What will health insurance plans look like under health care reform?

Amy Higgins

Americans will be required to purchase health insurance when the health care reform law's insurance mandate goes into effect in 2014. But what will insurance companies be required to cover? And how much will plans cost?

Defining 'essential'

The health care reform law states, "A health insurance issuer that offers health insurance coverage in the individual or small group market shall ensure that such coverage includes the essential health benefits package required under section 1302(a) of the Patient Protection and Affordable Care Act."

But what exactly are "essential health benefits"? That question remains unanswered. The Institute of Medicine (IOM) recently performed a survey to get a better understanding of how some professionals would interpret this phrase. After its research is complete, it will make recommendations to the U.S. Department of Health and Human Services, which then will decide what the final benefits package should include.

America's Health Insurance Plans (AHIP) was one organization that responded to IOM's survey. Whether or not a benefit is essential, the trade group says, boils down to its effectiveness in preventing, diagnosing or treating a condition. In other words, according to AHIP, if there's not sufficient evidence that a treatment works, it should not be considered essential. Experimental and investigational treatments, therefore, should be excluded from the package.

In its own response to the IOM survey, the Biotechnology Industry Organization (BIO) emphasized that creating an essential benefits package means making sure patients have access to "all needed therapies, whether innovative or generic, as determined by the patient and physician."

Linda Fishman, senior vice president of public policy analysis and development for the American Hospital Association also took a crack at defining "essential." She suggested a three-pronged framework for assessing which benefits to include:

  • Are the benefits responsive to individual needs? Benefits must be broad enough to address the diverse needs of Americans.
  • Do the benefits take affordability into account? Americans will be able to choose plans with various cost-sharing and deductible options, but the same benefits covered must be available for all plans.
  • Are the benefits easily understood and transparent? Benefits must be clearly defined understandable to everyone, so that they're not open to an insurance company's interpretation.

What's the holdup?

Which health benefits should be included in the comprehensive insurance package available to all is difficult to determine, as countless Americans are in need of differing specialized care. For instance, a cancer patient would want chemotherapy sessions covered under his health insurance plan and someone with diabetes would want insulin covered.

Making sure a patient's access to needed care isn't restricted by "arbitrary" rules is of utmost importance, Stephen Finan, director of policy for the American Cancer Society Cancer Action Network, told Kaiser Health News in January 2011. For example, Finan said, a cancer patient requiring chemotherapy shouldn't have to face limits on the number of treatments covered.

But when the forum is open to all Americans in need of specialized care, where must the line be drawn? While too few benefits would mean insufficient coverage, too many benefits would mean costlier coverage.

Most states have mandates that require insurance to cover certain treatments and conditions like infertility, autism, Lyme disease, hearing aids or prosthetic limbs, according to Kaiser Health News. But AHIP argues that it does not necessarily make sense to include every state mandate in the health care reform law because it would significantly drive up costs.

States can maintain specific health care requirements after the mandate goes into effect, but if they're not officially deemed essential benefits, states would have to shell out extra money to insurers.