HHS to Give States Freedom in Health Reform

The U.S. Department of Health & Human Services (HHS) announced on Dec. 16 a shift in policy toward more freedom for states to establish localized  health plans when implementing the Affordable Care Act. States must manage essential insurance plans by 2014.

Under the department’s intended approach, states would have the flexibility to select an existing health plan to set the “benchmark” for the items and services included in the essential health benefits package. States would choose one of the following health insurance plans as a benchmark:


  • One of the three largest small group plans in the state
  • One of the three largest state employee health plans
  • One of the three largest federal employee health plan options
  • The largest HMO plan offered in the state’s commercial market

The benefits and services included in the health insurance plan selected by the state would be the essential health benefits package. Plans could modify coverage within a benefit category so long as they did not reduce the value of coverage. Consistent with the law, states must ensure the essential health benefits package covers items and services in at least 10 categories of care, including preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs. If a state selects a plan that does not cover all 10 categories of care, the state will have the option to examine other benchmark insurance plans, including the Federal Employee Health Benefits Plan, to determine the type of benefits to be included in the essential health benefits package.

The policy proposed today by HHS would give states the flexibility to select a plan that would be equal in scope to the services covered by a typical employer plan in their state. States and insurers would retain the flexibility to evolve the benefits package with the market as innovative plan designs are developed and advancements in care become available and meet the needs of their citizens.

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