For the first time ever, thanks to the health reform law, we will soon have a standard definition of the “essential benefits” that insurance plans must cover. But how, exactly, should those benefits be chosen and defined? An expert panel of the Institute of Medicine just tackled that question at the behest of the U.S. Department of Health and Human Services. What the committee said may stir up some controversy, because it recommends taking cost into account when designing the benefits package, and readjusting the benefits each year to stay within a budget.
John Santa, M.D., M.P.H., a member of the IOM panel and head of the Consumer Reports Health Ratings Center explained:
If you don’t take into account the rise in medical costs, eventually it will mean fewer people would be insured. Every time you add a benefit, you subtract people who can no longer afford it.
The health reform law set this debate in motion by specifying that all plans sold on the new state insurance exchanges that will open for business in 2014 must offer a minimum set of essential benefits. An estimated 68 million Americans will eventually be covered by policies offering these benefits. The law outlined 10 categories of benefits that must be included, but left it to the Department of Health and Human Services to figure out the details. In turn, HHS asked the Institute of Medicine to come up with a method for doing that.
The required categories are: outpatient treatments, emergency care, hospitalization, maternity and newborn care, mental health and substance abuse treatment, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric care, including oral and vision care. The directive was to set up a framework for defining the essential benefits, but not a specific list, according to Santa.
Santa, who served on the IOM panel as an individual, not as a representative of Consumer Reports, said that he fully agreed with the panel’s decision to make the essential benefits package adhere to a budget. “Reform just won’t work if you don’t do that,” he said.
Rather than simply slash benefits to keep the plans on budget, the panel recommended a variety of other methods that, over time, would push plans towards more generous coverage of treatments and services that are proven effective and economical, and away from services that are expensive and unproven.
For instance, it says HHS should use a formal “deliberative process” that brings together consumers, small-business owners, and others with a stake in the system to weigh benefits and costs and come up with their own tradeoffs. “Consumers can deal with these tough issues,” Santa said. “The question is whether the rest of us can.”
Another panel recommendation was to use something called “value-based” benefit design that gives more generous coverage to services that give the most bang for the buck than to services that are both expensive and of unproven effectiveness.
For instance, according to Santa
An angioplasty with a stent is a lifesaving and valuable procedure in certain emergency situations, but not so valuable when done as an elective procedure in patients with no chest pain. A value-based plan would distinguish between those two situations.[Ed. note: This is Santa’s personal example. The committee did not deliberate on specific treatments.]