Proposed Obamacare Rule Could Weaken Benefits

States are likely to get more power to set Obamacare coverage requirements under a Department of Health and Human Services proposed rule likely to be finalized in early 2018.

Comprehensive essential health benefits (EHBs) that health plans are required to cover under the Affordable Care Act are generally based on the largest small business health plans operating in each state. Under the proposed rule, state insurance regulators in the 39 states that use the federal exchange could choose categories of benefits from health plans offered in other states, or they could come up with their own set of benefits with approval from the HHS.

States that are struggling to maintain individual market coverage under the ACA may try to reduce premiums by looking for plans in other states where benefits are skimpier, Joel Ario, a managing director at consulting firm Manatt Health and a former director of the HHS exchange office in the Obama administration, told me.

“The EHB flexibility allows so much mixing and matching that it could be used to patch together a plan that is not representative of employer-based coverage as required by the statute,” Ario said. “We do not want to go back to days when individual coverage was inferior to group coverage,” as was the situation before the ACA took effect in 2014, he said.

But Chris Sloan, a senior manager at health-care policy consulting firm Avalere Health, told me that he didn’t think the proposed rule would significantly change the market if it is implemented. “There’s not that much difference in the EHBs state to state,” he said.

Moreover, states that are most inclined to try to reduce premiums already have more limited benefits, Sloan argued. “It’s not like New York’s going to go pick Alabama’s benefits.”

The proposed rule also would end the federal Small Business Health Options Program (SHOP) as an online enrollment tool. The ACA’s SHOP program, intended to provide better coverage options for companies with up to 50 employees, has never been successful.

Under the proposed rule, brokers and health insurers would enroll small companies directly, which is now largely the case.

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