White House Sets New Insurance Rules for Benefits Coverage

The Obama administration released new rules outlining what insurers on federal- or state-run insurance exchanges must cover as essential health benefits. Ray Suarez talks to Health Affairs' Susan Dentzer about how states are reacting to further implementation of the Affordable Care Act after the president's re-election.

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    And we turn to an issue that loomed large before and throughout the election campaign, the survival of Obamacare, the health care reform law.

    With Democrats retaining control of the White House and the Senate, the questions now, how will the law work, and to what extent will states participate?

    Ray Suarez has our update.


    The law allows many uninsured Americans to buy new coverage beginning in 2014 through new marketplaces known as health care exchanges.

    States can set up their own federally subsidized exchanges or opt to let the federal government run one for them.

    So far, at least 17 states, plus the District of Columbia, will set up their own. But some 20 others, many led by Republican governors, won't and may leave the task to the federal government.

    Five others want to partner with the administration. Six have not decided on a path yet. State officials also say they have been waiting for federal rules on a whole host of provisions, including what insurers must cover as essential health care benefits.

    The Obama administration released some of those regulations today.

    For a look at where things stand, I'm joined by Susan Dentzer. She's the editor of the journal "Health Affair" and an analyst for the NewsHour.

    And, Susan, the election is over and some of the ambiguity about what to do about the Affordable Care Act I guess has gone away now that the speaker has said it's the law of the land. Has all the dust settled? Is it settling?


    It slowly beginning to settle, Ray.

    As you said, lots of regulations were issued today. More will be forthcoming in the coming weeks.

    And, of course, some of the big questions, what will happen with respect to Medicaid expansion, remain undecided.

    But essentially what we have now is a situation where, as we said, a number of states are moving ahead to set up their health insurance exchanges. These will be websites in effect up and running, ready for open enrollment on Oct. 1 of 2013. So it's literally just around the corner.


    They have a extended the deadline for opting in or out. Are there some states that are on the bubble that may yet come in with this extension?


    Yes, very clearly. The states now have until mid-December to tell the federal government what their plans are.

    And if they want to set up an exchange in partnership with the federal government, they have until the middle of February to tell the federal government that.

    And then, of course, even if states make a preliminary decision now, they are allowed to change their minds at any point in the future. If they decide two years down the road from now that they want to open up a state-based exchange, they have the authority under the law to do that.


    So, if you're sitting at home watching this and you live in one of the some 20 states that have either made it absolutely clear they're not participating or are very likely to finally make that decision, what happens to you?


    You will be able to access health insurance anyway through an exchange that the federal government will either set up in your state…


    So, that's a market?


    Yes, it's a market. For — the bulk of consumers should think of this as a website. That's how they will really interface with these exchanges, much the way they go online now to Travelocity or another website to set up travel arrangements. It will be a similar kind of a thing.

    So, you will go — if you're in a state where the governor or the legislature has decided not to go forward with an exchange, you will have one anyway. It will probably be called the name of your state. You just won't know necessarily that it's actually run by the federal government and specifically by federal — private contractors who the federal government has engaged to actually operate the exchange.

    There's also the possibility of a nationwide exchange being formed as well, a federal backup exchange. The federal government hasn't said a whole lot about that, but that's possibly in the offing as well.


    Now, did the administration contemplate when they were painstakingly setting up the architecture for the Affordable Care Act that they may have to go into run the exchanges for almost two dozen states?


    They certainly did contemplate it.

    And that's why shortly after the law was signed, they got to work discussing how to do this, basically hiring the private sector vendors that will be putting the exchanges together. And they're prepared to do it.

    Keep in mind that, under the Medicare drug benefit program, the federal government has a kind of a similar setup now that allowed people to begin to select their drug coverage policies under Medicare several years ago.

    So it's not a really particularly exotic thing for the federal government to be doing, even though it's never done anything on quite this scale.


    Is there a paradox embedded in all this, that governors who adamantly insisted that they didn't want the federal government nosing around in their affairs have, by refusing to participate, essentially invited the federal government in to run these marketplaces?


    There is indeed a paradox. And a further one is that the states are insisting that they want to be able to control and manage their health insurance policies that are sold within the state.

    And just today, members of the administration insisted that that's what they want too. They want the states to set up these exchanges. They want the states to be deciding which plans can come into the exchange.

    The states have the option of running these in a very rigorous way, where they negotiate with health insurers very hard on what the prices will be, or they can take a more hands-off approach and let more plans come in and not negotiate so hard.

    But states have the ability to make those decisions. And, as I say, the federal government said, you should. You should. States, you should do that. We would rather you do that than us come in and pick your plans. So, it is ironic.


    You mentioned earlier that the federal government announced some new rules today on various parts of the Affordable Care Act. They made two big announcements on drugs and on pre-existing conditions. What did they have to say?


    Well, the big announcement on the essential health benefits was to change what the plans in every state, the benchmark plan, that is to say, the plan that will be the standard package of benefits offered in every state, in each state.

    They said that — earlier, the administration had contemplated that those plans would only have to offer one drug, one medication in each particular class of drugs.

    They revised that just slightly today and said it actually has to be either one drug or, if the state picks a benchmark plan that has more than one drug in every class, then that becomes the minimum. So it's a little bit more choice.

    And this was an important issue for patient advocacy groups that are worried about chronic illnesses and things like that. They want to make sure that patients have the ability to pick one or more drugs, because sometimes one given drug in every class doesn't work as well for everybody.

    So having a little bit more choice was attractive to them, and the administration has acceded to that.


    And pre-existing conditions?


    Preexisting restrictions that — essentially ratified what had been known already, which is that as of 2014 those will go away.

    There was a little bit more detail on some other aspects of regulations, for example, new age rating rules.

    Now health insurance plan pricing, which used to be quite broad depending on whether you were younger or older, now has to be much more limited.

    A plan for an older person can only be about three times more expensive than for a younger person. So those rules were clarified, and how those rating bands as they're called are set were clarified today.


    Susan Dentzer, thanks for joining us.


    Great to be with you, Ray.


    Find out what kind of health exchange plan your state is building. Go online to see our interactive map.