well, the federal government has spoken about its intent with regard to defining essential benefits, and the answer is: leave it to the states. As Tim Jost notes in his latest blog post, there are some (probably, most) who assumed the Affordable Care Act would result in more uniformity in essential benefits across the country. But instead (no doubt bowing to a perceived political backlash at this time of difficult discourse in Washington, DC) the Obama administration decided to publish guidelines and establish broad parameters for essential benefits without going into the details.

As Politico noted, the reaction was muted even though there were many disappointed health reform advocates. So why wasn’t there a bigger outcry? Because even the most ardent activists understand what the administration is up against politically.

Had the administration decided to enumerate benefits, it would have opened itself to renewed charges of a government “takeover” of health care and “socialized” medicine. As noted in the New York Times, the administration clearly did not want to give that kind of ammunition to opponents of health reform—particularly in this political year.

During the 2008 presidential campaign, Democratic pollsters admonished the candidates to use certain words and phrases when talking about health reform. One of those phrases was “uniquely American solution.” In today’s political climate, this “uniquely American solution” seems to center around the idea of not telling people what to do: be they consumers with the individual mandate, or states setting up exchanges, choosing qualified health plans, and now, establishing essential benefits. Centralized decision-making (in health care, at least) seems to evoke terms like “socialism” and give fuel to the opponents of reform.

Like so much in today’s political discourse, the critique of centralized decision-making is most unfortunate. It seems to be made in a vacuum, independent of analysis and thoughtful dialogue. A serious discussion—in this case, about how much health policy should be carried out federally and how much at the state or local level—is an important precursor to informed public policy. These kinds of decisions include tradeoffs, and these tradeoffs are most evident when it comes to things like essential health benefits.

Today, Medicaid plans benefit plans vary—within some guidelines—from state to state. And most health plans tailor benefits for their largest customers and manage risk for smaller customers through benefit design. This means that, over time, health plans can end up with literally thousands of different benefit options for large customers to choose from.

The question is: what value does this benefit variation provide? Yes, it gives autonomy to different decision makers in the system (HR managers, state legislators, labor negotiators and the like) but does it meet any other goals? Does it improve the health of the population? Or the cost effectiveness of health care? The evidence would seem to indicate that it probably does not achieve either of these goals. It does reflect the coverage priorities of decision-makers and presumably represents how they might want to spend health benefit dollars. But, if anything, this plethora of benefit designs and benefit structures adds considerable administrative cost to the system without consideration of the value of the benefits provided with regard to health or wellness. The added cost comes at every level: from the health plans that must train benefit representatives to become familiar with thousands of benefit designs to the providers who have to remember each formulary or other scope of coverage questions before they prescribe care to their patients. Benefit variations add cost to the system.

In most other developed countries, benefits chosen centrally and are generally uniform across population groups. American health care reformers hoped the essential benefits component of the Affordable Care Act would do something similar: help lower administrative costs and clarify benefits for consumers. With the current decision on essential benefits, it does not appear that those goals will be met.

The ACA provisions on essential benefits do advance us from where we are today, but not as far as many hoped we would get. So, it would seem that for now, the “uniquely American solution” on essential benefits is politics-smart, but policy-weak.