IOM emphasizes affordability for essential benefits

Panel releases guideline recommendations for determining essential benefits

An Institute of Medicine (IOM) committee last week emphasized affordability in its recommendations to HHS on how the basic coverage standards for the state-based health insurance exchanges should be established, National Journal reports.

Under the federal health reform law, states by January 2014 must create insurance exchanges that provide coverage options for individuals and small businesses. States can choose to administer their own exchanges—for which they must have some infrastructure in place by January 2013—or ask the federal government to run the exchanges for them.

According to the IOM committee, the cost of any new benefits should be "offset by savings" elsewhere in the health system. The panel said, "Unless we are able to balance the cost with the breadth of benefits, we may never achieve the health care coverage envisioned in the [health reform law]," adding, "If the benefits are not affordable, fewer individuals will buy insurance" and "if health care spending continues to rise so rapidly, the benefits will begin to erode."

Details of IOM recommendations

The report recommended that only medically necessary services be covered. The panel did not outline the types of benefits that HHS should include in the health plans offered through the exchanges, according to the Wall Street Journal.

However, the committee included guidelines for HHS on how to define essential benefits, noting that minimum benefits should reflect those provided by small employers in the private market, rather than by large or medium-size employers that offer more generous coverage. It said federal officials also should determine what the national average premium of a typical small employer plan in 2014 and attempt to limit the national average cost of essential benefits below that threshold.

In addition, the committee said that the federal government generally should not require the coverage of new treatments unless they demonstrate "meaningful improvement in outcomes over current effective services."

Response to recommendations

According to the New York Times, the committee's recommendations likely would please employers and insurers but cause some concern for patient and consumer advocates.

In a statement welcoming the proposals, America's Health Insurance Plans CEO Karen Ignagni said, "IOM is urging policymakers to strike a balance between the affordability of coverage and the comprehensiveness of coverage," adding, "The recommendation that the initial [essential health benefits] package reflect the scope of benefits and design provided under a typical small-employer plan is an important step toward maintaining affordability."

However, Marc Boutin—executive vice president of the National Health Council (NHC), which represents specialized disease advocacy organizations—said he hoped that IOM would make more explicit recommendations for a broad range of coverage, adding that NHC "strongly encourage[s]" HHS to consider suggestions from patients groups (McCarthy, National Journal, 10/6 [subscription required]; Pear, New York Times, 10/6; Radnofsky, Wall Street Journal, 10/7).


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