* Rule preserves state role in selecting benchmark plans
* Phased-in process for accreditation of insurance plans
* Little change overall from previous HHS proposals
By David Morgan
WASHINGTON, Feb 20 The Obama administration on
Wednesday issued its long-awaited final rule on what states and
insurers must do to provide the essential health benefits
required in the individual and small-group market beginning in
2014 under the healthcare reform law.
A cornerstone of President Barack Obama's plan to enhance
the breadth of healthcare coverage in the United States, the
mandate allows the 50 U.S. states a role in identifying benefit
requirements and grants insurers a phased-in accreditation
process for plans sold on federal healthcare exchanges.
Wednesday's rule included few changes from previous
administration proposals, a fact that could help states and
insurers as they prepare for new online state health insurance
marketplaces, known as healthcare exchanges, scheduled to begin
enrolling beneficiaries for federally subsidized coverage on
"The administration has been consistent in its approach to
essential health benefits for more than a year, and that
continued today. It's good news for states and insurers because
it means they don't have to make any changes," said Ian Spatz, a
senior healthcare adviser at the consulting firm Manatt Health
The exchanges are expected to cover as many as 26 million
people within 10 years and seem likely to dominate individual
and small-group insurance markets. Another 12 million people are
expected to receive healthcare coverage through an expansion of
the Medicaid program for the poor, according to the nonpartisan
Congressional Budget Office.
Obama's Patient Protection and Affordable Care Act sets out
10 benefit categories that must be covered by most plans at the
same level as a typical employer plan. The categories range from
hospitalization, prescription drugs and maternity and newborn
The American Cancer Society Cancer Action Network was
cautious in its praise, describing the rule's prescription drug
mandate as an improvement but warning that it was unclear
whether patients would have timely access to drugs needed to
treat and survive serious illnesses including cancer.
The rule got a cool reception from insurance and employer
groups, which warned that higher costs could result from the new
"The minimum essential health benefits standard will still
require many individuals and small businesses to purchase
coverage that is more comprehensive and more expensive than they
choose to purchase today," said America's Health Insurance Plans
President Karen Ignagni.
Neil Trautwein, National Retail Federation vice president,
said the ultimate impact of the regulation will not be felt
until plans are priced and sold on the market.
"The administration has tried hard to navigate between the
competing concerns," he said. "But I'm worried that people won't
be able to afford coverage."
Insurers including UnitedHealth Group Inc, Aetna Inc
and Cigna Corp will use the government's final
word on these required benefits as they design plans and set
premium prices ahead of the exchange launches. They have each
said they will sell plans on some of the exchanges, but have not
yet committed to which ones.
UnitedHealth, the largest insurer, said it is still
reviewing the new rule. The company said the exchange insurance
plans will essentially be a new type of coverage.
"In the long term, we are expecting and preparing for an
'exchange' category of coverage to become established as a new
benefit category between Medicaid and the traditional commercial
benefits markets," spokesman Daryl Richard said.
The U.S. Department of Health and Human Services said the
rule would mean greater access to mental health and substance
abuse services by requiring parity with other healthcare
benefits. HHS estimated that 62 million Americans would gain
mental health coverage, an issue that has risen in importance
after a string of mass shootings including last year's
elementary school massacre in Newtown, Connecticut.
The final rule preserved the state role in determining how
the requirements are met by selecting their own benchmarks from
plans sold within their respective borders. Most states opted
for their home market's largest small-group plan.
But after two years, HHS said it would review the situation
and determine whether a new approach might be necessary.
The administration kept to the benchmark rule despite
objections from consumer groups who claimed that some of the
selected plans were not comprehensive enough and argued for a
single, uniform federal package.
But HHS officials found that maintaining states as primary
regulators of state insurance markets would keep benefit
offerings more in line with services typically offered through
employer-sponsored plans in each state.
"The states continue to maintain their traditional role in
defining the scope of insurance benefits and may exercise that
authority by selecting a plan that reflects the benefit
priorities of that state," HHS said in the rule.
The administration also gave insurers the chance to phase-in
requirements for plans sold on federally facilitated exchanges
and denied requests from groups that wanted to exempt low-cost
community health plans and Medicaid managed-care plans from the